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The 3 Questions You Should Ask Yourself 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 on the checking account that can best serve their business, owners should think about profit potential, expected growth, transaction behavior, and what they hope to get out of a banking relationship.

Determining Needs of the Business Checking Account

Before deciding on a banking institution, the first step is to compare the types of business checking accounts to determine the best fit for the business. Doing some homework can prevent business owners from paying unnecessary fees for features they might not need. Below are three questions business owners should evaluate when looking for a business checking account:

1. What is your normal or anticipated account activity and volume?

Facilitating final transactions is one of the primary uses for a checking account. The type and number of transactions a business makes — including cash or check deposits, withdrawals, money transfers, and electronic payments — can help determine the type of checking account that is best suited for the company.

Many 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 higher monthly service charge. An account that allows up to 500 transactions per month with no per-transaction fees could be a good fit for a business that only averages around 300 transactions per month. It is important for business owners to evaluate their activity before selecting an account.

2. How much do you plan to keep in the account at any time?

Having a range of the anticipated account balance(s) in mind is one of the main factors when selecting a business checking account. Certain accounts require a minimum balance, such as $5,000, to open the account and might require that you maintain a designated minimum balance in the account to avoid monthly service charges. If cash flow is unpredictable each month, it might be best to look for a bank account that has a low minimum balance requirement or does not charge fees for a low balance.

3. What type of banking and account services does your business require?

Banks offer different services based on account type, and these services can help maximize the benefits of the account and banking relationship. Compare features and incentives offered by 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 an experienced team of professionals 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 account options for any business. 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.
  • Business Checking: This account is a great option for businesses with basic banking needs and a low volume of account activity. There is no minimum balance required and no monthly maintenance fee, but per-item fees may apply to deposits and paid checks. 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 experienced professionals to help new business owners get where they want to go. Learn more about Cathay Bank Business Checking Account options and limited-time promotional offers.


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