Starting a new business today entails recruiting help from and working with different partners and suppliers. These partners and suppliers can include your website developer, an office interior designer, a recruitment agency, and a bank.
As a business owner, you will need to put some careful thought into selecting the right bank to work with. From opening a business bank account to getting a corporate credit card and having access to other financing solutions, you need to select a bank that you will be able to have a smooth working relationship with for an extended amount of time.
Having a Productive Partnership with Your Bank
The right bank can help entrepreneurs achieve the dream of opening a business. And it doesn’t end there. You can rely on your bank for other banking and financing services and solutions that will enable you to sustain and grow your business now and into the future.
Below are the best business tips you can follow to ensure you get the most out of your partnership with your chosen bank:
1. Have a separate account for your business transactions
You may be tempted to use your current personal bank account for your business as well; don’t even consider this option.
It is always best to have a separate bank account for your business to make record keeping (especially during tax filing time) simpler and more efficient. In addition, having an official corporate bank account will make it easier for you to plan for and set funds aside for both anticipated and unexpected business needs.
2. Select your bank carefully
A successful partnership starts with having the right partner. In this case, you need to find the right bank that will meet your needs.
Although you may already have a personal account with a particular bank, you don’t have to immediately recruit their services for your business bank account as well. Keep in mind that there are other banks offering better account servicing options that relate to your business and can provide valuable expertise as a result, especially if you require a line of credit or require cash management assistance.
This doesn’t mean though that you should discount your current bank immediately; start the comparison process with them. However, make sure you don’t count out other options that may be a more suitable fit for the industry you’re in or that offer lower business banking costs.
Before you go “bank shopping”, create a checklist stipulating all your business needs and priorities. Make sure the bank you eventually select can meet them with immediate effect and has the capability to assist you as your business grows.
3. Decide which types of accounts and services your business needs
For new businesses, the following business products and services are crucial:
- Checking account
- Savings account
- Corporate credit card or debit card
- Online business banking
Before deciding which account to open and what other services to apply for, get details on each of these business banking products and services including the fees and requirements.
Checking account fees are still common but some banks offer free business checking accounts with no minimum balance. Fees and requirements such as a minimum maintaining balance, monthly required use of credit or debit card, etc. vary widely. As such, do your bank comparison shopping diligently and thoroughly.
4. Find out what perks a bank offers
A good way you can narrow down your list of possible banks is to find out what benefits they offer. These perks may include gift cards, a cash bonus for opening a new account, etc.
Although you shouldn’t choose a bank based on the perks they offer, asking about available bonus gifts for new business accounts may result in some much-needed discounts.
It can also serve as a great tie-breaker if you’re having a hard time deciding between two banks.
5. Selecting the right financing option for your venture
If one of your main purposes for opening a business bank account is to secure additional funding for your new venture, make sure you study each option well. Any borrowing you do comes with interest, so be careful about selecting certain particular loan products.
The most common funding option offered by banks include business credit cards (also called business lines of credit) and business term loans. Business credit cards usually come with lower interest rates than personal credit cards. They are options worth considering for small, routine purchases or expenditures.
If you opt for a business term loan, you can get a larger amount of money which you will repay plus interest in installments over multiple years. Loans are more suited for major purchases such as an essential piece of machinery or equipment which you can use for a long period of time.
6. Work with your bank to set up the right payment system
Another important step you will need to take after opening a business bank account is to set up a merchant account so that your business will be ready to accept payments once it starts operations.
Point of sale payment (POS) options are popular among many businesses today since many customers prefer to make purchases with their debit or credit cards instead of cash. To use this payment system, a credit and debit card merchant account is necessary so that you can accept credit card payments. The system will also require your business bank account and a way to process payments.
This payment system is highly useful for both cash management and record keeping. However, make sure that the merchant account service you choose satisfies your needs in terms of the services they provide and accompanying fees. If you don’t expect to have many POS-based transactions, you can opt for a volume-based payment plan which can give you more savings. Discuss other options with a bank representative maximise your ROIs and profits.
In case you will be accepting online payments, make sure you iron out all the details with your bank before business operations start. Making use of an online payment system is certainly a smart idea if you are expecting a large volume of e-commerce transactions.
7. Always keep track of all transactions and find out if you’re losing money
Lastly, not all business accounts are created equal and the fees you pay for deposits and withdrawals can also vary widely. Businesses that have high volumes of transactions will often be charged large and recurring fees that can affect their ROI and cash flow.
You can avoid this problem by making sure you are aware of all the fees that come with your account and any transaction you make (something that you should have done before opening your account).
You can also look into the bank’s cash management services so that you can get help with minimizing costs and rates while capitalizing on efficiency at the same time.
When you open a new business, you will need all the help you can get to ensure all your plans push through. By selecting the right bank, you will have a complete and reliable partner from the early stages of your venture to its eventual growth and continuous success.