Key Benefits of a Business Checking Account

Meow Technologies, Inc.

Meow Technologies, Inc.

Opening a business checking account is one of the most important early steps an entrepreneur can take. While it may seem easier and cheaper to just use your personal bank account, having a dedicated business account provides some major benefits. In this comprehensive guide, we’ll outline everything you need to know about business checking accounts—from keeping your finances organized to fueling your company's growth.

Introduction

A business checking account may not be legally required for sole proprietors and independent contractors. However, there are still good reasons why any type of business owner should open one. As we’ll explore throughout this article, a business checking account can simplify your finances, protect your assets, score you capital and loans, and legitimize your company in the eyes of customers.

While personal checking accounts typically have no monthly fees, business accounts often charge maintenance fees. However, the organizational benefits alone make it worthwhile for most business owners. And many banks offer ways to waive monthly charges. So business checking accounts provide more pros than cons if set up properly.

Keeps Business Finances Organized

Without a doubt, one of the biggest perks of having a dedicated business checking account is keeping your business money separate from personal finances. When everything flows through one account, you’ll end up with a disorganized mix of transactions that can muddy the financial waters.

With a distinct business account, you'll easily see how much revenue is coming in and exactly what you're spending on operating expenses. Having this clear picture makes tasks like preparing financial statements, tracking deductions, creating budgets, and filing taxes much simpler. No more wasting hours sorting through paperwork or trying to remember if that airline ticket was for work or vacation!

What’s more, separating accounts reduces mistakes when paying bills or vendors. And if you ever need outside financing or sell the company, your balance sheet will be clean and easy to interpret.

Adds Credibility & Builds Business Credit

Beyond organizational benefits, opening a business checking account also lends legitimacy to your venture. When you pay suppliers from a company account, it signals you are running a serious operation. This perception can help attract new customers and clients who may otherwise view you as a hobbyist or freelancer.

On top of that credibility boost, having a dedicated account in your business’s name starts establishing its commercial credit profile. Every on-time vendor payment you make gets reported to credit bureaus and counted towards your business credit score.

A solid business credit history then allows you to qualify for financing options like business credit cards, lines of credit, and loans. So opening that business checking account lays the groundwork to access capital your company needs to grow. Just be sure to manage the account responsibly.

Provides Liability Protection

As your business expands, a dedicated checking account also serves as an important legal shield between your personal and commercial finances. Without one, your personal assets could be subjected to claims or debts racked up by your business.

By keeping business funds separate, you reinforce that your company exists as a distinct entity. This protection is especially vital if you operate your venture as an LLC or corporation. In those cases, commingling finances could essentially nullify your liability safeguards.

A business checking account forms a barrier that prevents any blurring of lines. So both you and your company remain insulated from risk. For extra protection, you may also open commercial insurance policies after starting your business bank account.

Allows Smooth Payroll & Tax Payments

Initially, you may be the only employee on your payroll. But over time, any growing business needs to add staff members. Having an existing business checking account makes that transition easy breezy.

With a separate account, you can pay payroll seamlessly while keeping those transactions distinct from general operating expenses. This clarity helps tremendously when calculating quarterly income tax withholding payments.

Fuels Future Business Growth

As beneficial as business checking accounts are early on, they become even more invaluable as your company scales up. The business credit profile you establish positions you to access larger financing amounts. This funding can support any growth plans like expanding locations, upgrading equipment, or increasing inventory and staff.

In addition to loans, a business history with an account provider may qualify you for other services like merchant accounts to accept credit card sales. Some businesses can upgrade to high-volume checking accounts that offer perks like higher transaction limits or multiple users.

So in many ways, something as simple as a business checking account can provide the foundation for your small business to become much bigger over time.

Key Features to Look for in Business Checking Accounts

Now that you know the value behind business checking accounts, it’s time to actually open one. But first, you’ll want to understand the key variables and features to look for as you compare options.

Monthly Fees & Ways to Waive Them

Unlike some personal bank accounts, business checking accounts may charge routine maintenance fees. Some banks waive monthly charges if you maintain a minimum balance.

Transaction Limits

While personal checking accounts place limits on monthly transactions, business accounts offer much higher thresholds. It’s key to understand an account’s caps on monthly transfers, deposits, withdrawals, and purchases. Exceeding these results in per transaction overage fees.

For relatively small businesses, an account allowing 200-300 transactions monthly sufficiently covers activity. But fast-growing companies should target higher limits of 1,000+ to ensure they can scale smoothly.

Interest Earnings

Typically, business checking accounts don’t pay much interest. However, some providers offer accounts that do deliver modest annual percentage yields (APY). See "Do Business Checking Accounts Earn Interest?" for more details.

If you use Meow to apply for a checking account from FirstBank, a Tennessee corporation; Member FDIC, you'll receive up to 5.02% APY (subject to rate sheets, as of 1/23/24. Meow is a financial technology company, not a bank).

When Should You Open One?

If you legally structured your business as an LLC or corporation, opening a dedicated checking account should be your immediate next step. Failing to establish separate finances puts your personal assets at risk and muddies important company records.

Likewise, if you want to build business credit or plan on seeking financing soon, get your checking account fast. Any lender will want to review recent statements to evaluate financial health.

The Bottom Line

At this point, the multitude of benefits offered by business checking accounts should be clear. From an organizational standpoint, they prevent your personal life from commingling with commercial finances. A dedicated account also bolsters legitimacy, establishes critical business credit, and sets the stage for company growth.

With some diligent shopping around, you’ll secure a solid business checking account to sustain your venture for years. Proper financial management is the gateway for any successful business. An account specifically designed with your company’s interests in mind is an entrepreneur’s first big step towards prosperity.

Apply Now

Click the button below to apply for a business checking account from FirstBank, a Tennessee corporation; Member FDIC. The application generally takes less than 10 minutes to complete.


Meow Technologies is a financial technology company, not a bank or FDIC-depository insured institution. Likewise, Meow Technologies is not an investment adviser and none of the information presented herein should be relied upon as financial advice or a recommendation to make any financial decision nor should it be considered to be tax or legal advice. The information is the opinion of Meow Technologies for educational purposes and may not be suitable for all companies. Products, like the one described herein, are offered through Meow Technologies and are not advisory services which are only offered through Meow Advisory, LLC.** The FDICs deposit insurance coverage only protects against the failure of an FDIC-insured bank.**

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*Disclaimer: Meow Advisory LLC is a registered investment adviser. Registration as an investment adviser does not imply any level of skill or training.
For accounts opened through Atomic Brokerage LLC: Meow Advisory LLC has an engagement with Atomic Brokerage LLC (“Atomic Brokerage”), a registered broker-dealer and member of FINRA and SIPC , to bring you the opportunity to open a brokerage account. Brokerage services for customers of Meow Advisory LLC are provided by Atomic Brokerage. For more details about Atomic Brokerage, please see the Form CRS, General Disclosures, and the Privacy Policy. Check the background of Atomic Brokerage on FINRA’s BrokerCheck.
For subadvisory services for accounts opened through Atomic Invest LLC: Meow Advisory LLC has an engagement with Atomic Invest, LLC (“Atomic Invest”), an SEC-registered investment adviser, to bring you the opportunity to open an investment advisory account. Investment advisory services are provided by Atomic Invest. Companies which are engaged by Atomic Invest receive compensation of 0% to 0.85% annualized, payable monthly, based upon assets under management for each referred client who establishes an account with Atomic Invest (i.e., exact payment will differ). Atomic Invest also shares a percentage of compensation received from margin interest and free cash interest earned by customers with Meow Advisory LLC. Meow Advisory LLC is not a client of Atomic Invest, but our engagement with Atomic invest gives us an incentive to refer you to Atomic Invest instead of another investment adviser. This conflict of interest affects our ability to provide you with unbiased, objective information about the services of Atomic Invest. This could mean that the services of another investment adviser with whom we are not engaged could be more appropriate for you than Atomic invest. Advisory services through Atomic Invest are designed to assist clients in achieving a favorable outcome in their investment portfolio. They are not intended to provide tax advice or financial planning with respect to every aspect of a client’s financial situation and do not include investments that clients may hold outside of Atomic Invest. For more details about Atomic Invest, please see the Form CRS, Form ADV Part 2A, the Privacy Policy, and other disclosures. Brokerage services for Atomic Invest are provided by Pershing Advisor Solutions LLC (“PAS”), a registered broker-dealer and member of FINRA and SIPC.
Neither Atomic Invest nor Atomic Brokerage, nor any of their affiliates, is a bank. Investments in securities are Not FDIC insured, Not Bank Guaranteed, and May Lose Value. Investing involves risk, including the possible loss of principal. Before investing, consider your investment objectives and the fees and expenses charged by Atomic Brokerage and/or Atomic Invest.
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**Disclaimer: Meow Technologies is a financial technology company, not a depository, bank or credit union, and your account at Meow is not, itself, an FDIC-insured product.

Meow currently partners with three banking providers. Banking services are provided by Third Coast Bank SSB; Member FDIC, Grasshopper Bank, N.A; Member FDIC, and FirstBank, a Tennessee corporation; Member FDIC.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Grasshopper Bank, N.A, you deposit your funds into a deposit account at Grasshopper Bank, N.A. which sweeps those funds into deposit accounts across a network of Federal Deposit Insurance Corporation (“FDIC”)-insured banks, for up to the current standard maximum deposit insurance amount (“SMDIA”) of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including Grasshopper's ICS Deposit Placement Agreement. Grasshopper Bank, N.A. uses a third-party vendor and agent to help administer this sweep process. Visit https://www.intrafi.com/network-banks/ for a list of the banks and savings associations with which we/Grasshopper, N.A. have a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Grasshopper, N.A. or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of Grasshopper Bank, N.A, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheets for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Third Coast Bank SSB, you deposit your funds into a deposit account at Third Coast Bank SSB. If you also hold funds in a sweep program with Third Coast Bank SSB, Third Coast Bank SSB sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per receiving bank, for each ownership capacity or category, including any other balances you may hold at that receiving bank directly or indirectly through other intermediaries, including broker-dealers. Third Coast Bank SSB uses a third-party vendor and agent to help administer this sweep process. Visit Third Coast Bank SSB for a list of the banks and savings associations with which we/Third Coast Bank SSB have a business relationship for the placement of deposits at receiving banks, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Third Coast Bank or you). The current maximum deposit insurance amount for your funds is up to $50 Million in FDIC insurance through the sweep network of Third Coast Bank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and conditions and refer to the applicable rate sheet for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by FirstBank, a Tennessee corporation, you deposit your funds into a deposit account at FirstBank, which sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including FirstBank's ICS Deposit Placement Agreement. FirstBank uses a third-party vendor and agent to help administer this sweep process. Visit IntraFi for a list of the banks and savings associations with which FirstBank has a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by FirstBank or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of FirstBank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheet for additional information.

***FDIC insurance coverage is only available to protect you against the failure of an FDIC-insured bank that holds your deposits (and does not protect you against the failure of Meow or other third party). Your account with Meow and all services provided to you are subject to the Meow Terms of Service (“Account Agreements”) and other applicable terms and no other representations or warranties, express or implied, are provided to you except as expressly set forth in those written Account Agreements. If you have any questions regarding your account, please contact team@meow.com.

FirstBank Funds Availability Notice

FirstBanks general policy is to allow you to withdraw funds deposited in your account on the first business day after the day we receive your deposit. Funds from electronic deposits will be available on the day we receive the deposit. In some cases, we may delay your ability to withdraw funds beyond the first business day. Then, the funds will generally be available by the SECOND business day after the day of deposit.