What is a business checking account?
With a Business Checking account, you can make transactions via wire transfers, ACH transfers, electronic fund transfers (EFTs), ATMs, checks, and a debit card. You can also earn cash deposits and withdrawals by visiting a bank branch unless you’ve set up an account at a Novo Bank (online-only bank). You can manage all transactions through online banking and/or a mobile banking app.
When you open a business checking account, you get a debit card and checkbook (usually for free). If you lose them, you can request a replacement, which may incur a replacement fee and a waiting period of up to 90 days. Many business checking accounts come with payroll features as well, while some even offer integrations with bookkeeping services, such as accounting software.
4 Basic features of business checking accounts
Business checking accounts offer numerous benefits, but many come with certain limitations, too. It’s vital to understand them before choosing a bank for your business.
Business checking transaction limits
When setting up a business checking account, your bank may limit the number of free transactions you can make per month, including cash deposits, withdrawals, and fund transfers. The limit is typically around 200 free monthly transactions. However, some banks don’t place withdrawal limits, while others place no transaction limits at all. The latter cases are fewer in number, as unlimited transactions are typically reserved for personal checking accounts.
Most online business checking accounts offer unlimited free transactions. However, since online banks don’t have a physical location, and few have an ATM, you can’t make cash deposits or ATM deposits and withdrawals.
Every business checking account comes with specific business banking1 fees. Even those marketed as free are never entirely free. There are always services you need to pay for to handle your business transactions through a bank. If you exceed the number of your free monthly transactions, you may have to pay per-transaction fees. Those can include transfer fees, ATM withdrawal fees, and other fees over a set transaction limit.
If you make cash deposits over a set dollar amount, your bank may charge you a cash handling fee. Find an account with a high cash deposit limit if your business deals primarily with cash to avoid high cash handling fees. Most business checking accounts come with low to no monthly maintenance fees. However, banks that charge you for maintaining your account typically offer ways to qualify for a monthly fee waiver.
You may need to meet certain minimum balance requirements, minimum monthly direct deposits, or minimum debit card purchases per month, depending on the bank. Some banks may waive your monthly service fees if you sign up for their bundle services, such as business credit cards or merchant services (e.g., credit card payment processing).
You can find very few business checking accounts that let you earn interest on your balance. Unlike other types of business bank accounts (e.g., savings accounts), interest-bearing business checking accounts typically have a lower annual percentage yield (APY). If you go for such an account, you may not have to pay for monthly service fees or meet minimum balance requirements. However, you may be able to earn interest only on deposits up to a certain dollar amount.
The FDIC (Federal Deposit Insurance Corporation) offers insurance to eligible owners of all business accounts, including checking accounts. It covers total deposits of up to $250,000 in qualified business accounts. Those include corporations, unincorporated organizations, LLCs, and partnerships organized under applicable state law.
If you’re eligible and have multiple business accounts at a single FDIC-insured bank, the FDIC will add them together and insure your total deposits up to $250,0002. If you would like to insure any of the remaining funds, you need to transfer them to another bank.
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Frequently Asked Questions