Small Business Financial Article
|Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.|
Banking Essentials for Small Businesses
If you’re ready to take your business to the next level, one of your first considerations should be in developing a solid relationship with a business bank. While it may start with opening the right kind of checking account for your business, a good business bank offers an array of banking services that can be critical to the growth of your business. Because your business is unique, it is important to work with a bank that offers a wide range of business-centric products and services that can meet your specific needs as your business grows.
Business Checking Account
Opening a business checking account is often an essential first step towards legitimacy and effective cash flow management. Many business owners are surprised at how different business checking accounts are from personal checking accounts. With many banks, there is a limit to the number of free transactions that can be made with a business checking account depending on the volume of transactions. For example, a basic checking account might allow for 150 free transactions and then charge a small fee for additional transactions. When your business requires more transactions, you can simply move to a higher tier checking account that might allow for more transactions.
Most business checking accounts charge a monthly maintenance fee; however, the fee can be waived if you maintain a certain minimum balance. It can vary widely from bank to bank, but, for a typical minimum balance requirement is $5,000. A higher tier account might that allows for more transactions might require a minimum balance of $20,000. The key to minimizing your checking account costs, while optimizing its use for your business is to work with your business bank to match your business’s current and future needs with the right type of account.
There comes a point for every business when expense control becomes important, especially when more than one employee is involved in purchasing. A business debit card can be a more effective way to monitor and control spending. Not only does it reduce paper transactions, it allows for more accurate, real-time tracking of expenses. Most banks issue a free debit card with their business checking accounts and many will issue extra cards for employees at no additional cost.
Everyone is familiar with conveniences of online banking; but it can be especially beneficial for small businesses trying to get a handle on their cash management. With 24/7 access to their accounts, small businesses can more easily track their expenses and cash on hand. Many online banking platforms allow you to categorize your expenses so you can see exactly where your money goes and whether it is being spent according to your budget. Most online platforms also allow you to export your account information to accounting software programs like QuickBooks, which can save a substantial amount of time while improving accuracy.
Other Business Banking Services
One of the biggest challenges facing a growing business is keeping up with its cash management needs. Businesses that rely on timely receivables and cash on hand to pay operating expenses can benefit from cash management tools offered by business banks, such as Automated Clearing House (ACH), electronic funds transfer and remote deposit.
Any business that expects to get to the next level will invariably need access to financing and, the time to build a relationship with a business bank is well before the need for financing arises. The right bank can become an essential partner in your long-term success.