Let me preface this by saying- I’m not some kind of banking or financial genius. I’m a dummy. And I struggled for so long not only to understand the concept of what I needed to do to make business accounts, but also what banks I should chose. I did a TON of research, talked with a bunch of business owners, and let’s be honest- cried a bit out of sheer frustration. Eventually I found a system for my business bank accounts that fits my picky standards and makes all my financial stuff so much easier.

Now that I’ve got it figured out for my own business, I thought I’d help other dummies who might be struggling as well. I’ll teach you the basics to get you started on your first business bank accounts, and show you my favorite banks to work with.

The Basics

Checking Account = Debit Card. This was what confused me so freaking much in the beginning. If I got a business checking account, doesn’t that come with a debit card and a credit card…? Nope. A debit card draws directly from a checking account. If a checking account hits $0, you simply can’t spend anything. Many banks will let you get multiple debit cards that draw from just the one checking account, but the important thing to know is that a checking account cannot go negative. Your business absolutely needs a checking account- this is where your income will go.

A credit card is a whole ‘nother deal. You might even use an entirely different bank. You don’t necessarily need a credit card, although I recommend one. A credit card can only go negative. So it’s good for making purchases, but you should not have people pay you into your credit card. I like to use my business’ credit card to make every single purchase my business has, but I think it’s especially important to set up any reoccurring subscriptions or monthly payments with your credit card. That way it can’t decline the purchase and potentially shut down your business if you forgot to move money around.

Balancing Your Two Business Bank Accounts

Try to keep up good credit card practices as much as you can. This means making sure you try not to spend more than 30% of your credit limit- using more than 30% of your credit limit may ding your personal credit score. Because credit cards charge you interest the longer a charge sits on your card unpaid, you always want to pay it off as soon as possible.

Use your business debit card to make frequent payments to pay off your credit card. You can transfer money from debit card to credit card. Find a routine that ensures you won’t ever forget to pay it off in a timely manner (timely manner means at least once a month). This might mean you pay off every transaction as soon as you make it, or maybe it means you sit down once a week or once a month to pay off the charges.

Credit cards usually require minimum payments to be made once a month. If you miss those payments, or if you’re late, they’ll charge you extra fees. It could also severely impact your personal credit score, which will make it harder to do things like buy a house, apply for a loan, or get another credit card.

Accounting With Your Two Business Bank Accounts

If you make sure that every single purchase comes out of your credit card, and you make sure that every single payment you get goes to your debit card, it makes accounting soooo much easier. To find your total income, just go to your checking account (debit card account) and look at a list of all your deposits. That’s your total income. Simple. To find out your total expenses, just go to your credit card and look at all the charges.

Business Bank Accounts vs. Personal Bank Accounts

Your business account doesn’t have to be technically classified as a “business account” with the bank. It can be just a regular personal account that you use for business. The most important thing is that your business transactions are separate from your personal transactions. In fact, both of my business accounts are technically “personal” accounts, not business.

That being said, there are some perks to having actual business bank accounts:

• First, it will help your business’ credit. Businesses can have credit ratings just like people can have credit ratings. Having real business bank accounts can start it out on the right track and help you in the future.
• Sometimes the government might give business grants or loans (like with Covid) and may require your business bank account to actually be classified as business by the bank to get those loans.
• You may need to check to see if your state or profession requires a business account.

Another important thing to note: If you accept checks, you need to pay attention to whether people should be writing checks to your name, or to your business’ name. If you’re a business account, they probably need to make a check out to your business name. If you have a personal account that you use for business, they need to make their checks out to you.

Automatic Saving and Categorizing With Online Folders

I really recommend using banks that allow for easy savings and categorization. Why not make your life easier, right? Before I started my business, I fell in love with an app called Digit. Basically, you can set up a whole bunch of different folders for each category you want to save for. My Digit account had savings goals and folders for everything, from new shoes, to buying a house. Digit would automatically save for you and put money into all these different categories, or you could manually put money in there yourself. When you were ready to spend it, you would transfer it back to your bank account with one click.

Once you have this kind of folder system in your life, I swear y’all. You can never go back. It’s the best thing ever. So I started the hunt for a business bank account that would let me have that same kind of system built right in.

The problem? Most banks that offer similar systems only offer them in savings accounts- not checking accounts. This means you could only withdraw from your folders 6 times a month! What if I wanted to make more than 6 purchases in a month? That was not going to cut it for me. I needed a bank that had this kind of automatic folder system connected to a checking account- with no limits on how often I could spend.

What I Found? Qapital. The Perfect Solution For My Business Bank Account.

Like Digit, Qapital can be used no matter who you bank with. You don’t even need to have a checking account with them! Although you don’t need one, I decided to get a Qapital debit card anyway. So my Qapital Debit Card became my business account- and it saves and budgets for me automatically.

What I love about Qapital:

• It took me like 5 minutes to sign up. I didn’t have to wait for anyone to approve me, they don’t do credit checks, and the signup process was super quick.
• No minimum balances. Not to start, not ever. Your account could chill at $0 and nothing would change.
• No overdraft fees.
• Automatic savings based on a ton of customizable triggers. One of the big problems I saw with other banks is that I could set up automatic savings based on a percentage of my deposits, or I could set up just a flat fee. Not both. With Qapital, I can tell it to save 10% of every single deposit and put it into a sales tax folder. And I can tell it to take $25 from every single deposit and put it into a client gifts folder. It also lets you save based on how large the payment is, where the payment came from, round up every purchase, create budgets, save every time you go to the gym, save a certain amount in a certain time period, and more. Seriously. Incredible. It’s like Digit, but on steroids.
• Multiple folders. Many of the other banks only offered one savings account I could save to, or they had limits on how many I could have. With Qapital, it’s unlimited.
• Withdraw from your folders whenever you want- however many times you want. If you have the Qapital debit card, it’s even an instantaneous transfer.
• The ability to deposit and write checks using the app.
• The ability to deposit and withdraw cash without fees at certain ATMs.

The cons?

• They cost $3 a month if you want just the folder ability. $6 a month if you get the Qapital debit card as well. Many of the other banks had free options, so this was kind of a bummer, but not outrageous.
• They’re not great with multiple users. You technically can add one other person to your account, but they can’t get a debit card for your account, and they’re limited in how they can interact and withdraw the money there. This is the primary reason I use them only for business, and not for my personal account.
• Their APY is only .10%. Many banks will pay you a percentage of how much money you have stored there. A .10% APY isn’t that high, but it’s also not one of the lowest either.

Here Are Some Other Banks I Checked Out, and How They Compare

Your Needs Will Change as Your Business Grows

This system I have with Qapital works great for me. But remember, I’m a small one-person business. As your company grows and as you start to earn more money or add more people onto your team, you may want to consider other options. You need to decide what is going to work best for you and your individual situation. And of course, consult with your accountant along the way.

If you were feeling totally lost and confused about what to do or who to chose, I hope this post was able to give you some clarity! Or at least some good ideas. I’m sure there’s a ton of people out there with even more great information. If you have a bank that you love to use, let me know in the comments below!

Bonus!

Looking into Qapital? You can get (and give!) $5 using this code: m28qb4xc

Looking into Digit? You can get (and give!) $5 using this link.