Best bank to open up business account?

Question

Hi,

My girlfriend and I are looking to purchase a first investment property soon, and we were wondering if there was a preferred bank to open up a business account. Or maybe it doesn't matter, as long as we have a place to send money for purchases, and to get money from rental income etc. I assume it is mainly for CPA / Tax purposes.

Let me know if it is that simple, or if there are any pro tips we should know about?

Ryan Chatman · Answer

@Joshua Sun my short answer: look for a bank that has features to offer convenience, plenty of locations or ones close to where you'll operate, and a fee structure you are okay with.

Long answer:

1. Do they charge monthly fees? Require minimum balance? Minimum transactions?

2. Fees/limits for transactions and/or deposits

3. Convenience in locations/atms

4. Convenience with apps & online banking

I have used both large national banks and smaller "local" banks and credit unions for business accounts, so I'll share my experiences.

1 & 2. I can't stand paying fees. If my business was new at the time and wouldn't be carrying larger balances, it is simply annoying to pay a bank for not having 1500/2500 minimum average balance. I've also had banks that tried to add fees for things like doing a certain number of transactions over a month. In this case you'll need to determine your financial activity and pick a solution that will work for this. There are also plenty of banks that will have no fee business accounts which is my top choice. Smaller banks are more likely to have no fee accounts, but some big ones do too.

3. Convenience in locations has become very important for me especially since I'd moved to a few different parts of the country and my wife and I love to travel. Nothing beats being able to walk in to a location and resolve your business not far from anywhere you are located at the time. Large banks win in this case.

4. All Online banking/ATMs/apps are not created equal. Local credit unions and small banks usually have online banking & apps but they lack some of the features larger banks have, and their sites are a bit more clunky. I can easily do transfers or different transactions with better suited apps and websites. Another big one is the ATMs of smaller banks sometimes would not have deposit capability or they claim you can deposit your checks at any ATM in their co-op network. I've had to wait almost 2 weeks for a deposit using a co-op ATM, and it sucked because my account didn't even show the deposit until after that 2 weeks. I also have had some banks where their app didn't allow mobile deposits but almost all banks do this now.

I have been very happy using Wells Fargo small business checking, but they no longer offer the same no fee account (I opened in 2015). I'd google search for no fee business checking and see what banks are nearby. Also they should have plenty of ATMs/branches in the area you will be in the most.

I think the above factors are most important for your main transactional account.

As @Hayden W Gibson mentioned- For mortgages I would create relationships with a small local bank's loan officer. This is what we did, completely separate from our primary transaction bank. They will have the best rates and also understand the local markets.

Hayden W Gibson · Answer

Hi Joshua,

I'm in the process of getting my first investment property as well! From the research I've done, I don't think there is a "one size fits all" answer to your question. In my opinion, it's better to keep your money with a small bank or credit union because you often get better service and, more importantly, you have the opportunity to build a relationship with the people at the bank.

As I'm sure you've heard other investors say, real estate is all about relationships and the relationship you have with your bank is no different. I'm sure other more seasoned investors will have better insight than me, but that's my two cents.

Best of luck to you!