Business owners looking to open deposit accounts have many financial institutions to consider. Opening a business savings account can have many benefits, with different banks offering different types of business bank accounts.
In this article, we will be looking at the many advantages these type of bank account have to offer, what to look for when choosing one, and reviewing some of the best business savings accounts on offer including which types of business would benefit from it the most.
5 Best Business Savings Accounts
Here are the top 5 business savings accounts you can open now:
- Axos: Best for New Business Owners
- Capital One: Best for Face-to-Face Banking
- Live Oak Bank: Best for Growing Your Savings
- NBKC Bank: Best for Businesses on a Budget
- Chase: Best for a Wide Range of Products
Axos: Best for New Business Owners
Axos Bank is an online-only bank offering a wide range of products and services to personal and business consumers.
If you’re a new business owner with a business incorporated after the 1st of June 2020, opening a new bank account with Axos can help you bag a $100 cash bonus.
Their business savings account is interest bearing and one of the highest rates around. You’ll need a minimum opening deposit of $1,000 to open the account, and you’ll need to maintain an average daily balance of $2,500 to avoid paying the monthly fee.
Should you fail to keep this balance, you’ll need to pay $5 per month.
The account comes with access to online banking and mobile banking – a necessity seeing this bank does not have any branches.
Of course, you can apply online, and the bank lists all of the required documents that you’ll need to open the savings account.
Capital One: Best for Face-to-Face Banking
Opening a new Capital One Savings account earns you a high APY introductory rate of 0.40%, which earns it in a position among the top 3.
However, once the first 12 months have passed, this APY rate will drop to the standard variable rate.
The minimum deposit amount to open this account is $250, and you’ll need to maintain a balance of at least $300 to avoid the $3 monthly service fees.
Fee-free withdrawals are limited to 6 per month, with any subsequent withdrawals charged at $10 each.
Incoming wire transfers are free, while sending them will cost you $25. You get access to both internet banking and their mobile app, but you can also visit one of their branches should you live or operate near one.
If you choose the latter, make sure there are no restrictions before making the trip.
Live Oak Bank: Best for Growing Your Savings
Live Oak Bank’s Business Online Savings Account comes with the highest APY of all banks surveyed at 0.50%, which’s also compounded daily, helping you make the most out of the rate on offer.
The account also does not have any maintenance fees, so you won’t have to pay anything should your account suddenly find itself depleted. Do keep in mind that the bank does charge a dormant account fee, however.
Transactions are limited to 6 per month as per the old Regulation D, with additional transfers costing $10 a pop. Accounts are also FDIC-insured up to $250,000.
You can open accounts online with apps available for both Android as well as iOS devices.
There are several ways you can fund the account, including ACH transfers, wire transfers, check mail-in, or by using the remote check deposit function of the mobile app.
NBKC Bank: Best for Businesses on a Budget
While NBKC Bank does not offer a business savings account, their Money Market Account (MMA) is just as good.
The APY rate on offer currently stands at 10%, which, although it’s not the highest, it’s still a respectable rate. This rate is applicable on all balances so that you’ll always know how much your money is going to earn you.
There is no minimum deposit requirement to open the account, and there are exactly 0 monthly fees. The ban also does not charge any overdraft or NSF fees.
Several things are optional, like ACH credits and debits and desktop deposits, which allow you to choose the services you need without spending money on those you do not use.
Chase: Best for a Wide Range of Products
Chase for Business offers two different savings accounts, depending on your business requirements.
The entry-level account is called Chase Business Total Savings. It has a $10 monthly service fee that you can avoid by keeping a ledger balance of $1,000 or more or linking it to a Chase Business Complete Banking account.
Each statement cycle, you get up to $5,000 in cash deposits free of charge and 15 deposited items. The APY rate is a low 0.01% regardless of the balance, while a $5 fee applies for transactions over the 6-per-month limit.
You get access to Chase’s mobile and internet banking. The mobile banking app comes with many features, including online bill pay, account alerts, paperless statements going back some seven years, and Chase QuickDeposit.
What Is A Business Savings Account?
A business savings account is a savings account designed with businesses in mind.
They work just like a regular savings account but, in many cases, include business-friendly features, which we will cover in more depth in a short while.
Business savings accounts are generally made available to different businesses, including sole proprietorships, partnerships, LLCs (Limited Liability Companies), and corporations (both for-profit and non-profit).
Depending on the type of business you want to open a savings account for, you will need to present a different set of documents. These can include agreements, articles of incorporation, IRS letters, and others.
Your bank or credit union will list these on their website, so make sure you take the time to check to avoid wasting your time going back and forth collecting all of the required documents.
Why Get a Business Savings Account?
Just like people, businesses from a small business to a large corporation need to set money aside.
From an emergency fund for a rainy day (or as the pandemic has shown us a rainy year) to funding projects and expansions, savings can go a long way to helping businesses survive and thrive.
Having liquid capital can also prove to be of great help should you require a business loan since this is often seen as a sign of a healthy business. Most business savings accounts also offer interest in the form of APY, which can help you grow your savings that much more.
Business savings accounts are not the end all be all. Other financial products and services such as a business checking account or a business money market account can provide you with all of the financial tools you need to keep your business running and growing as smoothly as possible.
What To Consider When Getting a Business Savings Account
Savings accounts for businesses come in all shapes and sizes. One account may offer more of one thing and less of another, while the opposite may be true for the next account.
Like every other business in every other market, banks adjust their value proposition according to what they feel will give them an edge in the market.
Since your business is also unique (in that its circumstances, goals, and financial health can be different from other companies), understanding what makes you special can help you choose the best account for you.
Before choosing a savings account for your business, take the time to understand your financial situation and what you hope to achieve by opening this savings account. Running this exercise can help you gain clarity and understand what’s important to you.
In this section, we will be looking at some of the features that a business savings bank account generally has to give you a better idea of what you might want to look for, or as it were, avoid.
Fees are one of the ways banks make money but avoiding them is not entirely impossible.
Most accounts come with monthly maintenance fees that generally can be avoided by keeping meeting minimum balance requirements or making frequent direct deposits.
Since savings are meant to sit tight in your bank account for an extended time period, banks offer an interest rate on the money in the account.
Usually (and usually, we mean 99% of the cases), banks offer this through an APY (Annual Percentage Yield) rate.
This APY rate offers compounded interest on your money so that any interest earned also earns interest with higher interest rates offering more bang for your buck.
Whether you prefer to bank at a physical branch or online, understanding how easy and accessible are the services that you need can help you make sure that you’re left with enough time to run your business.
Regardless of whether you employ a team of accountants or do everything yourself, time is money, so you’ll want to make sure that the bank is there to serve you.
Most savings accounts come with a limit on the number of transactions, usually limited to 6 a month. This limit comes from a federal regulation called Regulation D, and it limits the number of withdrawals you can make, whether it’s by bank transfer or ATM card.
Although the regulation has since been deleted, several banks chose to keep the limit with extra fees applicable for any transactions above the limit.
Business Savings Accounts FAQs
Which bank is best for small business accounts?
Small business owners looking to open a new account have many different options. Since all businesses are different, there is no one best bank for all.
Instead, you should look for a bank that can service your specific goals. If you’re looking for particular products or services such as a high-yield savings account, a credit card, or a debit card, make sure that the bank you choose offers these as otherwise, you will be searching for a new bank in no time at all.
Throughout the above article, we covered different banks for businesses, highlighting which type of business would benefit from it the most.
What is the best business savings account?
There is no one best business savings account since your business’ requirements might not fit what one particular bank offers. You’ll need to make sure that the bank you choose is a member FDIC bank so that your money is insured. You should also try to make sure that the bank does not charge high fees for the services you use the most, as this will allow you to keep your overheads to a minimum.
Can businesses have savings accounts?
Yes, not only can businesses have savings accounts, but they should. A savings account can be a great tool to alleviate certain cash flow problems by ensuring there are funds at hand should these be required. Savings accounts also tend to earn interest so that your money is not sitting idly by but is instead of generating more cash for you. A savings account can also act as collateral should you require a business loan without affecting your credit score.
Can an LLC open a savings account?
Yes, an LLC can open a savings account just like any other business. The documents required to open a savings account might differ from those needed to open an account for another business type. Still, generally speaking, everything will remain the same – from account balance requirements to fees and FDIC insurance.