Choosing a financial institution for your small business can be a daunting task. With so many banks, credit unions, online banks and other options out there, each with their own systems, fees and locations it’s difficult to know exactly what’s going to give you (and your company) the best results. So, let’s break it down a bit, shall we?
Before you start shopping around for a financial institution, consider why you need one in the first place. Are you looking for specialized services, such as investment help or a small business loan? You can search online for local banks that specialize in equipment loans or small business working capital.
Consider also how much cash flow will be moving in and out of your business account. Is your “business” even a business yet? You will be required to have a business name and usually be registered with the state upon opening up a business banking account. San Francisco-based financial advisor Kathryn Amenta suggests using this rule of thumb: “Once someone is spending 20 hours a week on a project and counting on the revenue to make up as much as 50 percent of their personal income, it’s definitely a business for financial and tax purposes,” she says.
Some banks provide incentives to keep a certain amount deposited – and others offer services to make the most of your profits. If you don’t already have a financial advisor who can help with investments, it might be wise to consider a bank that can offer those services. Otherwise, you would be wise to enlist an independent financial advisor to pinpoint your needs before choosing a bank.
If you’re just starting out and think you only need a checking account to manage incoming payments from your clients and reliably handle outgoing checks, think again. What else might your small business need in the next 10 years? Might you be expanding and need a loan in the future?
Finding a bank that could work with you on that is most important to focus on. Now that you are a business owner, “free checking” is no longer enough to make a decision based on. And incoming payments are no problem if you just stick to WePay Invoices anyway.
Research the bank’s lending services. When your business needs grow, you want a bank that can grow with you. In some cases, it may be easier for you to qualify for a loan if you have a prior relationship with the bank. Regardless, make sure that your bank offers everything you need, and know that loan services are there if and when you need them.
If your bank offers you merchant services, then it can simplify the process of collecting payments from customers for any type of card transactions, including point of sale, online and telephone transactions. Understand and compare the fees associated with these services.
Another service to look for is the ability to do account-to-account transfers. As a small business owner or manager, it is likely that you will have personal bank accounts and maybe other small business accounts either within the same bank or across financial institutions. Many banks offer the ability to electronically move money across your accounts both within their institution, as well as across financial institutions. This flexibility combined with WePay Invoices to handle incoming payments allows you to not only better manage your small business cash flow needs, but also to stay on top of your personal finances at the same time.
In the long run, the more of an open dialogue you have with each bank representative, the more research you do and the closer attention you have to details will only serve your companies best interest. And nothing is more important than security with your finances. What have you found in your bank searches?