Tweet

Choosing The Right Bank for Your Business

Written by: Glenda Lange

Article Overview: Choosing the right bank for your business can often be an ongoing event. With the world of finance changing each day and new banks opening, there is more competition between the banks and therefore the opportunity for you to get a better deal. You will also find that, as your business grows, your banking needs will change.

Choosing The Right Bank for Your Business

Choosing the right bank for your business can often be an ongoing event. With the world of finance changing each day and new banks opening, there is more competition between the banks and therefore the opportunity for you to get a better deal. You will also find that, as your business grows, your banking needs will change.

As you start out in your new business, you may want to take some time comparing banks and bank accounts. As with most new businesses, you will have very little cash flow to start with so you would be looking for a bank account that has low fees. Unfortunately, this also means a low interest rate. As you are unlikely to be able to keep the minimum monthly balance required for high interest in your account for the first few months, the interest rate is initially of little importance.

Most importantly, you need to look at the types of fees the bank charges. These can include monthly fees and transactions fees. Some banks will charge different amounts for different types of transactions. For example, they can charge fees for ATM transactions, cheques written, deposits made etc. What you will ideally be looking for is an account that has a low monthly fee that covers most or all types of transactions.

Now that you have decided on a main bank account for your business, you may want to get a second account that gives you a high interest rate but still allows easy access to your money. This account will serve two purposes. Firstly, it gives you a way to put money aside for your tax liabilities. Secondly, it gives you an emergency cash fund. Ideally, at the end of the month when you have paid all your bills, you will transfer at least half the balance of your main account into your high interest account.

As we are progressively becoming a cashless society where our main methods of payment are EFT and credit card, your next account to research is a merchant account. Remember, your business has to pay the fees on these transactions so you will want to get the lowest fees possible. The fee structures for these accounts vary between a percentage of sales to an amount per transaction. You will need to estimate the possible amounts of transactions to see which calculation will suit you best. Some banks may also offer a combination of fee calculation types.

Lastly, you may want to look for a line of credit. This may be either a business credit card or an overdraft facility on your main account. The choice to make here, other than interest rates, is convenience. Which line of credit suits your business? In addition, you need to note that with an overdraft, your interest is charged immediately. With a credit card, you should be able to get interest free days.

So, this is what you have for your business:

A low fee, low interest main bank account, preferably with a chequebook and debit card.

A high interest savings account with easy access for tax and emergencies.

A merchant account for receiving payments by eftpos and credit card.

A line of credit.

Please note that you do not have to have all of these accounts with just one bank. Do your research and choose the accounts that offer the best deal for your business.

Related Articles
  Is your slogan authenticated by your story?
  Business funding sources for today's business owner...
  Central Bank of Nigeria (CBN) Approves Conversion of Community Bank into Microfinance Institution (MFI)
  4 Ways to Finance your Franchise
  Why Some Networking Events May Not Be Right For You

Article Tags: atm transactions, bank accounts, banks, cash flow, cashless society, credit card, easy access, eft, emergency cash, finance, high interest account, high interest rate, merchant account, money, new business, new businesses, tax liabilities



Related Forum Posts
You can see my Bank statement......... - Hi there, Today we are bombarded with 'Business Opportunities' by the multitude. I believe it is possible to earn a lot through the internet, but it is hard work. Nobody gets it very easy on a long term basis. [b][b]How much notice do people take[/b], [/b]when the Bank Statements are shown as means of 'how credible' their business idea is? Are they always totally true? They look authentic. The whole industry is growing rapidly. What is your experience? Is there any regulation in presenting the 'Bank Statement' or other statements from 'Click Bank' etc ? Kindest Regards Beat "Unlock People's Potentials!"
BDC - [quote="IWDCanada":jib6tqt9]I think if you try to do business in the Maritimes the Business Development Bank of Canada might be able to provide grants.[/quote:jib6tqt9] On that note, does anybody have any experiences with the Business Development Bank of Canada that they would like to share? I have been considering approaching them for a business loan.
Re: BDC - [quote="Jones":255lkmrn][quote="IWDCanada":255lkmrn]I think if you try to do business in the Maritimes the Business Development Bank of Canada might be able to provide grants.[/quote:255lkmrn] On that note, does anybody have any experiences with the Business Development Bank of Canada that they would like to share? I have been considering approaching them for a business loan.[/quote:255lkmrn] I'll be working with the BDC later this month on a few projects. From what i've been told they are really great when it comes to small business. Their loans have a little higher interest but their payment terms are a lot easier to swallow. I can give you a contact if you need.
New Small Business Topic - Hello everyone, I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section? Here's a list of what we currently have: Angel Investors Branding Bank Loans Business Coaching Business Plan Franchises (New) Insurance Legal Marketing Public Relations Sales Small Biz Loans Venture Capital
Online Payment Methods - I'd like to know what Payment method do entrepreneurs use to process credit cards online? Here at RSC Business Group we have made a decision to go with Paypal in the short term. If we find that we have more than 10 transactions a month then we plan on going with a Bank Processor of Payments. What do you guys use?


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Are You My Mentor

What Is The Foundation for Your Vision?

Four Reasons Why Entrepreneurs Should Blog

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.