Business Vs. Personal Checking Account: What’s The Difference
by Arnab Dey Finance 17 May 2022
You have a few different options when choosing a checking account when managing your finances. You can either open a personal checking account or a business checking account. These types of accounts offer their own set of benefits and drawbacks.
Business Checking Accounts
As the name suggests, business checking accounts are designed for businesses. If you’re self-employed or have a small business, this is your account. Business checking accounts offer features and benefits that personal accounts don’t.
However, business checking accounts also have drawbacks, such as higher fees and minimum balance requirements. Be sure to shop around and compare different account options before deciding on a business checking account.
Personal Checking Accounts
Personal checking accounts are best for individuals who don’t have a lot of transactions or need extra features. They typically have lower fees and fewer requirements than business accounts.
Remember that personal checking accounts also have drawbacks, such as lower monthly limits and fewer features. But if you’re looking for a simple account with low fees, a personal checking account is a good choice.
Here is a closer look at the differences between business and personal checking accounts.
Related Resource: Quickbooks – Accounting Solutions for Small Businesses in Cape Cod
5 Main Differences Between Online Business Checking Accounts and Personal Checking Accounts:
1. Monthly Fees Charged
The monthly fee is one of the most significant differences between business and personal checking accounts. Business checking accounts typically have higher monthly fees than individual accounts, ranging from $10 to $50 per month.
The possible explanation is that businesses often have more transactions and need to use special features, such as wire transfers and merchant services. However, many personal checking accounts offer free or discounted merchant services, such as credit card processing and online banking.
2. Minimum Balance Requirement
Another key difference is the minimum balance requirement. Most business checking accounts require a minimum balance, ranging from $500 to $5,000. Personal checking accounts typically don’t have a minimum balance requirement.
The higher minimum balance requirement is because businesses tend to have more transactions and higher average balances than individuals. Companies also tend to write more checks than individuals, so they need to make sure they have enough money to cover their transactions.
3. Features and Perks
Business checking accounts also offer features and perks that can benefit businesses, such as free or discounted merchant services and unique financing options. Many companies checking accounts offer free or discounted credit card processing, online banking, an online business checking account, and other merchant services. Some business checking accounts also offer unique financing options, such as lines of credit and loans.
4. Monthly Account Statements
Business checking account statements typically include more detailed information than personal account statements. It can be helpful for businesses that need to track their expenses and income.
5. Interest On Savings
Personal checking accounts typically offer low or no interest rates. On the other hand, business checking accounts often offer higher interest rates. Businesses tend to keep more significant balances in their accounts than individuals do.
So, Which Type of Account is Right For You?
It depends on your individual needs. Business and personal checking accounts both have their pros and cons. It’s essential to consider your needs and what features best suit your business before deciding which type of account is correct.
A business checking account is likely better if you need more comprehensive services and features. However, if you’re looking for a basic account with no frills, your best bet is a personal checking account.
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