There are many things to consider when you are running a small or medium-sized business; from choosing a business name to a structure type, and figuring out the best way to handle your finances.
If you have decided to structure your business as a sole proprietorship, you are probably wondering what's the best way to manage your business expenses.
Does a sole proprietor need a business bank account? Well, while a sole proprietorship doesn't require you to open a business bank account, separating your business funds from your personal finances brings many benefits for small business owners.
From building a business credit to keeping your accounting records organized for a smoother tax deduction, a business account is bound to save you all kinds of financial trouble in the future.
With that said, let me help you figure out which is the best option for your business. Here are our top picks:
But first, let's quickly go over the main aspects you should consider when shopping for a business bank account.
There's a big difference between a personal vs business bank account. You'll need to start organizing your finances better as your business grows. This means you must keep in mind your business needs and any growth plans for the near future as they will determine the kind of products and services you should look for. Let's go over some of the most important factors to consider before choosing a bank for your small business.
Some banks may charge a monthly fee for maintaining your account. You want to look for a free business checking account or at least one that charges low monthly fees which you can ideally waive by meeting certain qualifications.
Additionally, consider any benefits provided by the bank in case they do charge monthly fees. For example, some banks offer unlimited free transactions for a slightly higher monthly maintenance fee, which depending on your business might be a good option.
Not all business checking accounts require that you meet a minimum initial deposit before becoming a customer. However, it is worth keeping an eye on these requirements as some banks may ask for exorbitant amounts that can be a deal-breaker.
Banks may have a set cash deposit or withdrawals limit, and some may offer a fixed number of free transactions. Since you'll be managing your business' day to day finances, it's a good idea to inquire about any cash withdrawal and deposit limits as well as the fees related to it.
Consider your business model and frequency of transactions to find an account that fits your needs, but in general, going for bigger withdrawal limits is certainly more profitable.
Think about how you manage your business on a daily basis; if your transactions are mostly digital, meaning your payments, invoicing and accounting happen electronically, then you will definitely benefit from a business bank account that you can manage completely online.
However, if you consider you will need the option to easily withdraw or deposit physical cash in big quantities then you might want to look for an option with local branches where you can drop off money at the end of the day.
Keep in mind, internet-only banks usually have lower fees as well as lower minimum balance requirements, so it's definitely a good alternative if in-person banking is not part of your daily workflow.
As a start-up business, you may not have large amounts of funds at hand, so a high minimum balance could block your working capital. It's always best to open a business account with no (or low) minimum balance requirements, as well as considering the fees that may apply in case your balance does go below the minimum level.
Some banks may not have a penalty for not maintaining a minimum balance, however, they may ask for it as a requirement to waive a monthly fee. So also be on the lookout for that.
Apart from banking solutions, your business checking account can be a great way to handle many other aspects of your business such as invoicing, online credit and debit card payments, or your payroll.
Ideally, you want to find a checking account that provides tools to help you organize your funds better and keep everything together in one platform. For example, if you struggle to build savings, find an online business checking account that allows you to have sub-accounts where you can specify how much money to save automatically and give it a specific purpose.
Some banks also offer the option to link your account to payment processing tools such as Stripe or PayPal to help you get paid quickly.
Now, considering these factors, let's take a look at the best options to open a business checking account that fits your needs.
Let's get into some details to help you make the right choice. We'll review the product we know best--our own.
We start strong, with an option that has everything you need to manage your business finances. Bonsai Cash is the ultimate online business checking account for freelancers and small business owners, giving you a completely digital platform where you can save, organize and spend your funds.
It's super easy to use and it gives you access to so many features that will help you keep all your finances in one place. Here's why you have to try it.
Easy set-up: Once you are part of the Bonsai family, getting your business checking account is incredibly easy. You'll be prompted to fill out a few on-boarding steps and you'll be ready to go in no time. No paperwork, no branch visit. It's a guaranteed business bank account.
No hidden fees: Unlike other business checking accounts, with Bonsai Cash you will not be required to maintain any minimum balance to avoid fees. Additionally there is no monthly service fee, transaction fees or any other hidden fees.
This means you'll be able to accept transfers, store and manage your funds, make payments as well as send ACH bank transfers without paying anything extra!
Simplify savings: Bonsai Cash has a great feature called Envelopes, that allows you to create sub-accounts to save up for a rainy day, vacations, tax liability, or whatever is important for you and your business.
This saving feature is simple and fully automated. You just choose the percentage of your transactions that you want to save, and which sub-account you want it to go to.
All-in-one business hub: With Bonsai, you not only get one of the best business checking accounts in the market, you get a whole business suite to help you stay seamlessly organized. It integrates invoicing tools, a payment platform, automatic expense tracking, income reporting as well as a tax software with estimates and reminders. It's truly everything you need to stay on top of your business.
No in-person banking: While Bonsai business checking accounts are backed up by an FDIC registered banking system, there are no brick-and-mortar branches. However, if you do not need in-person banking services (large cash deposits or other teller-type transactions) everything can be handled through the Bonsai Cash app.
Transaction limits: Bonsai cash has daily transactions limits; $300 on ATM withdrawals, $2,000 for card transactions and $3,000 external bank account transfers. The good news is, these limits are not cumulative across the different types of transactions, so you can make an ATM withdrawal of $300 and still use your card for transactions of up to $2,000 on the same day.
Bonsai Cash is a great fit for all small business owners and sole proprietors who are looking for a well-rounded business banking solution with no monthly fees. If you want to manage your finances, get lightning-fast payments, and save on taxes all without juggling different accounts, look no further. The cost to open a business bank account is free with a Bonsai account.
Axos Bank is also focused on offering a 100% internet experience, while still providing easy and affordable access to a small business checking account. If you have low monthly transaction volumes this may be a good choice to completely avoid fees. Here's what they have to offer.
No monthly fee: With the basic business bank account you won't have to pay any monthly maintenance fee, which is great if you worry about not being able to waive the monthly fee that most brick-and-mortar personal and business accounts usually charge.
Unlimited ATM reimbursements: Axos business checking account includes unlimited domestic ATM fee reimbursements, which means you can use any ATM in the country. The bank also has a fee-free ATM network so you don't have to pay any charges at all.
Free set of checks: New Axos Basic Business Checking account users get the first set of checks for free. It's a total of 50 free checks after you open your account, and each additional check after that will have an extra cost which varies depending on the check design.
High minimum opening deposit: For being one of the most basic business checking accounts, their minimum opening deposit of $1,000 is considerably higher than its competitors.
Limited transactions: With Axos basic business checking, you only get the first 200 transactions free per month. After that, transactions (deposit, ACH, transfers, etc...) will have a cost of $0.30 each.
Not the best for cash deposits: Axos bank does have some deposit-taking ATM options in their network, but there are not many and you probably won't have one close by. So if your customers usually pay you in cash, you may want to find another option.
Overall, Axos Business Checking Account is a good choice if you are looking for a basic option that is fuss-free and easily allows you to move your money on-the-go.
Chase is one of the most well-known banks in the country, and one of the largest brick-and-mortar banks as well. Chances are, you have a Chase Bank nearby, and that might be a good fit for your business if you do a lot of cash transactions.
However, being a full-service bank, it does come with more fees and lower yields than other online-only competitors. Let's break down the Chase business complete banking features.
Bonus offer: Chase has a great account opening bonus of $300 on their Business Complete Checking Account. However, make sure you can meet the requirements for the bonus before you sign up; First, a minimum deposit of $2,000 within the first 30 days, and maintaining the $2,000 balance for 60 days. Additionally, you must complete 5 qualifying transactions (i.e debit card payments or deposits, among others) in 90 days.
Built-in card acceptance: You can accept debit and credit card payments anytime and anywhere in the U.S with the Chase QuickAccept feature integrated in the app. This payment processing service connects with a mobile card reader to swipe, tap or dip transactions.
Unlimited electronic deposits: This includes deposited items, ATM transactions, ACH transfers, internal transfers, mobile deposits, and credit card purchases, providing you a great flexibility when it comes to online payments.
Monthly maintenance fees: Considering how many free business checking accounts there are out there, paying a $15 monthly fee might be a bit hard to take. However, they do offer several options to waive it, including maintaining a $2,000 daily balance or $2,000 in purchases with your business card.
Limited physical transactions: Your Chase Business Complete Checking account will only allow 20 free physical transactions per month (other options offer up to 250 transactions). If you need to make teller-deposits or write paper checks, this might not be the best business checking account for you.
Cash deposit limit: Your checking account includes only up to $5,000 in cash deposits per month. After that, you'll pay a $2.50 fee for every $1,000 deposited. If you operate mainly in cash, this may be a problem.
This is a good option for small businesses that operate (or are planning to expand) nationwide, and would benefit from having branches and ATM locations all over the U.S. If you want an in-person, full-banking service and don't mind paying higher fees this is also a good fit for you.
BlueVine Capital Inc. started as a lender for small business in 2013 and now provides business checking solutions with no hidden fees and no minimum requirements to open an account. Their platform is designed to help you grow your business with a flexible working capital. Here's why it might work for you.
Access to business financing: With BlueVine's Invoice Factoring and Line of Credit programs you can get up to a $5 million advance on outstanding balances or a credit line of up to $250,000.
Get high interest: Your BlueVine business checking account offers you a 1.2% APY (Annual percentage yield) on balances of up to $100,000. This is one of the highest interest rates among business bank accounts, and unlike most others, it does not require you to maintain a minimum daily or monthly balance.
Cash deposits: Thanks to its partnership with Green Dot, you can make cash deposits of up to $7,500 a month using your business debit card. There's over 90,000 Green Dot locations throughout the U.S.
Cash deposit fees: Although BlueVine stands out for being an online-only business bank account, there's a $4.95 fee for any cash deposit into your account. If your business deals with cash frequently, the fees can quickly add up.
No ATM fee refunds: Unlike many of its competitors, BlueVine doesn't offer a refund for any fees incurred when using an out-of-network ATM.
No in-person banking: Being an online-only business account, you will not have access to any physical branch or in-person customer service.
If your startup business is on a growth stage, this might be your best bet. With the possibility of loans, this business checking account can help you take your growth to the next level. It's also a good choice if you have a larger capital flow, given their very attractive interest rate.
Novo Bank's business checking account is a great choice for digital banking and business owners on the go. This business account is completely digital, meaning there are no physical branch locations. Let's look at a breakdown of pros and cons.
Free ATM access: With Novo's business checking account, you have free ATM access in the U.S or abroad. They will also give you a refund ATM fees from other banks, which is deposited to your account at the end of each month.
Integrate your business tools: A Novo's stand-out feature is the ability to connect to popular tools you may be using in your small business. You can connect it to payment processing platforms, Venmo, Apple or Google Play.
No fees: This checking account has no monthly maintenance fees, no transaction or incoming wire fees, and no incoming/outgoing ACH transfers or debit card replacements fees. Additionally, There are no minimum account balance requirements.
No recurring payments: Novo's business bank account does not offer the option to set up recurring payments. This is a common feature in other online business checking accounts, and it might be a deal-breaker if you don't want to spend extra time monitoring your bills to make payments before their due date.
No (easy) cash deposits: If you have cash you'd like to deposit, you can't simply deposit it at an ATM. Instead, you have to purchase a money order and deposit the check using Novo's app. If your business deals primarily with cash, you may want to look for an option that accommodates frequent deposits.
With no monthly fees or minimum balance requirements, Novo business checking account is a great option for those business owners and entrepreneurs who only earn a few hundred dollars a month for whom other bank's requirements might be excessive.
Competing with Chase as one of the most well-known banks in the U.S, Bank of America also offers a great business checking account option. It features an online and mobile banking platform and an integrated cash-flow monitoring tool that will give you great flexibility.
Unlimited transactions: Bank of America business checking accounts offer free unlimited electronic transactions including debit card purchases, electronic debts, ACH transactions and mobile check deposits. It also includes remote deposits at a Bank of America ATM or online. This is a stand-out feature considering most traditional banks have a set monthly transactions limit.
High cash deposit limit: Your Business Advantage Fundamentals has a fee-free cash deposit limit of $7,500, which stands out among many brick-and-mortar competitors with a $5,000 limit.
Generous rewards: By linking your business checking account to Bank of America Preferred Rewards for Business program, you can access a 25% reward bonus on eligible business credit cards and waive the monthly fee. Plus, if your business needs change, you can switch your Fundamentals account to a Relationship checking account and get an extra 5% interest rate.
Monthly maintenance fee: There's a $16 monthly maintenance fee that can be waived by either keeping a minimum balance of $5,000, spending at least $2,500 in qualified debit card purchases or becoming a Preferred Rewards for Business member.
Check deposit limit: Bank of America has a maximum of 200 check deposits per statement cycle. After that they will charge a $0.45 fee per item except for mobile or ATM deposits. Consider your business needs to make sure this is not going to be a problem.
If you're looking for an option to do your business banking in person or operate with large amounts of cash, and don't mind paying a monthly fee this is a good option for you. Also, the ability to switch to a more complete business checking account gives you an additional financial advantage for your business in the future.
LendingClub's business checking accounts are specifically tailored for small business owners providing unlimited free transactions and many other benefits. Here's what you need to know.
Rewards program: Your LendingClub business checking account gives you the option to earn a 1% unlimited cash back on all transactions made with your debit card. You can also earn a 0.10% interest (APY) on your monthly balance.
Free ATM access and rebates: You won't get any ATM usage fees for any in-network or Money Pass and SUM ATM access. In fact, your Tailored Business Checking Account includes unlimited refunds for ATM fees from other banks worldwide.
Easy application: To open your LendingClub business account, you only need to submit an online application (which you can complete in 10 minutes), providing information about your business and linking an existing bank account or debit card. Other competitors require you to make a branch visit and file some paperwork.
Minimum balance requirements for perks: While technically there's no minimum balance requirement (you won't be charged a fee if your balance falls below a certain threshold), you do need to maintain an average monthly balance of $5,000 to access many of the benefits offered. If you can't maintain this minimum balance, you won't be able to earn interest, have access to the cash back program, or waive the $10 monthly maintenance fee.
Additional fees: Besides a monthly fee, LendingClub also charges certain incidental fees such as $25 for returned items, stop payments, non-sufficient funds and incoming/outgoing wiring. Their overdraft fee is $5 per day. While these service fees may be standard among business checking accounts, other competitors offer fewer incidental fees.
Minimum opening deposit requirement: To open a business checking account with LendingClub you will need to comply with a $100 minimum initial deposit.
This is a great option for small business owners who are looking for a rewards program. The unlimited 1% cash-back feature is a real plus which, along with the .10% interest earn, is a great way to get some extra cash; provided you can keep an average of $5,000 on your account.
With so many business checking account options making a decision can seem a bit overwhelming. Hopefully this list helped you narrow down your options and you are now one step closer to finding your best fit.
I highly recommend you create a list of qualifications and features that you'd expect to get from your business checking account to make this process a bit easier.
Remember, managing your business finances doesn't have to be so complicated, just take a look at Bonsai Cash & Business Hub to see for yourself. Our services are specifically designed for freelancers and small business owners like you. Entrepreneurs who are looking for efficiency and peace of mind when it comes to handling one of their most important assets - Money.
Check out what Bonsai has to offer, there's surely something for you!
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?