Four Steps to Open a Business Bank Account

In today’s market, companies need someone to serve as back-up should they encounter economic hardships. Whether the business is large or small, a veteran company or a business newbie, the best way to get ensure financial backing is to acquire a business bank account. These accounts serve to keep personal and business finances separate and are an important part in establishing a financial relationship that will help your company grow and succeed. There are several factors to consider before opening a business account and each step should be well-researched and investigated before final decisions are reached; with the right financial institution as a business “partner,” a fitting foundation is established that will allow the company to prosper.

Evaluate Financial Institutions

Most business owners typically have their business accounts with the same bank as their personal accounts. Although this is convenient, unless the institution offers some type of interest rate reduction, or other incentives, this often is not the most beneficial option available. Compare the financial institutions in your area to determine which best fits your company; some things to consider are:

1. Multiple Accounts – If opening more than one account, or if you choose to use the same bank for both personal and business accounts, look into special rates and discounts; some institutions offer relationship pricing that can add up to big savings.

2. Fee Structures – Not all banks charge the same rates for the same services.

3. Additional Products/Services – Business debit cards, on-line statements, courier services, and automatic bill pay options are not necessarily included; be sure to ask if these options are built-in or are available at further costs.

Compare Business Bank Accounts

Financial institutions typically offer numerous forms of business accounts that accommodate various business needs. Starter companies benefit from small business accounts that do not accrue interest but require a low minimum balance whereas larger companies require a more complex account to meet its specialized needs. This step can get quite confusing so it’s often profitable to contact a customer service representative at each institution and schedule appointments to discuss how each bank can best benefit your company.

Don’t Forget the Paperwork

Yes, the bane of every business’s existence – paperwork; a necessary evil to establish any account. This step can be disheartening since each financial institution requires different types and amounts of credible paperwork to open a business bank account. Contact your chosen financial institution to determine precisely what information is needed and in what form it is accepted. Generally speaking, most financial institutions require:

1. Previous year’s business tax forms (if applicable)
2. Previous bank statements (if applicable)
3. Business EIN number
4. Owner’s social security number
5. Maintain the Account

Many business owners forgo this last step, but it is crucial to maintain a solid relationship with your financial institution. Keep the account in good standing by checking activity and balances daily and by paying any accrued fees in a timely manner. Contact a bank representative immediately with any questions or if you notice suspicious activity. A healthy relationship with your financial institution will open the door to additional resources in the future (i.e. business credit cards, payment processing options, loan opportunities).

At the end of the day, a strong relationship between your company and its financial institution is vital to keep your company afloat. The business bank account you choose should provide a stable foundation that allows for growth and expansion opportunities.

How to Perform a Business Bank Account Comparison

With all the financial institutions in the world clamoring for more and more business, hype is at an all-time high in the financial district. Terms and conditions that are applicable to certain trial dates can lead to confusion once these “free trials” end and can leave the business owner feeling used and defeated with an account that no longer suits their needs. Fortunately, there are a few guidelines to follow to ensure that your company gets the account it needs by performing a bank account comparison.

Company Size and Business Account Options

The business checking options will vary depending upon the size of your own. Incentives that hook small businesses aren’t necessarily applicable to big corporations and vice versa. Each size of business requires a different set of account options in order to optimize financial support and services.

Small businesses tend to make fewer transactions than larger corporations and therefore greatly benefit from a preset limit of free transactions. Typically with this type of package, once the preset limit is reached, a small fee is charged to each applicable transaction thereafter. Some business accounts even offer an interest earning option that is beneficial to businesses with low to moderate transaction volume. Conversely, larger businesses require a moderate to high number of transactions and usually pay a small monthly fee to allow for this difference.

Minimum Balances

Small business accounts tend to forgo monthly minimum balances but usually sacrifice interest earnings for this advantage. Moderately sized businesses usually have accounts that require a minimum daily balance or a monthly averaged balance that exceeds a predetermined limit. Minimum balances for larger businesses tend to be slightly more complicated; these can be determined by an average daily balance, average combined deposit balance, or average combined deposit balances and outstanding credit balances. The specific amounts are different for each institution, be sure to contact individual banks for detailed information.

Maintenance Fees

Many business owners neglect to factor in maintenance fees when performing a bank account comparison. This usually isn’t a big deal for a small business account since most do not have a monthly maintenance fee. However, moderately sized and larger businesses must take these fees into consideration when comparing business accounts. Nowadays, most financial institutions only charge maintenance fees if the balance falls below a predetermined minimum limit. Once again, the amounts of these fees vary by institution so be sure get an accurate number when comparison shopping for an accounts.

Business Type

Even though you may own a certain sized business, not all accounts suggested for that sized company will suit your needs. Some business accounts are geared toward non-profit organizations, community groups, and public agencies while others lean more toward small or growing businesses. Research and investigate each business account you consider to determine the right business checking account for your company.

Business bank account comparisons can be confusing and daunting chores; however, if you take into account your business size and style with business account options you desire, it should be a relatively easy task to choose a business account that will carry your company well into financial security.

Why 2013 Saw a Rise in Small Business Sales in California

If you are contemplating selling your business in the state of California, it may interest you to know that business sales for 2013 were up from 2012. Selling a business is a big and sometimes difficult decision. Even so, many business owners find this recent increase in sales to be quite comforting, especially if they want some security to know that there is a stronger market out there for selling. In fact, many potential buyers hope that these positive numbers will induce more businesses on the fence about listing their business will knowing that the market is in a healthier place for business sales in the state.

Small Business Sales Increase in California

The rate of small business sale has increased throughout the Golden State. In 2012, reports show that 14,368 small business operations were sold in total. In 2013, that number grew to 14,764 completed sale transactions. Of course, experts suggest that the increase may not be felt as substantially in some counties as others, which is typically to be expected, but that overall these good numbers reflect a new trend in upward sales that is likely to continue in 2014. Many factors appear to be linked to the increase, but one of the main reasons why these sales are going through is because buyers have better access to funding sources.

Sales in Large Counties Mixed

Some of California’s largest counties may not be feeling the increase yet, but that likelihood could change as more California businesses may be hitting the market for sale in 2014. Certainly, large counties like Los Angeles County are hoping to see more sales as a thriving business-for-sale market is a strong indication of an overall strong economy. Increased business sales are linked to better job growth too. The increase is doubly important in light of the fact that the state was losing businesses at a rate of about five percent.

What is Triggering the Rise?

While better access to money is at the heart of the increase, there may be other factors involved. For instance, experts believe that an improving house market as well as an improved stock market may also be supporting the increase in California business sales. Many small business owners also appeared to be waiting to list their business for sale in California until the market began to shape up.

Do You Have a California Business for Sale or Want to Buy One?

Increases or decreases aside, it can help the process of buying and selling to contract with a business broker. Their services can help viable buyers and sellers to sync up more quickly and effectively. Business brokers stay current with the sale market and understand the ins and outs of the buying and selling process. Their expertise can certainly impact the nature of the sale and the time frame in which a sale can be made. Contact a business broker if you plan to sell your California business or hope to purchase one.

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