Opening a business checking account helps small business owners build a relationship with a bank, which can make it easier to qualify for business loans and credit cards in the future. Having a dedicated checking account for your business also simplifies your taxes, makes accounting easier and separates your personal finances from your company.
The 5 best free business checking accounts of 2020
- Wells Fargo Simple Business Checking: Best for in-person checking
- U.S. Bank Silver Business Checking Package: Best for small businesses
- Axos Bank Basic Business Checking: Best for online-only checking
- Citizens Bank Clearly Better Business Checking: Best for overdraft protection
|Business Checking Account||Monthly Service Fee||Minimum Deposit||Transactions Per Month|
|Wells Fargo Simple Business Checking||$10 (waived with $500 balance)||$25||First 50 free; then $0.50 each|
|U.S. Bank Silver Business Checking Package||$0||$0||First 150 free; then $0.50 each|
|Axos Bank Basic Business Checking||$0||$1,000||First 200 items free; then $0.30 each|
|Citizens Bank Clearly Better Business Checking||$0||$100||First 200 items free; then $0.50 each|
The 5 best business checking accounts of 2020
Wells Fargo Simple Business Checking: Best for in-person checking
Wells Fargo is one of the biggest banks in the country. It has 5,400 locations nationwide, which makes it a great choice for business owners who want to bank at a physical branch. You’ll also be able to pay bills and check your balance online or on your phone through the Wells Fargo app.
This bank has a few different options for small business owners, including the Simple Business Checking account. It has a low minimum deposit of just $25, so you’ll be able to open it even if you don’t have much cash flow. You’ll also be able to make 50 free transactions each month and deposit up to $3,000 in cash at no extra charge.
The only drawback is that there’s a $10 monthly maintenance fee. You can avoid the extra charge, though, by maintaining a balance of at least $500.
U.S. Bank Silver Business Checking Package: Best for small businesses
U.S. Bank started as a regional bank in Ohio and has grown to become the fifth-largest bank in the nation. It has thousands of locations across the eastern half of the country, so there may be a branch near you.
Even if you don’t live in the eastern United States, you should still consider U.S. Bank’s Silver Business Checking Package. It has no minimum deposit, which makes it a great choice for new businesses. The account also offers 150 free transactions each month before the $0.50 fee kicks in, which is a fairly generous number of free transactions. You’ll also get 25 free cash deposits each month, and a 50% discount on your first check order up to $50.
Axos Bank Basic Business Checking: Best for online-only checking
If you don’t mind doing your banking entirely online, Axos Bank may be a good option for you. It’s one of the oldest online-only banks and has over $11.8 billion in assets. Its Basic Business Checking account has no monthly maintenance fees and comes with a set of 50 free checks. You’ll also get unlimited ATM fee reimbursement, access to a network of surcharge-free ATMs and 200 free items a month.
The only drawback of this account is the high minimum deposit. You’ll need to have $1,000 on hand before you can open an account. If you’re a new business owner, that amount of money may be tough to come up with.
Citizens Bank Clearly Better Business Checking: Best for overdraft protection
Citizens Bank, headquartered in Rhode Island, has over 1,000 branches throughout the eastern United States. It offers a few bank accounts for businesses, including the Clearly Better Business Checking account, which has no monthly maintenance fees and a low minimum deposit of just $100. After you open your account, you’ll get 200 free transactions each month and access to 3,100 ATMs across the country.
Even if you overdraft your account, Citizens Bank has measures in place to help. If you qualify, you can get an overdraft line of credit. It links directly to your checking account and covers your checks and bill payments when you don’t have enough funds. You can also link your savings account to your checking account to prevent it from becoming overdrawn.
What is a business checking account?
Business checking accounts are just like personal checking accounts, but you can only qualify for one if you run a company. This product allows business owners to separate personal finances from company finances, which has a number of advantages. It makes accounting and taxes easier, and also prevents personal assets from being seized if the company runs into legal trouble.
Business checking accounts typically have higher fees and minimum balance requirements than personal checking accounts, though you can find ones without fees. They also offer lower interest rates on average. Some accounts do come with perks, though, like employee debit cards and sign-up bonuses.
How should I choose the right business checking account?
When shopping for a business checking account, you should look for accounts with low maintenance and transaction fees. Even though maintenance fees are a few bucks a month and transaction fees are only a few cents, these add up. If you’re a new business owner and you don’t have a lot of cash on hand, you should also try to find an account with a low minimum deposit.
If you have a growing business and you make a lot of transactions every month, you should search for an account that has a high transaction limit so you don’t get slapped with fees. Business owners who mainly deal in cash may also want to look for a bank that has physical branches nearby because depositing cash into an online bank account can be a hassle.
Some other features that are nice to have are employee debit cards, sign-up bonuses and high interest rates, but they’re not essential. It’s more important to find an account with low fees that meets your monthly transaction needs.
The bottom line
Every business should have its own bank account to make taxes and accounting easier. If you haven’t opened one for your company yet, you should look into free business checking accounts. It could save your business hundreds of dollars every year because they don’t come with the high monthly fees that many business bank accounts do.