One thing every business must have is a business bank account. This account will show lenders and customers that you are a legal and legitimate organization. In order to acquire any type of financing you need to have a business bank account. This article will guide you through the process of setting up a business bank account and how to choose the right business bank for your company.
First, you need to shop around for a business bank that has low transaction fees. If you are accepting credit card payments from your customers, you will need to pay a small percentage from each credit card sale to the business bank or you must pay a flat rate fee. Visa and MasterCard have lower transaction fees from Discover and AMEX so search for a credit card that fits your customer's shopping style and the financial needs of your business. Unlike student checking accounts, you aren't going to get a free account for a business. Practically every business bank account will charge monthly fees to hold the account. If you open a savings account, you will earn a small APR on the account but it won't cover the cost of fees you pay. The upside to the fees is that you can write them off with your taxes each year.
Second, once you select a lender you need to open the account quickly. To be eligible for funding and for a business license in some states you must have a bank account. To open a business bank account you simply set up an appointment with the lender and show up with all the financial records for the business. The business bank account will actually strengthen your business credit rating and help you acquire future loans. The information you provide will include your personal identification (license), business license or filed paperwork for it, business name, and your EIN. Then you are required to make a deposit when you open the account. The deposit amount can be a low amount to start with like $100. However you want to add to this quickly so you don't bounce checks or anything if you intend to start using the account.
Third, if your business credit and personal credit are solid, ask the lender if they will provide you with a small business credit card or a line of credit. This is one of the fastest ways to build your business credit rating. It can also help you purchase raw goods and materials you need to get your business up and running. Even if you do not intend to use the card immediately, having a line of credit on hand for emergency needs is a must for every business. You never know when sales will slow down and you will need to draw on a line of credit to get you by for a few weeks or a few months.
Fourth, now that you have your business bank account open and operational you need to develop strong bookkeeping skills. Lenders must be able to trust in your ability to repay your loans in a timely manner. The only way to do this is to have good financial records. Consider purchasing a program like QuickBooks as it will help you track your sales, invoices, etc. If you cannot afford QuickBooks, opt for Quicken. It is basically an electronic check register and it can help you track your books so you don't get into the red and have problems with your bank account.
Strong financial records are essential for the overall health and development of your company. Make sure you are keeping track of your books and that you are developing good financial habits so your business will remain in tact for many years to come.
Corporate Credit Concepts specializes in business bank. For more information about business bank and how it might benefit your business, please CLICK HERE for a free phone consultation.