Run a quick Google search for “How to Start a Business,” and nearly every tutorial or checklist you come across will offer the same list of to do items:
- Choose a business name. Check.
- Register your business with state/local authorities. Check.
- Write a business plan. Check.
- Open a business checking account. Well, that should be pretty simple, right?
If most of your past experience has been with personal checking accounts, it’s easy to assume that this step should be really straightforward:
You open an account with a $25 or $50 dollar balance, waiting expectantly to make more sales so you can watch your account grow—plus accrued interest, of course.
But after just a bit of research, you’ll quickly realize that the terms between personal and business checking accounts tend to differ quite a bit. Without choosing carefully, you could easily find yourself getting hit month after month with piles of small fees… That add up to a big dent in your bottom line.
This step may seem trivial in the grand scheme of starting and running your business, but don’t just accept the first business checking account you come across online. We’re making it easy to weigh all possible factors and find the best free business checking account for you.
The Importance of Separating Your Business and Personal Finances
On the other hand, if you’ve been in business for awhile but are seeking out a business checking account for the first time, it might be that you’ve previously been keeping blurred line between your business and personal finances.
So before we dive into choosing the best free business checking account for you, let’s rehash exactly why it is so important that you are accurately track expenses and income for your business separately from your personal finances.
Mixing business and personal finances not only causes accounting headaches—it can get you into hot water with the IRS and even ruin your chances at securing a small business loan down the line.
If you’re still using the same bank account to manage your business and personal finances, you’re in exactly the right place!
Choose a free business checking account from our list and fix this today. However, also know that you may need to spend some time working with a bookkeeper or accountant (or at least with your calculator) to clean up any lingering confusion in your books.
Okay! With that quick aside out of the way, exactly how do you go about choosing the best free business checking account for you?
Let’s dive in.
Factors to Consider When Choosing a Business Checking Account
When you start researching checking accounts for small businesses, you’ll quickly learn how much truth there is to that old saying, “There’s no such thing as a free lunch.” Even with so-called “free business checking accounts,” banking institutions have several ways of earning money from your account.
A few of the most common ways they do this are by charging interest off your account balance, charging small fees off of each of your transactions beyond a set maximum, small “cash handling fees” for monthly balances above a set minimum, wire transfer fees, out of network ATM fees, and more.
Even with a so-called free account, all these fees can add up to significant costs!
While there might be no such thing as a truly “free” business checking account, there are a few considerations that can help lead you to the lowest cost option for your business.
Before selecting a business checking account from our business, consider how these factors might way in to your choice:
Number of Monthly Transactions
How many transactions do you have on average per month?
(This includes cash and check deposits, cash withdrawals, payables by check, and electronic payments.)
Many “free” checking accounts will set a limit of the number of transactions you can make each month before the institution charges a fee for each transaction, or determines you no longer qualify as an account small enough for their “free” product level.
If you know that you process a lot of transactions, pay attention to the fine print to make sure this won’t cause you to incur additional costs.
Average Daily Account Balance
What’s realistic to expect for your average daily account balance? Monthly average account balance?
Some accounts will let you have few fees, or even no fees, if you can maintain a high enough account balance.
Your Opening Deposit
How much money do you available as your opening deposit?
This might differ from your average daily account balance if, for example, you need to maintain more than one checking account for a few days (or longer) as you transition between checking accounts.
In addition to average daily balance requirements, some accounts with the fewest fees require a much larger opening deposit than accounts with more or higher fees.
Availability of a Physical Branch Location
How often, if at all, will you need to visit a branch location in person?
If you have physical storefront or office space for your small business, or deal in cash for a significant amount of your revenue, you may need access to a local branch to make deposits. If this is the case, a bank that only has a few branches in your state, or is internet based, might not be the most fitting option.
In contrast, if you only sell your products or services online and all of your revenue comes in through digital transactions, an internet based bank with no physical branches might work just fine for you.
Pro tip: If you know for certain that you need access to a local branch, the “local and regional favorites” list at the end of this post may be your best place to start!
Size of the Banking Institution
Smaller banks tend to give the fewest details online about the “fine print” behind their fees. Most hope to win you over on the phone: they want you to come into a branch location or call for the details.
Larger bank brand names will often have options to include balances of other accounts with their bank towards a minimum total balance to waive fees. This is useful if you already have an account with a large national brand, and need to keep your business account separate.
Smaller local or regional banks or credit unions tend to have the best “deals” on accounts. They’re generally more interested in competing for your share of the local economy and are more invested in the best customer service.
Word of mouth in the community is valuable on the smaller scale. There’s less anonymity, as you’ll probably speak to a customer service representative face-to-face or will be in contact with them more often, as opposed to a larger national brand with a customer service call center.
Now that you’ve weighed these most important considerations, here’s our master list of nearly all free business checking accounts we could find online!
To keep things simple, we’ve organized our list according to standout features, so we suggest looking for the description you most identify with as a starting point for your best checking account option.
If You Have Less Than $1,500 In the Bank
Are you in the very beginning stages of starting your business, but want to go ahead and open a business checking account to keep things on the up and up? Good for you! You’re doing this business checking account exactly the right way.
That said, in these early days, you likely don’t have much cash on hand to put in your fancy new checking account. Here are a few great business checking accounts with no or low minimum balance requirements:
As a straightforward business account for a first time entrepreneur, ANB Bank’s BusinessFREE account is about as simple as it gets:
A $25 opening deposit. No minimum balance. No monthly fees.
While transaction limits might mean that some businesses outgrow this account eventually, most can seamlessly graduate to ANB’s complementary interest bearing business checking account in order to process more transactions at lower cost.
If you have access to a branch location, BBVA Compass Bank’s Clear Connect account provides a great combination of online convenience and in-person customer service for small business owners—particularly of retail businesses who may need to process cash transactions.
As part of this monthly fee free account, business owners have access to process 2 deposits and 5 withdrawal and/or checks per month in-branch at no additional charge. And with otherwise unlimited additional transactions, this virtually guarantees that all your banking needs will be taken care of at almost no cost to you.
Determined to prove that their business checking is “clearly better,” Citizen’s Bank offers an impressive combination of no minimum account balance and 200 free transactions per month. Depending on your type of company, this could exactly fit your needs—especially for your first few years in business.
As a small bank (and therefore a small business) themselves, Comerica understands the challenges that small business owners face.
That’s why this bank doesn’t stop at no monthly maintenance fee, a low $50 opening deposit, or 150 free transactions per month.
More significantly, they focus on perks like credit card and payroll processing to help fill in the gaps where new business owners need help the most.
Despite the regional name, Bank of the Ozarks offers small business checking for businesses across the country who are looking for no monthly fees and no minimum balance for their checking experience. An opening balance of $100 gets you 250 transactions and 15 free payments per month.
That said, keep an eye on additional transactions, as $0.50 each can add up to bigger costs over time.
With no maintenance fees, no minimum balance, and overdraft protection, First Citizen’s Basic Business Checking is as easy as it gets for micro-business owners who don’t want to think too hard about their banking.
Even so, business owners who choose this account should pay attention to changing needs as they grow. Once you’ve hit 175 transactions and or $5k in deposits per month, the fees can start to quickly add up.
Business owners hoping to build a relationship and grow with a single bank will find great comfort in Iberia Bank’s various free business checking opportunities.
Instead of offering distinct accounts to choose from, this bank starts all customers with no minimum account balance, no monthly fee, and 500 free transactions per month, then automatically converts their account to a minimum balance account with more transactions after two consecutive months of over $10,000 deposits or over 500 transactions.
Instead of panicking for the day that you reach the limits of your free checking account and get hit with exorbitant fees, you can rest assured that Iberia is already planning to grow with you.
As long as you’re processing under 200 transactions and less than $7,000 in total deposits per month, Popular Community Bank’s starter business checking account truly holds to its promise of being totally free.
You’ll see no monthly fee and no minimum balance—and when you do hit that $7k month, the folks at Popular Community make it quick and easy to upgrade to next level account, equally tailored to your business’s level of growth.
Okay, so we’re cheating a little bit here—Small Business Bank’s Micro Business Checking isn’t technically a free account…
But we’d argue that $2.99 per month is a small price to pay for no minimum balance, unlimited transactions, and no surprises.
If you’re on the fence about your average balance, number of transactions, or any other factor—this account is a great (and still very inexpensive) way to know your exact cost up front, so you don’t have to stress month to month about whether you chose the right business checking account.
If Your Business Is More Established
Is your little business quickly growing into a little-big business? If so, you may already be outgrowing some of the low-balance accounts listed above. More established small businesses who have a bit more cash on hand and routinely process over $10,000 in monthly deposits should look to these accounts tailored for medium sized and larger businesses.
At first glance, the $16 monthly on Bank of America’s Business Fundamentals account may seem exorbitant. However, keep in mind that this fee is waived as long as you keep a minimum daily balance of at least $3000, as well as an average monthly balance of $5000.
If you process a high number of transactions or a high dollar value of deposits, be prepared to pay a cash handling fee of 0.2% for all deposits over $10,000, as well as a fee of $0.45 percent for each transaction after the first 200. That said, many business owners find Bank of America particularly user friendly for online banking, so the minor costs may be worthwhile.
Had you lost hope for a business checking account that would actually pay interest on your balance?
Well, Bank of the Internet’s Business Interest account may be here to turn that around. Sure, an interest bearing rate of 0.8% APR isn’t much, but it’s better than nothing!
Requiring an average daily balance of $5000 to avoid the $10 monthly fee, this account is a best fit for medium to large B2B companies that process relatively few transactions per month, but for large values each. That’s because while the terms of this account add a per transaction fee after the first 50 monthly transactions, it boasts no cash handling fees, regardless of the sum.
If you have a growing but still relatively micro-small business, Chase’s Total Business Checking might be right up your alley.
This account requires a minimum daily balance of only $1,500 in order to avoid the $10 monthly fee.
However, free transactions cap out at 200 per month, and deposits over $7,500 per month will also incur a fee. So if you’re planning for significant growth in the future, your business may outgrow the free boundaries of this account.
Like others in this category, Citibank’s streamlined checking account has a $12 monthly fee waived that is easily waived as long as you maintain an average balance of $5000.
This one offers 250 free transactions for month, with additional transactions billed at $0.30 each. If you process lots of large deposits, keep an eye on their 0.10% fee for all deposits above $10,000 per month.
If You Process A Lot of Transactions
For retail or other point-of-sale businesses who process a lot of transactions, per-transaction fees can add up quickly. These accounts either offer unlimited transactions or have some of the lowest per-transaction fees we found.
No monthly fees, an opening deposit of just $100, and unlimited transactions?
ANB Bank’s Business Interest Bearing Account may be one of the best (and most truly free) accounts we’ve come across. However, not all businesses or account types will qualify, so consult with one of ANB’s live chat advisers to see if this account may be a fit for your business.
A great choice for small to medium-sized single-location retail businesses, Popular Community Bank’s Simple Business Checking account is a healthy balance of a variety of great business checking perks.
Although this account doesn’t quite offer unlimited transactions, 400 free transactions per month is still almost double what most accounts offer, and may be enough for the majority of small retail businesses.
Keep your daily balance above $7,500 to avoid the $15 monthly fee—and if you’re having a particularly great month, prepare to pay a small fee for deposits over $15,000.
If You Operate Primarily Online
You’re already used to doing business online, so why wouldn’t it make sense to keep your banking in the same place?
These free business checking accounts from popular online banks gives you access to fellow business minds who think digitally—just like you do.
As an internet-based bank, Everbank offers great solutions for digital companies who want to do their banking exclusively online.
For this account, which requires an opening balance of $1,500, you can avoid the $14.95 monthly fee by maintaining a monthly balance at least $5,000. You also receive 200 free transactions per month, after which transactions have a relatively low fee of just $0.25 each.
Forget “First Bank of [Insert Your City or State Here].” Bank of the Internet does business exactly where you do—online.
And as you know from your own business costs, avoiding expensive branch locations gives this institution more flexibility to offer great customer perks.
High on their list for basic business checking?
Fifty dollars off your first check order, 200 free transactions per month, and no maintenance or cash handling fees—ever.
If You Prefer the Community Banking Experience
(Local and Regional Favorites)
The banks that follow aren’t available nationwide and won’t allow you to open an account online—but if you happen to be in one of these areas, there are great perks to working directly with a local banking provider.
Alabama and Nevada residents struggling to forecast future transactions might enjoy the free business checking options from America First.
Although this account offers only 250 free transactions per month, the low additional transaction fee of only fifteen cents each will hardly break the bank if you are a few transactions overboard. This local favorite is great for low volume accounts that want personalized customer service without the cost of high monthly maintenance fees.
A longtime favorite of golden state entrepreneurs, California Bank & Trust offers three different options for free business checking.
At the advantage level, customers with a minimum daily balance of $7,000 enjoy 400 free transactions and up to $10,000 in deposits per month with no additional fees.
While the essentials and essentials plus level accounts offer only 75 free transactions per month, these factors are balanced with lower minimum balances ($2000 for essentials and $3000 for essentials plus) to avoid paying any monthly maintenance fee.
Texas and New Mexico businesses have next to nothing to lose with this easy small business checking option from City Bank.
It boasts no monthly fees, no minimum balance, and an opening deposit of just $100. And even if your needs exceed this account’s 150 free transactions, the miniscule fee of $0.10 per additional transaction is one of the lowest we’ve come across.
No monthly fee, no minimum balance, and 500 free transactions a month?
Business owners in Kentucky, Ohio, and the Virginias luck out with this best of all worlds business checking option.
Mississippi, southern Alabama, and Louisiana business owners with strong ties to their southern roots will be pleased with the local community partnership offered through the First Bank’s first free business checking account.
Like others on our list, this one offers no monthly maintenance fees, no balance minimum, and 225 free transactions per month, with additional transactions charged at just $.25 each.
But more than just the dollars and cents, a business account through first bank offers a certain peace of mind in working with a local and trustworthy team.
Are you doing business in Alaska, New York, Ohio, Pennsylvania, or the Maryland, Virginia, and Washington D.C. area?
Check out National Cooperative Bank’s basic business checking account for no monthly fees and a low minimum balance of just $100. While you’re limited to 150 free transactions per month, the community-based experience of working with this cooperative bank will appeal to business owners who want to feel like more than just an account number.
We hope this guide has helped to find the right business checking account for your business!
Do you know of a great free business checking account that we missed? Find us in the comments section below to share your thoughts.
from Fundera Ledger https://www.fundera.com/blog/2016/06/30/free-business-checking/