The world of business is constantly changing. New products and services are being created, and the way we do business is continually evolving. This requires business to adapt to the ever changing economic environment ro succeed. Business banking has advanced astronomically since the inception of the internet. Attaining financial assistance in the form of a loan from a bank, like Bank of America, or a peer-to-peer loan option like those provided at Prosper Loans (866-615-6319), is important when your require resources to leverage a business opportunity or simply retain cash flow.

 

One thing that hasn’t changed much in recent years is the use of bank accounts for business. In this write-up, we will explore five different types of bank accounts for small businesses.

1) Business Savings Account

A business savings account is a liquid, interest-bearing account. Deposit money into your bank, and it will earn you interest over time. You can withdraw the funds at any point with no penalties for early withdrawal.

 

Business checking accounts are typically paired with this type of savings account to act as an overdraft protection plan if there isn’t enough cash on hand to pay all the checks that come due during one month’s cycle. A small business owner must keep close track of their finances if they use these accounts because there may not be much wiggle room for paying bills.

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2) Business Money Market Account

This type of bank account is similar to a business saving account where there is no monthly maintenance fee if your balance falls below $2500. You can also withdraw money at any time without having to pay extra fees. The interest rates on this kind of account will vary, but they typically fall between 0.20% and 0.50%.

 

Some banks require you to deposit thousands of dollars into this type of account before allowing you access to the funds via check-writing privileges; others allow for some or all checks written from these accounts to be returned unpaid (NSF) if there isn’t enough cash available when the bill comes due. If you need daily access to your money, this may not be an ideal account for you.

 

Business checking accounts are typically paired with this type of savings account to act as an overdraft protection plan if there isn’t enough cash on hand to pay all the checks that come due during one month’s cycle. A small business owner must keep close track of their finances if they use these accounts because there may not be much wiggle room for paying bills.

3) Business Money Market Fund

This is a mutual fund designed for businesses. The returns are typically less than those of money market accounts. Still, the risks involved are also lower since you aren’t depositing your funds in an actual bank or business account. These investments make one of the best business bank accounts because they are very stable, and it’s ideal if your company needs access to their cash on hand at all times without having to worry about losing out due to fluctuating interest rates. Businesses with more enormous reserves may find this type of investment makes sense as part of their overall financial strategy.

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For companies with simple finances, a business savings account may be all you will ever need. But as your small company grows and begins to bring in more cash, they must expand their financial options by pairing one of these accounts with a business checking account.

4) Business certificate of deposit (CD) account

This kind of account is more like a checking or savings account, but the money deposited into this account cannot be withdrawn without paying stiff penalties.

 

Businesses that need access to funds for specific purposes (like buying new equipment) will find CDs are an ideal option since you can lock in interest rates and draw out capital as needed throughout your contract.

 

These contracts typically last between one month and five years. The longer you agree to leave your cash locked away with a bank or other financial institution, the higher rate you’ll receive on what you deposit. CD rates are usually higher than savings account interest rates and sometimes even rival money market accounts.

5) Business checking account

This type of account is more of a personal checking and savings account, but unlike its more general counterparts, business accounts come with specific perks designed for entrepreneurs. Checks can be written against the balance in these types of accounts without having to worry about whether or not there’s enough money on hand when it comes time to pay bills.

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In addition, most checks that would normally bounce due to insufficient funds will automatically clear if your company has at least one business checking account open. These are just some reasons why so many small businesses have begun using this financial strategy over traditional alternatives like cash reserves or business money market investments.

The Bottom Line

When choosing the best type of bank account for your growing business, you must consider what kind of financing products will help you reach financial milestones without unneeded risk or wasted time/money spent managing multiple accounts.

 

Author bio :- Ken Anthony

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