Why do you need a business checking account?
There are many reasons why you should have a business checking account. A business checking account is an essential tool in your arsenal as an entrepreneur. That is why we have listed the top 10 reasons why you should have one:
- Faster deposits: Sometimes it can take several days before checks clear and funds are deposited into your bank account. With a business checking account, deposits are made immediately so that you don’t have to wait any longer than you have to before purchasing products or making payments.
- Track your finances: A business checking account will allow you to deposit checks from customers into your account and pay vendors and employees directly from your business account. It will allow you to track all of your purchases and income by category so that you can monitor your expenses, stick to a budget, and see where money is coming in and going out.
- Access to your funds: You can access your business checking account 24 hours a day and seven days a week via online banking, mobile banking applications, or telephone banking. This is great if you need to pay a bill at 3 AM!
- Lower fees: Business checking accounts typically have lower fees than personal accounts. Some accounts charge no monthly maintenance fees at all! This is great if your company is still small and doesn’t bring in much revenue yet.
- Convenience: Business checking accounts typically offer convenience checks, cashiers checks, and other forms of payment that make it easy for you to keep your business running smoothly.
What do you need to open a business checking account in Massachusetts?
The following are some of the documents you might need to open a business checking account in Massachusetts:
- TIN: your Federal Tax Identification Number is usually your employer identification number (EIN) issued by the IRS. If you don’t have one, you can obtain one from the IRS for free.
- Business identification: Documents such as your articles of incorporation, partnership agreement, or articles of organization for a limited liability company (LLC).
- Business license or certificate: You will need this if you are required to get one from your state. This document serves as proof that you are permitted to operate in your state.
- Business bank statements: If your business has existing business bank accounts, you’ll need to bring them with you when applying for a new business checking account.
- A valid Massachusetts state driver’s license.
- Proof of identification (must include a photo, address, and birthdate of each person listed on the account)
Common business checking account fees in Massachusetts
Here’s a sample list of common checking account fees in Massachusetts. Fees vary, so check with your bank to see if some of these apply to you:
- Account maintenance fee: This covers basic services like ATM access and debit cards. It typically ranges from $3 to $12 per month and may be waived if certain conditions are met — such as keeping an average daily balance above a certain amount or maintaining direct deposits.
- Non-sufficient funds (NSF) fee: A bank may charge an NSF fee if they pay an item that exceeds the balance in an account. Some banks will re-deposit the amount of the item, plus any NSF fee, back into the account.
- Overdraft protection: This is an optional service available to many businesses checking accounts. It allows you to link to another account — such as a savings account or credit card — and transfer funds automatically when there isn’t enough money in your business checking account to cover a check or debit card purchase. You might get charged for this service monthly, per check, or per transaction.
- Check ordering fees: Most banks charge a fee for every check ordered for your business checking account. The cost varies based on how many checks are ordered and how quickly you need the checks delivered. If you order online, there’s often an additional convenience fee.
- Statement fees: Banks may offer free online statements or charge a small fee for paper statements mailed to your address.
How to choose the best business checking account in Massachusetts
Trying to find the best business checking account can be frustrating because some banks offer incentives for new customers and others require large deposits for bonuses. Evaluate your options carefully to see which bank has the best business checking account for your needs. Here are several factors to consider when choosing a business checking account:
- Business type: What kind of business do you operate? Are you selling products, taking payments online or do you have employees? A bank that caters to businesses in your industry may have more flexible terms and conditions than other banks.
- Security: Your company’s checking account should be safeguarded against theft and fraud. Be sure to choose an institution that offers security features such as checks with microprinting and accounts with at least two signers for outbound wire transfers.
- Fees: You might find that some bank fees are unavoidable, but others might be avoidable by shopping around. Some banks charge monthly maintenance fees while others waive these fees if you maintain a minimum balance or keep a minimum number of direct deposit transactions per month. If your bank charges a fee to process debit card transactions, ask whether it offers cheaper flat-rate pricing instead of per-transaction pricing.
- Narrow down your choices: You need to know what you want before you start comparing offers from banks. Make a list of all of the features and services you would like in a bank account and prioritize them according to importance. If online banking is important, this should be towards the top of the list. If cashback or interest on your funds is important, this should be on the list too.