Best Business Savings Accounts of October 2024

What is a business savings account?

A business savings account works just like a personal savings account, but it’s designed for business owners.

Once you open an account, you build your savings by making regular deposits. You can also withdraw funds, but your bank may have a limit on the number of transactions you can perform each month before you have to start paying a fee.

One of the biggest differences between a personal savings account and a business savings account is that business accounts often come with extra features. For example, your bank may give you the ability to run custom reports, making it easier to keep track of your money.

Why should I get a business savings account?

Opening a business savings account offers several advantages for companies of all sizes:

• Reduced liability. One of the benefits of forming an LLC or a corporation is that you get to separate your assets from your company’s assets, reducing your legal liability. Opening a business savings account makes it easier to separate personal funds and business funds.
• Streamlined accounting. Business bank accounts usually come with online statements, custom reports and other features to help you streamline your company’s accounting processes.
• Faster tax preparation. If you use the same account for every transaction, it’s much easier to track your revenue and expenses. When tax time rolls around, all you have to do is print out your statements, reducing the amount of time it takes to prepare a return.
• Emergency savings. One of the best reasons to open a business savings account is that a financial emergency can happen at any time. Even well-established companies struggled to stay profitable when COVID-19 forced people to stay home instead of dining out or going shopping. If you have a business bank account, it’s easier to save up for these unexpected events.
• Enhanced reputation. Having a business bank account may make other companies take your business more seriously, leading to a better reputation in the marketplace.

Pros and cons of high-yield business savings accounts

A business high-yield savings account comes with a much higher APY than a standard business savings account. Opening one of these accounts has the following pros and cons.

Pros explained

• Better earning potential: HYSAs have APYs that are up to 20 times higher than the average interest rates available with standard savings accounts. High APYs help your balance grow much faster.
• Increased flexibility: When you buy savings bonds or deposit money in CDs, you have to worry about maturity dates and early withdrawal penalties. A business savings account allows you to withdraw funds when you need them, giving you more flexibility.
• Insured by the FDIC or NCUA: Savings accounts are eligible for insurance coverage, reducing the risk of keeping your funds in a bank or credit union.

Cons explained

• Variable interest rates: HYSA rates are variable, meaning they change based on market conditions. Your APY may be high when you open an account, but it can always drop later.
• No debit cards available with most HYSAs: Banks generally don’t give out debit cards with their high-yield savings accounts, so you may have to visit your local branch or go to an ATM if you need to access your funds.
• Monthly limit on withdrawals at some banks: Your bank may charge a fee if you make more than a certain number of withdrawals every month, increasing your business expenses.

How to choose a business savings account

Before you choose a business savings account, consider the factors below.

APY

APY stands for annual percentage yield, which is how much you can earn in one year based on your interest rate. The higher your APY, the easier it is to grow your balance.

Minimum deposit requirements

Many banks require a minimum deposit, so you’ll need enough cash on hand to open an account. Some banks ask for as little as $50, while others want you to deposit several thousand dollars. Think carefully about how much you can afford to deposit.

Minimum balance requirements

In some cases, you won’t earn any interest unless you maintain a minimum balance. Your bank may also require you to maintain a minimum balance or average ledger balance to avoid monthly service fees. Before you open an account, make sure you can meet these minimum requirements.

Fees

The best business savings accounts have little to no fees, making them affordable for businesses of all sizes. Before you sign up for an account, make sure you get a copy of the bank’s fee schedule.

Digital features

Digital features make it easier to manage your funds, so look for an account that comes with online banking access and/or a mobile banking app.

Insurance

If your account is insured by the FDIC or NCUA, you don’t have to worry about losing your money if a financial institution fails. However, you may want to open multiple accounts if you plan to hold more than $250,000 at a time. FDIC and NCUA insurance only covers up to $250,000 per depositor, per bank, and per ownership category.

Customer service

Before you open an account, find out what type of support is available. Do you have to email the bank and wait for a response, or can you get phone assistance 24 hours per day? Online banks typically offer higher interest rates than traditional banks, but don’t be afraid to go with a local bank if you’d prefer to talk to a representative in person.

How to open a business savings account

The process of opening a business savings account varies from one financial institution to the next.

Many banks allow customers to open new accounts online, but your preferred bank may require you to complete the application process in person. By law, financial institutions must verify the identity of their customers, so be prepared to provide your driver’s license, passport or some other type of photo ID.

If you want to open a business bank account, you may also need to provide a copy of your business license or articles of incorporation. Once you have an account, you can fund it by depositing cash or transferring funds from your business checking account.

Alternatives to business savings accounts

If a business savings account doesn’t meet your current needs, here are three alternatives.

Business savings accounts vs. business checking accounts

The purpose of opening a savings account is to let your balance grow over time. If you need to write checks, use a debit card or perform other transactions, you may want to get a business checking account instead. A checking account usually comes with a debit card, check-writing privileges and other features designed to make it easier to manage your financial affairs.

Business savings accounts vs. business money market accounts

Money market accounts combine the features of a checking account with the features of a savings account. You earn interest on your balance, but you can also write checks, make debit card purchases or transfer funds to other accounts.

Business savings accounts vs. business certificates of deposit (CDs)

A certificate of deposit (CDs) is a special type of savings account that requires you to deposit money and leave it in place for a specific amount of time. For example, if you open a 12-month CD, you can’t make any withdrawals for the first year. Otherwise, you’ll forfeit some of the interest you should have earned.