One of the most challenging considerations when starting a small business is choosing a bank for your financial needs. For entrepreneurs, it can feel counterintuitive to use a different bank than what they use for personal finances. The overwhelming options often results in choosing the path of least resistance, which is rarely the right choice.
There are a few important things to understand and consider when choosing a bank. Here are some tips for finding the right financial provider for your small business.
Know What You Need
Before you can choose a bank, you need to know what services your business will require. Are you looking for a small business loan? Do you just need a basic checking account? The best banks for small business will have a variety of options available, catering to entrepreneurs and small business owners.
Take some time to consider what you need from your bank. Do you need to be able to make cash deposits on a regular basis? Do you need flexible hours and online banking options? Do you need a big loan with a low-interest rate? This will help you know what to look for when comparing options.
Understand the Types of Banks and Accounts
Not all banks are built the same. In fact, not all banks are considered banks in the traditional sense. Plenty of small business owners prefer to work with a credit union rather than a traditional bank, taking advantage of lower fees and interest rates resulting from their non-profit status. Others like the flexibility and resources offered by large banks. Modern entrepreneurs are investigating the options offered by online banks, like Tangerine.
There are key differences between business and personal accounts as well. Business accounts tend to offer more transactions and accessibility in comparison to personal accounts. For example, the business owner might be required to show the business registration information and have a company card. This card could be used by an assistant or employee as needed, rather than only the person with the account.
Business accounts tend to be more expensive to maintain, but they also offer a degree of protection and separation between personal and business finances. While sole proprietors can use a personal account for business transactions without too much trouble, plenty of business owners have been audited and unable to prove the legitimacy of their expenses come tax time. This results in hefty fines.
Compare and Contrast
Once you know what you need for your business finances, look at the options side-by-side. What are the pros and cons of each establishment? Is there a clear winner or a few contenders that seem on par? Consider the minutiae; is the branch conveniently located? Have you met with the people there and enjoyed their assistance?
By comparing the options side-by-side, and scheduling a few meetings to talk about your options, you should be able to determine which bank is right for your needs. Additionally, talk to local business owners and read reviews online to get customer insights to guide the decision-making process.
Consider in the Future
Your business needs today might not be what you need in five or ten years. Think about your financial goals and how you expect your business to grow. Does the bank you’re with now have the capacity to handle those changes or will you have to make a switch? Some business owners prefer to have one bank handle everything, while others are content to do what makes sense now and change in the future.
Remember, if you end up with a bank that you don’t like, you can always make a change to one of the competitors. Most banks are happy to accept new business and will work to make your transition as easy as possible. Look for a bank that wants to see your business succeed and will help you make it possible.
Photo Credit: stock photo