When you start a business, one of the first things you must do is create a checking account. But why are there different accounts for business and personal checking? What's the difference between a personal and business checking account when they can seem so similar?
Business Accounts Get Preferential Service
When you get a business account, you establish a relationship with the bank. You can connect with a business customer service representative directly to get better customer service. In addition, you can usually use the "business only" lines so you can get out of the bank faster. While it may not be fair, these are perks that you get for generally maintaining a higher balance and having a steady source of income.
Business Accounts Allow for More Transactions
Many bank accounts have a limited number of transactions. A personal account, for instance, could start charging you if you have more than 20 transactions within a certain period. Business accounts provide large numbers or even unlimited transactions so you don't get charged when you exceed those limits. A business could experience thousands of transactions a month if it's busy enough.
Business Accounts Often Have Higher Fees
It's not all positive; business accounts usually have higher fees. A personal account could be free while a business account will usually have a bank fee if you go below a certain balance. But that's because the business accounts are tracking more activity and cost more to maintain. Usually, the fees associated with opening a business account are insubstantial at best and don't outweigh the advantages.
Business Accounts May Have Better Rates
To offset those pesky fees, many business accounts also have better rates. They may have better interest rates on checking accounts, money markets, and savings accounts, which will make you more money over time. Business accounts are also more likely to have sizable signup bonuses; many customers simply rotate accounts to take advantage of these.
Business Accounts Look More Professional
When getting a loan or being assessed, many entities will ask you specifically for a business account. Business accounts separate your corporate money from your personal money, creating a better audit trail. They also look more professional to investors, lenders, and others who might be assessing your books.
Ultimately, a business account and personal account function very similarly. But business accounts are better at processing large volumes of transactions, while personal accounts aren't really designed for that purpose. Your banking representative can help you learn more.Share