For many therapists who run their own practices, setting up a business checking account is the first serious step they take to getting their business off the ground.
Having a separate business bank account allows you to separate your personal and business finances, set up a bookkeeping system, and manage your finances.
But with so many banks and other financial institutions offering business checking accounts, how do you choose where you open one? Here are the factors you need to take into, well, account.
A quick disclaimer
This article helps you choose where to open an account. It doesn’t tell you, outright, where you ought to open one.
If we were going to recommend an option, it would be a business checking account from Bluevine. We’ve partnered with Bluevine to offer checking accounts with features we believe suit most therapy practices—including limitless transactions and no minimum opening deposit. Read the official announcement here.
However, if you don’t decide to go with Bluevine, read on to learn what matters most when choosing an account provider for your business.
Account minimums for business checking
Most checking accounts charge monthly fees. You can avoid those fees if, each month, you maintain the account minimum.
The account minimum is usually calculated on a daily basis. For instance, you may need to have at least $300 in your account every day of the month in order to have your fees waived for that month. You can expect monthly fees to range from $5 to $15.
There’s another minimum you may need to meet: An opening balance. Some banks allow you to open an account without depositing any money at all. Others require an opening deposit in the range of $25 to $50.
Out of context, all this may seem like chump change. But account minimums are relevant if your business is just getting started, and you don’t have much in terms of retained earnings.
And it could be the differentiating factor between two providers. For instance, everything else being equal, would you rather an account that charges you $15 every month if you dip below the minimum, or an account that charges you $5, but has no minimum? Your circumstances (and how you prefer to bank) will decide.
Online access to your therapy practice bank account
We often take for granted easy online access to memberships, subscriptions, and accounts. But, in some cases, banking hasn’t kept up.
For instance, there are still many smaller local credit unions or state banks whose online interfaces are antiquated compared to national financial institutions, and who may not allow you to carry out as many tasks online.
If you lose your debit card, are you okay with calling your bank and enduring call waiting before you can request a new one—or would you rather just request one online? Are you willing to pay a fee for electronic transfers, or will it make you grit your teeth every time you have to send money?
Before you open an account with a smaller, local financial institution, see if one the bank’s representatives is able to give you a quick demo of the online experience. While you can assume major banks will offer state-of-the-art user interfaces, with smaller providers, that isn’t always the case.
ATM access to your checking account
A few reasons you may need to access your business checking account via ATM:
- Withdrawing money to top up an office petty cash account
- Paying yourself (withdrawing cash may be faster or more convenient than a bank transfer)
- Depositing checks (for instance, if you work on a contractual basis for an organization that pays by check)
If you don’t think any of these are relevant to how you’re going to run your business, you may not need to worry about ATM availability. But if any of the above do apply to you—or if you just want the security of being able to quickly withdraw cash anytime you need it—you need to learn about your prospective business checking account’s ATM setup.
Not all financial institutions are as easy to access from ATMs, and those that allow you to access them via competitors’ ATMs may charge hefty fees.
Insurance at your financial institution
Looking into your financial institution’s insurance coverage is more a best practice than an exercise in savvy shopping. You’re not comparing whether different banks are better insured—you’re just making sure they have insurance, period.
You have a lot of options when it comes to banking online with non-traditional financial institutions. While the odds are slim, there’s always the chance you could sign up with a fly-by-night operation that suddenly goes out of business after its CEO flees to the Cayman Islands.
Double check that any financial institution with which you open a checking account is insured either by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). In the event your institution shuts down, either type of insurance will cover the balance of your account up to a $250,000 limit.
Business checking fees for your therapy practice
Anywhere you consider opening an account, be sure to inquire about:
- Monthly maintenance fees, which are often waived as long as you maintain a minimum daily balance during the month in question
- Overdraft fees, charged when you don’t have enough money to cover a transfer, ATM withdrawal, or debit card purchase, but the bank allows your balance to cross over into a negative value
- Non-sufficient fund (NSF) fees, when you write a check that bounces or attempt to make an ACH transfer your bank doesn’t cover
- ATM fees, typically charged when you make a withdrawal from an ATM outside your financial institution’s network
- Incoming or outgoing wire transfer fees, which are charged on a per-transfer basis
- Card replacement fees, in case you lose your debit card and request to have it replaced
In some cases, banks or other checking account providers may advertise $0 rates for some of the fees advertised above, while the fine print specifies that this applies only in certain situations (e.g. if you maintain a daily account minimum).
Checking account interest and rewards
Financial institutions sometimes offer high interest rates or rewards as a way to entice new customers.
Checking account interest can be a great way to earn a modest amount of extra income without any exposure to risk. For instance, if you earn $2,500 or more per month in payments from clients and customers, Bluevine rewards you with 1.5% interest on your account balance.
Rewards often apply to specific types of purchases. You may be able to earn a few percentage points back every time you use your business checking account to pay a utility bill, or make purchases at qualifying stores.
Another kind of award to keep an eye out for: Account opening bonuses. Some banks will award you money if you open a checking account with them and set up direct deposit within a particular window of time. Don’t let yourself be distracted by the prospect of quick and easy cash, however; these rewards are only worthwhile if the account’s other features—such as monthly fees or account minimums—suit your needs as well.
Banking beyond your checking account
Besides opening a checking account, what are the other money moves you need to make to get your therapy practice up and running?
If you’re thinking about applying for a small business loan or line of credit, it may make more sense to do so at a financial institution where you already bank. Since you’ve already established a relationship with the institution, they could be more willing to lend you money or extend you credit than they would if you had just come in off the street.
Besides that, if you’re repaying loans, withdrawing money from a line of credit, or even making credit card payments, it’s simpler when you’re able to manage all your accounts from one point of access online.
Take some time, as you consider different options, to see what other types of financial services they offer. For instance, you may find you prefer to open a checking account with a bank that also offers business lines of credit with lower interest rates than their competitors.
Or maybe the bank you’re considering also offers a business credit card with a rewards program that suits your needs.
As with most aspects of running your therapy practice, planning ahead works in your benefit. Considering what your banking needs will be in the future will help you make a decision now.
Budgeting is a key part of financial planning, and one to which many first time business owners take an overly casual approach. Get schooled in the fundamentals with our article on building a budget for your therapy practice.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post.
Bryce Warnes is a West Coast writer specializing in small business finances.