Episode Transcript
[00:00:00] INTRO: Welcome to Financial Snickens, your bite sized information for entrepreneurs.
[00:00:12] Alisa McCabe: Today we're talking about needing more than just a business checking account. I know we tell you you need a business checking account and you absolutely have to have a separate business checking account from your personal account.
[00:00:27] But do you need more? So if you've accumulated more money in your business checking account than you really need for the daily operating expenses, then you might start to think about putting money aside and have it work for you. That money can be put aside for emergencies, taxes, savings, and a business savings account might be the answer for you.
[00:00:54] Now, look, every bank is different when it comes to these features and benefits of their business offerings, or they typically call it a money market account. So here's a list of some of the things you might wanna think about asking the banker or checking out online and making sure that they have these features.
[00:01:11] Is this account interest bearing? And if so, how does the interest rate compare to maybe another account right now? Banking is really having an interesting time. They're running special, really good interest rates for new money, so check into those and see how much maybe a new bank account, if you opened up a savings account there would offer you for an interest rate.
[00:01:38] Are there any initial minimum deposits to open the savings account? Some banks require a minimum amount and you can see what they are. What are the monthly fees? For each type of account. So for example, sometimes savings accounts have no minimum fees, they don't have any monthly fees. This way you don't have to worry about putting your money aside and you're getting interest on it.
[00:02:03] Win-win situation. What's the minimum balances that are required for both checking and savings accounts? So that fees are waived. Sometimes they have this so that maybe they do have fees, but they don't charge you those fees if you keep a minimum balance. And is it worth it to keep the minimum balance there?
[00:02:23] Could your money be used elsewhere to make more money? Are there withdrawal limits? This is something that I never thought of, but there's two sides here. Are there withdrawal limits and are there deposit limits? Deposit limits, really, you're gonna charge me for putting money into your bank. It's a thing.
[00:02:42] Find out and make sure, because I gotta tell you, we were shocked by it. And what are the other benefits of having a business savings account? Is there something that they offer? Some banks have, you know, hey, if you make, you know, three deposits in three months, they'll give you $300. So some of the things to find out in Shock Brown, see who has the best one.
[00:03:02] Also make sure that it's easy to use. Last but not least, can I connect more than one savings account to the main checking account? You wanna make sure that this account, this new account that you're setting up is easy to use. Does it connect to your main account? Does it connect to your financial software?
[00:03:23] Can you get easy access to it? All things that you wanna have. And often a bank account will tie. A checking and savings account together, and if there is a, like combined minimum balance is lower on either if either account was separate. So it's a really good reason. Having your checking account and savings account at the same bank might be more effective than having a separate savings account at a different bank.
[00:03:50] And other common benefits include waiving overdraft fees. Sometimes they even waive wire transfer fees or non-sufficient fund charges. Then there's other types of interest-bearing accounts besides savings accounts, including certificates of deposits. So maybe beyond having a savings account, you might want to have money market accounts, certificates of deposits, and they typically pay higher interest rates, but they usually tie up your money for a specific period of time and they can often have steep early withdrawal fees.
[00:04:28] There are many institutions besides your main bank that are focused on savings accounts and will pay you higher interest. Typically, some online banks and credit unions will pay higher interest rates than the big banks, but many may not be F D I C insured, and so be sure to read the fine print. Also, remember, as we've learned recently, that usually $250,000 or less is F D I C insured, but anything over that amount is not insured.
[00:04:57] With each bank, look into sweep accounts that can help you to increase this amount. So if you have more than $250,000 in a bank, you need to talk to your banker about the best process. So an additional benefit of keeping money in a separate savings account is that you can save for many things. It can be a cushion for emergencies.
[00:05:20] It can be used as a lump sum for tax payments, or you can use it for future capital expenditures. Once you've set up this new savings account or accounts, consider setting up. A monthly automatic transfer from your checking account to your savings account so that you build up your emergency funds or tax funds without thinking about it.
[00:05:44] Make sure your business cash works as hard as you do. If you wanna talk more about this or questions about anything we talked about, head over to our website, firststepsfinancial.com, and click on the Let's Chat button. And we can talk more about this or anything else to help grow your business.
