Common small business banking questions, answered

Get your business up and running and on the right track with expert answers to the most frequently asked business banking questions.

The to-do list for starting a business can be long but understanding the essentials of a business banking account doesn’t have to slow you down. Here are answers to common small business bank account questions:

What are the benefits of having a small business bank account?

Small business bank accounts can help ensure your professional finances are secure and poised for growth. Business and personal banking share similarities, such as offering checking and savings accounts. Additional business bank account resources include lines of credit for emergencies, credit cards for employees and point of sale integration.

One major benefit to having a business bank account is the financial protection of both you and your customers. This separation offers peace of mind to your customers who likely feel more comfortable paying a business, not an individual. Using your business bank’s payment processing tools also means your customers’ personal information is secure as well, as it will be routed where it needs to go through encrypted methods. 

Your personal finances are better off separated from your business finances for a couple of reasons. First, it’s easier to track expenses when they’re not jumbled up with your own personal spending. Separating funds makes balancing the books and paying taxes less time-consuming. Second, if your business is sued, your personal expenses won’t be included in any way. You own money exists separately from your business and is not subject to any liabilities against your business. Having a separate business account also helps with safety—if one of your bank accounts gets hacked, the other will still be safe.

What’s the difference between personal and small business checking accounts?

Your personal checking account is there to secure your personal funds, and the same is true for your business account and funds. The differences lie in what’s available to business owners. A business account may offer business-friendly features such as, overdraft protection, interest-bearing account options, free mobile check deposit, integration with Zelle for your business  and integration with enhanced cash management services. Opening a business checking account also requires additional information, such as your business license and a tax ID number, known as an Employer Identification Number (if you are the sole proprietor, you can use your Social Security number instead).

How much money should I keep in my small business checking account?

The amount of funds to keep in a business checking account will differ based on a variety of factors, like the type of business you have or the bank account you open. Some accounts that don’t require a minimum balance come with monthly maintenance fees, with the option to waive the fee if your funds stay above a specific amount or if you also have additional accounts. 

To avoid any fees and set yourself up for success, you’ll want to do some financial forecasting when choosing your business account type. According to SCORE (service corps of retired executives) , there are six key areas to explore when making a plan for your company’s finances: 

1. Estimate how much cash you’ve spent and how much you plan to spend.

2. Determine where you’ll secure cash if needed and how long that could take.

3. Keeping the previous two points in mind, determine how much cash you need to have available at any given point.

4. Factor in your business’ growth stage, which might impact spending patterns or financial forecasting.

5. Make conservative estimates for added protection.

6. Be proactive during growth cycles and negotiate cash to tap in leaner times.

You should also consider how many transactions or cash deposits you’ll be making, as this will impact your decision. Most business bank accounts come with set limitations, so be sure to give yourself plenty of wiggle room. Depending on how much money you’ll be keeping in your business bank account, you may want to explore accounts that can earn interest. Be sure to talk all this through with your business banker so they can help you make the smartest choice.

Does my small business need a savings account?

Owning a business means dealing with unexpected situations. Other than having access to a line of credit, growing your liquid assets is another method for dealing with these emergencies. Depending on the goals and needs of your business, you may choose to use a business savings account or money market account. Savings accounts offer better interest rates than checking accounts, but money market accounts are recommended for high-earning businesses as they have higher minimum-balance requirements. Consult with your business banker to decide if either of these accounts are right for you.

Can I take money out of my small business bank account for personal use?

A sole proprietor is able to transfer money from a business bank account to a personal bank account since they’re able to pay themselves in what’s called a distribution or owner’s draw. Carefully tracking such transfers is essential since there are tax implications, and it’s best to keep a clear delineation between business and personal finances. Keep records diligently, whether through a spreadsheet or payroll services. 

How does my small business bank account integrate with daily business operations?

With a trusted banking partner, integrating your small business bank account and day-to-day operations can result in optimal efficiency and financial peace of mind. Another benefit of having a dedicated small business bank account: you have access to products unique to a business that are best suited for your current operation and easily scalable in the future. From affordable credit card processing options to customizable POS systems, securing a banking partner that’s adept at supporting an organization from end to end is always in your best business interest.  

Have small business banking questions we didn’t cover? Head to our Business Resource Center for comprehensive information and the opportunity to talk with a small business banking specialist—via virtual appointment, phone or in person—in just one click.