In the 21st century, the number of banks continues to increase and break records. The number of convenient services for businesses is also increasing, such as calculators that allow you to make the exact calculations needed for your business or services that help you choose the right bank for your needs (example: Myfin.us). But how do you choose the right bank for you? That's what we're going to talk about today.
What do I need to consider when choosing a bank for business?
You need to make sure that the bank has a license and is a member of the deposit insurance system (DIS). If the DIS member bank goes broke, sole proprietors and small businesses will be able to recover money from their accounts up to $1 million.
In cases when business turnover is higher, you either need to distribute cash flows among different financial institutions or choose the bank more carefully. For example, take into account its reliability rating.
Set of services
Banks today are ready to become an accountant and IT consultant for the businessman, and even a security service to check on contractors.
It is worthwhile to see reviews of the work of the bank in advance and independently test different channels of communication. For example, check how quickly your question will be answered on the hotline, in the chat on the website, and in the bank's office. If you do business in several regions with different time zones, you'll need 24-hour business support.
What services do banks offer to entrepreneurs?
Business account maintenance
Banks usually don't charge money to open an account. Some also offer free account maintenance, but often only for the first few months, and then the price goes up. It usually depends on the size of the business. For example, for entrepreneurs with a small account turnover - up to 150,000-200,000 dollars a year - the rate does not exceed one thousand dollars, and for large companies can reach several thousand dollars a month.
But there are always fees for transfers and payments. Often banks offer package tariffs: the package includes both account maintenance and a certain number of transactions, and they charge a separate amount for each operation above the limit.
Several accounts for different subdivisions of the firm or different products often simplify accounting, and sometimes they allow saving due to the optimal choice of tariffs.
Such a card is attached to a business account. You can use it to deposit or withdraw money from ATMs - this option is called "self-cashing".
As a rule, card maintenance is included in the package rate. But even when it is charged separately, it is often free subject to certain conditions: for example, when the amount on the account does not fall below a certain limit or, conversely, the account turnover exceeds a certain threshold.
When paying for goods and services by card, banks do not charge a percentage of the transaction amount and do not limit the number of payments. But withdrawals are subject to limits and fees starting from 0.1%. But there are banks that allow withdrawing money for free - both in their own and others' ATMs. So find out in advance which ATMs you can use on favorable terms, and whether they are conveniently located.
They also usually charge 0.1% for depositing cash to your card, but often allow you to recharge your card from any bank with a minimal (or zero) fee.
Don't forget to set up SMS or push notifications for card transactions, so you can be notified immediately of transactions you haven't made.
Acquiring and online cash desk
Acquiring allows you to accept payments from bank cards. The fee for acquiring is usually 1-2% of the number of checks for a certain period, usually a month. Each bank determines the rate itself - it depends on the size of business turnover, area of activity, and other factors (even the reputation of the enterprise may be taken into account). Therefore, it is better to clarify the conditions at different banks and choose the best option.
Often in a package with acquiring, you can rent cash register equipment, including an online cash register that automatically transmits data to the tax service. This is convenient because you don't have to send the tax office data on every sale yourself. Plus, it makes the business transparent to the IRS - which means it reduces the risk of having your account blocked due to non-payment of taxes.
Take a quiz on the IRS website to find out if your business is required to have cash register equipment. It depends on your line of business, tax system, and other criteria.
Connecting QR payments
Major banks offer businesses to connect QR payments. This is one of the ways of cashless payments, which can be used both in retail outlets and online stores.
QR payments are more profitable in comparison with card payments. They will cost you a maximum of 0.7% of the purchase amount if the bank conducts them through the Instant Payments System.
You may need additional financing to invest or replenish working capital. The bank where your company is serviced is usually ready to lend money on favorable terms, because it is already familiar with your business.
In this case, approval of the loan application will require a minimum of documents and time - the bank can already see your account activity, can determine the turnover of the business, and it is easier to assess the risks, make a decision, and set the interest rate.
But it is better to find out in advance, even at the stage of selecting the bank, what its loan conditions are. Be sure to find out whether the bank participates in state programmes of concessional lending to small and medium-sized businesses - on loans with state support rates are lower than market rates.
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