Did you know that 50% of small businesses fail within their first five years?
To have a better chance of avoiding this fate, you’re going to want to make sure your business stays afloat financially.
Knowing how to choose the right banking accounts for businesses is integral to this. Fortunately, with a little research, you can easily pick the right accounts for your business.
Keep reading below for everything you need to know about the different types of bank accounts for businesses.
1. Business Checking Accounts
Businesses can utilize a number of various sorts of bank accounts, but the most popular one is a business checking account. Checking accounts make it simple for businesses to write checks, deposit money, and withdraw it. Most checking accounts also come with a debit card, which can be used for making purchases or withdrawing cash.
It’s vital to research the best options for business checking before opening an account, because certain checking accounts may have monthly fees or minimum balance requirements.
2. Business Savings Accounts
There are a few different types of bank accounts that businesses can use for savings. The most common type is a business savings account. This account typically has a higher interest rate than a personal savings account, and it also has a higher minimum balance requirement.
Businesses can also use Certificates of Deposit (CDs) as savings tools. CDs typically have a fixed interest rate and a set maturity date. Businesses can also use a savings account at a credit union. Credit unions typically have higher interest rates than banks, but they also have stricter eligibility requirements.
3. Money Market Accounts
Money market accounts are a type of account that offer higher interest rates than traditional savings accounts, but typically require a higher minimum balance. This account is best for businesses that have a large amount of money to deposit and want to earn interest on their balance. However, money market accounts also have certain restrictions, such as limits on the number of transactions that can be made each month.
4. Merchant Accounts
The merchant account is used by businesses to process credit and debit card payments. In order to qualify for a merchant account, businesses must have a good credit history and a strong financial foundation.
The benefits of having a merchant account include the ability to accept credit and debit cards, the ability to process online payments, and the ability to offer of customer financing options.
One downside of merchant accounts is that they can be expensive to set up and maintain. In addition, businesses must be careful to avoid fraudulent activity, which can lead to higher fees and charges.
Know These Types of Bank Accounts
There are many different types of bank accounts for businesses, and it is important to choose the right one for your business. The most common types of business bank accounts are business checking accounts, business savings accounts, money market accounts, and merchant accounts. Each type of account has its own benefits and drawbacks, so it is important to choose the right account for your business needs.
For more articles on business finances, check out the rest of our website!