Your company bank account is an essential component of your financial operations. Your company account is where you keep your money as well as pay bills, wages and running costs from.
As your company develops and grows further you will notice that you have enough money in your account to handle monthly bills and other projected charges. You may even have additional cash to set aside.
Business Saving Accounts: What You Need to Know
Business saving accounts are created solely to separate your profits from the money you wish to invest back into your business. Or for any other costs.
Like any other saving account, a business saving account is an account that you create with a bank to keep extra money. And hopefully increase the assets you save.
Here is everything you need to know about the many types of accounts available. What to watch for when selecting one and some of the finest high return business saving accounts available.
“Interest rates on business savings accounts are often three times greater than those on business accounts”
What is a Business Saving Account?
If the revenue of your business is strong and its profit margins are increasing then you may find yourself with a cash surplus.
Do you wish you could profit from this extra earning without taking on the hazards of stock market investing? Although you may also benefit from a business loan. Another way you may do so is with a business savings account.
Interest rates on business savings accounts are often three times greater than those on business accounts. As a result, you can deposit surplus cash. And make hundreds of dollars in interest without having to risk investing in the market.
Unlike many personal savings accounts a business savings account will require you to deposit a certain amount of money to open the account. And then maintain a certain balance.
Business Savings Account vs. Business Checking Accounts
In most cases a savings account will be opened after your company account has been well established. However, if your company does have the funds, it never hurts to open both types of business bank accounts right away.
It's critical to know the key distinctions between these two types of banking accounts. The distinctions between them can be narrowed down to two main elements.
Firstly, the funds in your savings account will most likely be more restricted than those in your business account. Secondly savings account funds will earn interest over time however business account funds will not.
Types of Business Savings Accounts
There are four main types of business accounts to choose from depending on the number of funds you will deposit and the kind of usage you expect.
Certificate Of Deposit
A certificate of deposit is a high yielding savings instrument available from banks and credit unions.
CDs often provide fixed rates that are greater than the fluctuating rates offered by standard savings accounts.
In return for a higher and more consistent APY. You will have to hold off from the withdrawal of funds for a specified length of time.
Depending on the financial institution, CD maturities might range from three months to more than ten years. As your CD approaches maturity, you may be able to lock in a higher interest rate.
Cash Management Account
A cash management account allows organizations to make the most of their funds without maintaining several accounts or restricting access to funds.
CMAs are not however like bank accounts. Instead, they integrate the characteristics of business savings accounts, checking accounts and investment accounts to provide all in one financial management.
Account users may earn industry leading APYs with no personal risk, no minimum balance fees, no overdraft penalties and wire transfer costs.
Furthermore, because it is a single account, all of your funds generate interest.
Business Money Market Account
Money Market Accounts are savings accounts with the added benefit of some business checking account characteristics.
They offer debit cards, ATM cards, check writing capabilities and ATM withdrawals in addition to high interest rates and FDIC or NCUA protection.
While MMAs function as a handy hybrid business account you will still want a company checking account. MMAs are subject to the standard six per-month withdrawal restriction.
High-Yielding Business Saving Account
A high yielding saving account is a type of bank account that pays interest and is often guaranteed by the federal government.
The top high-yielding accounts may generate an annual percentage interest of 1% to 2% (APY). That may not appear to be a tremendously lucrative yield. But it is significantly greater than an account with an APY 0.6 percent.
Other savings accounts may give better rates but cash in a savings account is easily accessible.
High yielding accounts are a smart option if you need to use this cash to cover an expenditure or invest in an opportunity.
“Despite their boasts, all high interest business savings accounts function the same way”
Business Saving Accounts: What to Look For
With so many banks claiming to have the greatest high yield business savings accounts it might be difficult to choose the ideal one.
Banks' high interest business savings accounts despite their boasts all function the same way. However, each has its own set of terminology which you should be aware of before selecting.
When looking for the best business savings account consider the Annual Percentage Yield, Withdrawals, Access and Customer Service. As well as Services Fees, High-Interest Business Savings Account Fees Plus Minimum Balances and Opening Deposit.
Best High Yielding Business Saving Accounts
Now that you have all the information you need to know about business savings accounts, you're finally ready to open one!
Here are some of the best high yielding business saving accounts you should consider:
They offer the ideal blend of traditional and internet banking. You may link your Capital One checking account for rapid transactions and easy access. In addition, they provide a terrific high yield business savings account.
Prime Alliance Bank
This is the greatest alternative for those looking for minimal minimum balance requirements. But you must have at least $1 in your account to receive interest. As a result, Prime Alliance is a good option as a business savings account for smaller businesses.
First Internet Bank
Online only First Internet Bank provides a typical standard savings account. Yet it has the highest ongoing APY. If your balance exceeds $1,000 a $5 maintenance charge will be eliminated. However, the transaction and deposit costs will still apply.
The Bottom Line
Whether you're a small business looking to separate your earnings from your investments or a business looking to double their money through interests, a savings account is ideal!
You wouldn't want to risk the hard work it took to build your company from the ground up. It would be best to consider opening a business savings account and reap the many benefits that come with it.