09/ 27/ 2006
If you've started a business during your high school or college years, you may not have taken the trouble to differentiate your expenses and profits from your personal funds. But opening a separate bank account is a key to formalizing your business and is essential if you are going into business as anything but a sole proprietor.
So how will you go about opening your business account? While simply stopping into the bank that houses your personal account and telling them you want to open a business account as well might be a time-saving option, a savvy entrepreneur will do some research to get his or her best deal. Just because your bank offers good personal account services, it might not best fit the needs of your business.
Here are five questions to ask before you make your decision:
Does the bank offer special accounts for small businesses?
If the words "small business" are nowhere to be found in the bank's brochure, then it's probably not the bank for you. Small-business owners are valuable customers for whom many banks offer competitive deals. Knowing that a bank hopes to entice you with special services is also a good indication that the institution offers more individualized service.
How personalized is the service?
You'll want to have a specific banker or two who is familiar with your business and happy to serve you whenever you come in. Conduct face-to-face, fact-gathering interviews with the banks you're considering and see how enthusiastic and personable the representatives appear. If you get the sense they're viewing your relative youth as a reason to be dismissive or condescending, then move on. There will be plenty of banks to work with who will view you as the serious entrepreneur you know you are.
Are the fees reasonable?
While most business accounts have some sort of fees attached to them, make sure you do enough comparison shopping to get the best deals. Also, estimate your monthly banking needs to get the best deal for your business. For example, will you be writing enough checks out of your business account that a flat monthly fee would save you money over a per-check fee? Crunch the numbers before signing up.
Would the bank give you a loan?
If you ever decide to expand your business enough that you'll need to take out a loan to do so, it would be in your best interest to have a bank with which you've established a good working relationship. Find out their minimum loan amounts, repayment interest rates and so on. While this might not be applicable now, it's always smart to prepare for the long haul.
Does the bank offer full remote services?
As a student and business owner, your schedule is packed. Fitting in a trip to the bank during regular hours may not be feasible, so it's important that your bank offers online access and an ATM card for your business account. Most banks do offer these services, but double-check that you'll be able to conduct all necessary transactions 24 hours a day.
Finally, it will also be a good idea to ask your fellow small-business owners about their banking experiences. Even if a bank's credentials look great on paper, you'll want to know that its day-to-day service is equally solid. Once you decide where you want to open your account, find out what information and documents you'll need to bring with you, such as your business tax identification number. Then congratulate yourself––you've just taken a big step forward in developing your enterprise.
