Personal banking is relatively easy to handle. There are fewer factors to consider and less risk to take on, making the experience straightforward and easy to understand. Business banking, on the other hand, is quite different. Since your business’ finances heavily rely on the bank you choose, this type of banking is often more complicated to navigate, especially if you are a first-time business owner.
Nevertheless, business banking is much easier to understand if you know the dos and don’ts that go with it.
The dos of business banking
1. Do look up multiple banks
Research at least three to four banks or more before choosing one to open your business bank account with. Look up each bank’s business loan options, account features, perks, and quality of customer service. Although most banks have similar features and qualities to compete with each other, you’ll find a handful of differences that set them apart.
2. Do consider a bank’s online banking features
Online banking is an extremely convenient tool for both individuals and business owners. With online banking, you no longer have to go to the bank to conduct important financial transactions. You can do so remotely on your computer or your smartphone with the bank’s official website or app.
However, different banks have different levels of quality when it comes to online banking. When searching for the perfect bank for your business, consider the features that their online banking offers, the level of convenience they can provide, and the amount of downtime they usually experience (since this can affect your operations directly).
3. Do stay with one bank for the long-term
Building a long-term relationship with one bank can open up more opportunities for you in the future, such as a better chance at securing a commercial loan or perks offered in exchange for your good record. As long as your current bank is still serving you well, avoid jumping from bank to bank to build a good relationship with the one that you have now.
4. Do borrow the right amount at the right time
When taking out a business loan, borrow what you need based on carefully projected costs and revenue. Do not estimate or give a ballpark figure. This can leave you with either too much money or too little, which can hurt your business both ways.
The don’ts of business banking
1. Don’t combine personal and business accounts
Storing your personal and business finances all in one account can become confusing pretty quickly. Aside from that, you won’t get tax deductions and other benefits that can help your business save money.
You can open another account in the same bank for your business, but keep it separate from your personal account. However, if there are other banks that can offer better banking options for business, go with those options instead.
2. Don’t skip the fine print
This is especially important when applying for business loans. Read through the fine print thoroughly to ensure that you are making the right decision for your business. If needed, you can get professional advice from a business lawyer or a third-party financial advisor.
3. Don’t go for the big bank automatically
Big banks are accessible, yes, but they may not automatically be the right banking solution for your small business. While accessible, big banks often have larger fees and lack a personal touch. In contrast, smaller banks provide a more personal connection to their customers, making it easier to navigate through financial transactions with the help of people-in-charge.
To help you decide, visit a mix of both big and small banks during your search. You can get a feel of the level of value they can offer based on one visit only.
By knowing these dos and don’ts, you have higher chances of succeeding with business banking. Although it may take some trial and error, doing your research beforehand is better than making a wild guess at which bank is right for your business.