Which Bank Accounts Will Give You The Most Return For Your Business

Every business owner needs an account to store their funds. Having an account will allow business owners to set up an emergency fund or set aside money for tax payments. A business savings account is easy to manage as it offers excellent returns on funds and has a small transaction fee, which is easy to budget for. Business savings accounts are provided by local banks, credit unions, and other financial institutions. Deciding on the best business account can be confusing.

First, potential account holders need to figure out if they even need a business account. They need to figure out what type of bank account is best for the business and what will provide the highest annual percentage yield. And finally, potential account holders need to consider the business account that will provide multiple ways of tapping into the business capital when required.

Types of Bank Accounts

These are the various types of bank accounts available to a business:

1. Business Checking Account

The business checking account is the most basic option for a deposit account. It provides a place to hold money while still being able to deposit money, withdraw cash, and make payments. This account operates like a personal checking account, allowing frequent transactions and constant monitoring by the account holder.

Be warned; some banking institutions may require a minimum account balance to open a business checking account and maintain the account. Account owners will also have access to online and mobile banking with this type of account. And account holders will be given a debit card for ATM transactions.

2. Interest-Bearing Checking Accounts

The biggest downside to a traditional business checking account is the inability to earn interest on deposits. An interest-bearing account allows for interest to be earned; these accounts have an annual percentage yield (APY) of less than 1%.

Despite the APY of 1%, this type of business checking account is rare. Very few banks offer it, making a business savings account a more attractive option.

3. Business Savings Account

The business savings account earns more interest on funds than checking accounts do. But savings account limit the holder's access to their funds. Many banks restrict saving accounts to six transactions per month, and some account holders need more access than that to their funds.

If an account holder needs constant access to the funds in a business savings account, they may be better off switching to a business checking account. Account-holders will be unable to access funds via check and online payment. Depending on the bank, a business savings account may also cost more to open and maintain than a checking account.

4. Certificate Of Deposit

A certificate of deposit has a considerable advantage over the standard savings account as it has a higher annual percentage yield than most accounts. Yet, the disadvantage of this account is the inability to access funds until they reach maturity. Finding certificate deposits with an annual percentage yield of 1% and even up to 2% is common. The longer a maturity range, the higher the annual percentage yield.

If the account holder chooses to withdraw funds before the maturity date, the account holder will need to pay the penalty. Be cautious when selecting the maturity range of certificate of deposits; they can range from six months to several years.

5. Money Market Account

The money market savings account has an annual percentage yield higher than a standard savings account. Banks give account holders access to some funds, but be aware there is a limit to the number of withdrawal transactions. Yet, account holders can deposit money at any time.

This account requires account holders to maintain a higher minimum balance than a standard savings account. So if a business has a reasonable amount of excess funds, this account is perfect.

Final Verdict

Opening a business account helps to save money while still allowing constant access to funds. Keeping money in the bank helps avoid unnecessary spending, thereby helping secure capital for a business. Business owners should consider things like access to funds and annual percentage yield when choosing an account that best fits their needs and the business's needs.