Before you get overwhelmed by all the options - and restrictions - that come with commercial banking products, remember that choosing a bank for your small business is a lot like finding the right personal bank.
It all starts with identifying your needs.
Consider your long-term objectives. What do you want your business to be like in two, five or ten years? By then you will have established your bookkeeping and a relationship with your banker - and you won't want to change just because you have outgrown your bank's services. Choose a bank that will serve you well into the future.
The basics. Every business pays bills and collects payments. So, you need a checking account. Start with one, but make sure it's affordable to add others later. And be sure you can link accounts and transfer funds easily.
Personal or business? Business checking accounts limit transactions per month and can't earn interest, so you may choose a personal account. If so, keep it completely separate from your household accounts. The government is a stickler about not mixing business and personal expenses. If you use your business name, too (i.e. Jane Doe d.b.a. A1A Charters), you can make and receive payments in your company name, which helps track income and expenses.
If you are concerned about liability, a business account will help protect your personal assets. It also gives your business more credibility. And, with a business account, you can access other bank services designed to help businesses.
Ask about a loan. If you need start up money, equipment leasing, or to stabilize your cash flow, you need a loan. For a start-up loan, find a bank with Small Business Administration loans. SBA loans are government guaranteed, so the bank can award them even if you don't have enough collateral to support your loan.
Small-business friendly community banks are also good sources of start-up money, since they are more likely to look past your credit score and award you a loan if they know you and believe your business is good for the community.
Even if you don't need it, you may want to establish your company credit by applying for a line of credit. This will give you a positive payment record when you do need a loan.
Remember, with any loan, you'll have to explain how much money you want, what it is for, and how you will repay it - so prepare a business plan covering all these details.
You're not done yet. Now, what else can your bank do to help you?
Cash management services help manage your cash flow. Talk to your bank representative about options like money market or sweep accounts, direct debit or direct deposit, and lock box services with check imaging. With some simple planning, your bank can help you make banking both more convenient and more profitable.
Use your banker as a resource. Start building a relationship with your banker now and give them a chance to get to know your business. A good banker will put their experience and expertise to work to help you start your business. Let them help you find creative solutions to your financial challenges.
The bottom line is your bank is a business partner - so choose one that meets your needs.
This article was submitted by Van Canada, Riverside Bank President in Volusia County.