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Three Questions to Ask Before Opening a Business Checking Account

Running a business comes with many decisions to make. Deciding where to bank is one of the important choices business owners need to evaluate. Choosing the right checking account can help a business grow and aid in reaching its financial goals. Before deciding the checking account that can best serve your business needs, think about your profit potential, expected growth, transaction behavior, and what you hope to get out of a banking relationship.


Determining the needs of a business checking account

Before deciding on a bank, the first step is to compare the types of business checking accounts available and determine which best fits your business. By doing your homework, you can prevent paying unnecessary fees or for features you might not need. Below are three questions you should consider when looking for a business checking account:

  1. What is your normal or anticipated account activity and volume?
    Facilitating financial transactions is one of the primary uses for a checking account. Considering the type and number of transactions your business makes — such as cash or check deposits, withdrawals, money transfers, and electronic payments — can help you determine the type of checking account that is best suited for your business.

    Some business checking accounts allow a set number of transactions, such as deposits and checks paid each month, before charging a fee per transaction. Other accounts might offer unlimited transactions but come with a monthly maintenance charge. An account that allows up to 500 transactions per month with no per-transaction fee could be a good fit for a business that only averages around 300 transactions per month. It is important for you to evaluate your business activity before selecting an account.
  2. How much do you plan to keep in the account?
    Having an idea of the range of anticipated account balance(s) in mind is helpful and is one of the main factors when selecting a business checking account. Some accounts require a minimum balance, for example $5,000, to open the account but might also require that you maintain a designated minimum balance in the account to avoid monthly maintenance charge. If cash flow is unpredictable each month, it might be better to look for an account that has a low minimum balance requirement or that does not have a monthly maintenance charge..
  3. What kind of banking service do you need?
    Banks offer different services based on account types, and if you choose the right one these services can help maximize the benefits of the account and banking relationship. Compare features and incentives between different banks and accounts, such as linking checking and savings accounts for overdraft protection, payment of interest on checking accounts, and any ATM withdrawal fees if the transaction is completed at another financial institution’s ATM. Some business checking accounts offer an earnings allowance or credit, which is a calculation of the funds available in the account, using an earnings credit rate, that can be used to offset all or a portion of monthly service charges. Large companies using treasury management services can use their balances to offset fees with an earnings allowance.


Selecting the right business checking account

At Cathay Bank, we have experienced relationship managers to assist business owners in evaluating and selecting the best business checking account solution for each company.

Once banking needs and goals are evaluated, the next step is selecting an account. Cathay Bank has a variety of business account options. Below are the four types of business checking accounts offered by Cathay Bank and the benefits of each:

  • Business Interest Checking: A Business Interest Checking account offers a competitive and variable interest rate so business owners can earn interest on their account balance. However, ownership of this account is limited by law to sole proprietors or nonprofit organizations only. A business debit card, online banking, and mobile banking are available with this account.
  • Advanced Business Checking: With this account, businesses with a moderate transaction volume can benefit from using combined balances in related interest-bearing savings accounts to avoid a monthly maintenance charge. Per-item fees may apply to deposits and paid checks. A business debit card, online banking, and mobile banking are available with this account.
  • Commercial Analysis Checking: This is an ideal account for businesses with a high transaction volume and treasury management needs. An earnings allowance, the calculation of the funds available in the account using an earnings credit rate, is available on this account for offsetting monthly maintenance and service charges. A business debit card, online banking, and mobile banking are available with this account.

Choosing the best business checking account for a company comes down to evaluating the needs and goals of the business. Cathay Bank has relationship managers to help new business owners get where they want to go. Learn more about Cathay Bank Business Checking Account options.


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This article does not constitute legal, accounting or other professional advice. Although the information contained herein is intended to be accurate, Cathay Bank does not assume liability for loss or damage due to reliance on such information.

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