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Choosing the Right Bank Account for Small Business: SME Banking Tips

21 December 2023

, posted by 

Nida Amalia

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As a small business owner, you make crucial choices daily that affect your business’s bottom line. Choosing the right bank account for your small business is equally essential because it is the first step towards achieving financial success. Your business banking needs differ from your personal banking. 

A business account with a reliable bank or neobank will help you make smart financial decisions, process high-volume transactions, obtain a business loan, earn interest, make transfers, and perform other business-related activities smoothly. Having the right business account for your startup will add value to its growth. So, it’s important to have a separate business bank account that fits the unique needs and goals of your small business. 

In this small business banking guide, you will learn the importance of having a separate business account, the types of bank accounts available, and the best strategies for choosing a bank account for your small business. These tips and information will help you make the right decision for your company. We will also introduce you to Fazz Business Account, the hassle-free banking solution for small businesses across Southeast Asia.

Types of Bank Accounts for Small Businesses

With numerous options available, choosing a new business account can seem overwhelming. Each bank and financial institution offers its own types of bank accounts, each with a unique purpose. Here are the most common bank accounts developed to help small businesses effectively manage their finances. Let’s explore these types!

Business Checking Account

A business checking account is a versatile account used for all financial transactions. You can deposit money, make payments, withdraw cash, and transfer funds in this account like a personal bank account.

This business account allows you to easily manage all transactions through mobile and online banking. Most business checking accounts, like a Fazz business account, don’t require a minimum balance or extra fees. Moreover, this account is also eligible for FDIC insurance coverage.

Business Savings Account

A business savings account is the right choice for your small business if you want to set aside a percentage of money and watch it grow over time. This bank account provides you an opportunity to earn a good interest on your savings.

Multi-currency Account

A multi-currency account, or foreign currency account, is ideal for small businesses that pay or receive money in foreign currencies. This bank account allows you to send and receive funds in multiple currencies. In addition, you can earn interest on your money, depending on your chosen bank.

Merchant Account

A merchant account is a type of bank account that facilitates essential debit and credit card transactions from clients. This bank account will be necessary if your business takes debit and credit card payments. When a client pays you, the funds are deposited into this account, and after processing, they are transferred to your other business bank account.

Note: Fazz Business offers a business account made specifically for small businesses in Southeast Asia. Our business account is easy to set up and has no minimum balance requirements or hidden fees. If you are seeking the best and simplest way to manage the company’s finances, open a business account today.

Can I Use my Personal Bank Account for Business?

You can use your personal bank account for business, but it is not recommended. Mixing your business and personal finances can lead to accounting and tax issues and put your personal assets at high risk if your company faces legal issues.

If you’re freelance, sole proprietor, self-employed, or contractor, you’re your business. There is no legal requirement to open a separate business account in such a case, but it is strongly recommended. 

Moreover, the IRS does not consider a sole proprietorship to be a legally separate entity. Having a separate business account for your small business will help you organize your finances. It is also important to keep track of business transactions, record receipts, and label those transactions as business expenses for tax purposes.

Why Do I Need a Separate Bank Account for My Business?

Using a personal bank account for business purposes is never a good idea. Even if you are a sole proprietor, a business account will help you avoid financial headaches and protect your personal assets.

Here are reasons why you need a separate business account for your business finances.

  • It keeps your personal and business funds separate.
  • It legitimizes your business and develops a professional image of your company.
  • It simplifies tax preparation.
  • It allows you to keep track of your cash flow and expenses.
  • It boosts your company’s credit rating.
  • Lastly, a separate business account is a prerequisite for a business loan. 

Key Considerations for Small Business Owners When Opening a Business Bank Account

When opening a business bank account for your small business, do proper research and take these key considerations into account.

Evaluate Your Business Goals and Banking Needs: Consider your short and long-term business goals and then evaluate your banking needs depending on these goals. This will help you shortlist the features you are looking for in a business account and narrow down the banks depending on it.

Compare Fee Structures of Shortlisted Business Account Providers: Compare rates of your shortlisted potential banks. You should see opening deposit requirements, service fees, maintenance fees, ATM fees, transaction limits, withdrawal fees, and others. Also, familiarize yourself with the bank’s terms and conditions.

Consider Online and Mobile Banking Experience: Make sure the chosen bank provides robust online banking services so you can have the freedom to conduct business from anywhere.

Ensure Scalability and Growth Support: As your small business grows, you have to make more and more transactions. So, you must go for a business account accommodating high transaction volumes. Additionally, it is best to choose a bank that offers business loans so you can support the growth of your small business.

Prepare the Needed Documents: Last but not least, you should prepare all the required documents in advance. The required documents can vary depending on the bank you choose.

Here are the essential documents required to open a bank account for a small business:

  • Proof of residential address 
  • Identity proof
  • Proof of company registration in Singapore 
  • Complete business information
  • Identification proof of shareholders and business directors 
  • Business Constitution or Company’s Memorandum and AOA
  • Board Resolution

After evaluating the crucial factors, choosing the best business account provider, and preparing the documents, it’s time to open a business bank account for your small business and start managing your business finances. You can open a business account online or in person, depending on the bank or financial institution you choose.

Check out  An Ultimate Guide to Opening a Business Account in Singapore!

Fazz Business Account: A Best Fintech Solution for Your Small Business

A Fazz business account is the best solution for small businesses in Singapore. Unlike traditional bank accounts, our business account comes with no minimum balance requirements, no hidden bank fees, and no subscription fees. This makes us the best choice for small and mid-sized businesses that are seeking to open a business account in Singapore and ease their financial burden. 

Fazz Business is a leading neobank licensed as a Major Payment Institution in Singapore that offers excellent banking solutions to fast-growing startups and web3 companies. Business owners in Southeast Asia use Fazz Business Account to pay and receive money hassle-free and conduct business at the lowest cost.

Our multi-currency business account allows customers across Southeast Asia to deposit both SGD and USD funds without any balance requirements. Moreover, customers can get limitless physical and virtual corporate cards without any annual charges. If small business owners need a loan to grow their business, Fazz Business also offers a working capital loan that can be approved in a few days.

The rise of fintech is transforming the banking landscape with online integrations and making it easier to handle business from anywhere in multiple ways. With Fazz Business, you can open a business account online in a few steps and manage your finances seamlessly anywhere.

Open a business bank account with Fazz Business and grow your small business without limits!


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