Before listing the top five free small business checking accounts of 2019, we need to address one major caveat: the word “free.”
The biggest difference between personal and business banking is the proliferation of fees in the latter. Banks make money from transaction, cash deposit, overdraft, and wire transfer fees, among others. A banking account that waives a fee may cost you more in the future as your company grows.
Basically, as you process more cash and need a higher number of transactions, a “free” banking account might not be best for your individual business.
When researching checking accounts at a bank or credit union, the two main fees you need to worry about are transaction fees and cash deposit fees.
Transactions include actions like debit card purchases and writing checks. (They are different than the credit card transaction fees from merchant services that you incur when credit cards are processed at your business.) If you own a restaurant, deli, or another business that processes a good deal of cash, you will want to pay special attention to the cash deposit fee structure when choosing a bank.
Many traditional business banking accounts waive their monthly maintenance fee if your balance remains above a certain threshold or if you have another account, like a savings account at the same bank, so we don’t recommend using a monthly maintenance fee as your main criteria when choosing a checking account.
Also, an innovative online bank like Azlo offers no-fee checking but doesn’t let you easily deposit cash. For the average brick-and-mortar business owner, cash deposits are a major reason to have a business bank account.
But if you’re looking for a free small business checking account that will cost you nothing to set up right now, here are our favorites for small business owners.
(One last thing. This post is not sponsored in any way and we don’t receive any money if you sign up with one of the banks mentioned below. Our recommendations are completely objective.)
U.S. Bank Silver Business Checking Account
This banking account has no monthly maintenance fee or minimum opening deposit amount, and is therefore completely free to set up. It’s a good option if you’re looking to save money in the early days of your business, since U.S. Bank does charge a 50 cent fee per transaction after the first 150 transactions per month, and begins to charge a cash deposit fee after the first $2500 in cash deposits per month. It might not be the best option as your business grows, but it’s a perfectly fine account in the early days as you raise money (with a loan, for instance) and manage start-up costs.
First Citizens Bank Basic Business Checking
First Citizens is a solid banking option for a new entrepreneur. For starters, you only need a $100 opening deposit to create an account. There is no monthly service fee if you decline paper statements (and let’s be real, who likes paper statements?) and no ATM fee if you use First Citizens ATMs, which dot the landscape of Southern California, Washington, and the Southeastern United States. The bank charges a 40 cent fee per transaction after 175 transactions per month, and if you deposit more than $5000 in cash per month, you’ll be hit with a 16 cent fee for every $100 you deposit, which is on the high end. Like U.S. Bank’s Silver account, Basic Business Checking is best for a small business owner who is just starting their business.
Better known by its gothic-sounding former moniker, Bank of the Ozarks, Bank OZK is an excellent banking option for a small business owner. You only need a $100 opening deposit to open a business checking account, and after that you don’t need to maintain a minimum balance or pay a monthly fee. You’re allowed up to 250 free “combined items” per month, which includes cash deposits. So even if you deposit cash every day, you will still probably avoid cash deposit fees, which is a huge plus. The one downside (or upside, depending on the location of your business)? Banking locations are mainly confined to the southeastern United States.
SEE ALSO: Business Funding and Accounting Basics
Chase Total Business Checking
Okay, so technically Chase Bank doesn’t offer a completely free checking account. If you’re enrolled in paperless statements, it has a $12 maintenance fee. However, the bank is constantly running promotions, usually offering a $200 – $300 sign up bonus, which offsets the monthly fee. Chase makes this list due to its convenience. It’s a huge bank, so you’ll never have trouble finding a branch, and it offers a number of e-banking options that add to the convenience. In terms of free actions, you can make up to 100 transactions or deposit up to $5,000 in cash before you are charged a fee.
BBVA Business Connect Checking
You can easily open a checking account at BBVA with $100, and after that, there is no minimum balance requirement or monthly fee. This is an especially good brick and mortar banking option if you live in the southern United States, but you can use non-BBVA ATMs without being hit by fees. Except for a limit of 5 branch withdrawals and cashed checks per month, all other banking transactions are free without any limits. You can also deposit up to $5000 in cash per month without being hit by a fee, which is on the high end of the industry standard.
When choosing a business checking account, consider location, convenience, online tools like mobile banking, details like overdraft protection, and how much it costs to replace your business debit card. Before you sign on the dotted line, determine the number of transactions you anticipate making each month and how much cash you hope to deposit. This requires you to have a good handle on your cash flow and financial projections.
We hope you’ll consider bank accounts that charge a small maintenance fee if you maintain a minimum balance, since transaction fees and cash deposit fees are a much bigger financial threat to your bottom line than a modest service fee.
Capital One, for instance, offers unlimited free transactions, and they waive the monthly $15 maintenance fee if your balance remains over $2,000. Bank of America has a popular checking option that costs $18 per month. You only need $25 to open a business checking account at Wells Fargo. For your standard brick and mortar small business, a local credit union may be an even better banking decision.
Ultimately, a checking account is not just about the fee. The best banking account for your business is the one that results in the fewest headaches for you.