Find the Best Bank and Credit Card for Your Small Business
Banks are in the headlines most days right now. Another one failed. Another one is at risk of failure. Another large bank acquires a small bank, yet once again.
It seems like a suitable time for us at Hoffbeck + Co to share with you all what we believe are the best banks for your small business. While we are at it, we will throw in our favorite small business credit cards as well.
TLDR: scroll to the bottom for our lists 👀
My first job after getting my finance degree was at Wells Fargo. I was a credit analyst and a banker. We were taught to make sure that all of our customers hit the magic number six with Wells Fargo, because then they would never leave. Six relationships (products) with the bank: (1) checking; (2) savings; (3) online banking; (4) debit card; (5) credit card; (6) bill pay. A bank has several products when you consider investments, auto loans, home loans, etc., so six actually comes pretty quickly. Wells Fargo knew the studies show that once a customer hits six relationships with them, they just won’t go. It’s just too hard.
What’s the first thing you think of when talking about switching banks? I’ll go first…it’s a lot of work. I tell you this in hopes that maybe by bringing light to it, it will lose some of its power 🙂. Also, a lot of you are trying to decide where to start your banking relationship. This point emphasizes the importance of choosing well.
Business Accounts + Cards Really Are Important
For Bookkeeping
I talk to way too many small businesses that don’t have a separate business bank account and credit card set up. If you get anything out of this blog, it is that distinct banking relationships (both bank accounts, as well as credit cards) are essential for your small business. For one, bookkeeping is a nightmare when you don’t have separate business and personal accounts. This alone is reason enough to separate your accounts.
For Legal Structure
Additionally, unless you are a sole proprietorship or partnership (not an LLC), then you really need separate accounts for your legal status of your company to hold up. I’m not an attorney (so no, this is not legal advice 🙂), but I did get a Master of Legal Studies at Pepperdine Law so I can bridge the gap between law and business. A key legal business concept that can arise when accounts are not distinct for business entities is “piercing the corporate veil.” Essentially, the courts may not recognize the limited liability of your LLC or corporation if it appears there is no real separation between yourself (the person) and your business. Read more here on NOLO if your interest is piqued. Long story short, open up a business bank account and credit accounts and make your life way easier, while having the peace of mind that your legal structure will hold up if they are ever needed to.
Choosing the Right Bank for Your Small Business
Okay, so now you either need to pick a bank and get your business accounts setup, or you’ve already got accounts setup but you’re curious to see if there are better bank options out there for your business needs.
You might be wondering…
What accounts are the best ones? There are a ton of banks out there, so how do I pick?
A lot goes into the selection process for a business bank account, and I’m not here to tell you that one size fits all for all small businesses. Your small business may have a lot of different needs from the next one. Business banks and credit companies do their best to carve out a niche and be the best with what they do.
So, what’s important to you?
Here are some factors to consider that lead to selecting a great bank for your small business:
Do you need to deposit cash? If so, then an online bank on its own isn’t ideal.
Do you have a lot of transactions each month? If so, then the slim essential accounts likely won’t be the right fit for you.
Do you want to avoid banking fees? The answer is YES!
Do you want to make sure it syncs well with Quickbooks Online? Again, the answer is YES!
Do you have a high or low balance?
Does it offer enough FDIC insurance for your balance? Standard is $250k, but some banks can provide $5M worth based on their banking network. Check out Mercury if you are looking for that high amount.
Are you looking for high interest rates for your checking and savings accounts? Then you might have better luck with an online bank than the big traditional brick and mortar banks like Wells Fargo, Bank of America, Chase, and US Bank.
Do you like to visit a branch? Then check Yelp or Maps to make sure one that checks your other boxes is also close by.
You want to increase your odds of getting access to capital with a small business loan? Small business loans are hard to come by, but smaller regional banks often take the cake with providing these more often than the big banks do.
Do you need or want 24/7 support? Then a small local bank might not be your best option.
My definition of a great small business bank is one that:
Synchs flawlessly with Quickbooks Online
Charges no fees or makes it easy to avoid them
Has no balance requirements
Pays you great interest
Has great support access
Not worried about bank failure
*This isn’t exhaustive, yet these are my core requirements.
(Remember your definition may be different based on the factors called out above.)
The most important factor from my perspective is consistent, accurate syncing with Quickbooks Online. I’m biased, I know 🙂, but from a financial management and bookkeeping perspective, this is a non-negotiable. Here’s why:
More often than not, you will need to make some sort of tradeoff when selecting your business bank account. My number one priority is that my bank uses top-notch technology infrastructure so that syncing with Quickbooks Online is easy and glitch-free. I’ve worked with too many clients’ banks and Quickbooks syncing issues where bookkeeping becomes a nightmare. The bank ends up creating more stress around money than alleviating it.
A lot of small banks simply don’t sync well with Quickbooks. From my experience, a lot of banks will even say that they sync with Quickbooks, but in reality, never have a reliable connection. For me and our business, this ruled out small local banks and credit unions. As a small business consultant, I love to support local small businesses whenever possible, but Quickbooks reliability is an absolute must for smooth and efficient financial operations for our business.
Quickbooks now even has its own bank account offering, but I haven’t used it yet so I can’t give a recommendation on it. But this is as close to the source as you can get to how important this factor is for me. For years I had Capital One Spark accounts and they promised good synching with Quickbooks, but it was very intermittent. I eventually left them and went to a bigger bank (Bank of America) where I have never had issues again. Granted, banks will continue to invest in their syncing with Quickbooks and most will eventually get it figured out, but in the meantime, it can be a big issue.
Okay… drum roll…
Our Favorite Banks for Small Businesses
Bank of America
Pros:
Reliable Quickbooks connection
Easy to avoid fees
A lot of locations if need to visit a branch
Not worried about bank failure as is it is the 2nd largest bank (1st is Chase)
If this bank fails the whole economy is in for it
Nice online banking interface and plenty of options to transfer money to other banks (including Zelle)
Cons:
Doesn’t pay great interest
Tradeoff, yet, opening another business savings account elsewhere can be a great way to access higher interest rates for your savings.
Chase
Another bank with a reliable Quickbooks connection, lots of locations, and no worry of bank failure. This is essentially the Pepsi to my Coke (Bank of America). There’s not major differences between these two banks. It’s more of a preference at that point. A lot of our clients use Chase and have had a great experience there.
Some Other Banks We Are Intrigued By
American Express Business Checking
See more here
This account is a new offering by AMEX and is exclusively for Business Platinum Card Members
We are card members and just received this offer in the mail and may start testing out this account
$0 monthly fees
Earns 1.30% APY
Earns rewards points
Quickbooks Checking Account
See more here
Truist
See more here
Mercury
See more here
Bluevine
See more here
Honorable Mention
Capital One Spark
Capital One has done a lot to serve small business banking needs. We started with Capital One, but eventually made the shift based on their Quickbooks issues. They may have already fixed these glitches, and if they haven’t already, it should only be a matter of time before they get them resolved.
An added positive of banking with Capital One is that they have some easily attainable Small Business Credit Cards as well.
Our Favorite Credit Cards for Small Businesses
American Express Platinum Card
Here is our referral link if you want to earn 150,000 AMEX points (value from $1,500-$3,000)
Capital One Spark
Great options here if you need a starter small business credit card without having the best credit
Chase Ink
Another good option
American Express Delta
Good if you fly Delta
Here is our referral link if you want to earn 70k Delta miles (valued near $700)
Credit Card Tip
It can be great to have multiple credit cards to separate distinct purchasing habits that your business has. For example, you could have one credit card that is used for all operating expenses and another that is dedicated to purchasing products (Cost of Good Sold) that you resell to your customers. This same tactic can be applied to your checking accounts as well.
Be intentional about the banks and credit cards your small business has accounts with. They should make your life easier and give you more peace of mind. And if you have been waiting to finally get your business bank accounts in order, let this be a nudge to crossing the finish line. We may choose different banks, that’s expected. Just make sure you pick one and don’t get stuck with one.
More soon,
Lane
CONSULTANT + PARTNER
P.S.
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