How to choose the right business savings account

What kind of business savings account do you need?

Before you open a business savings account, calculate how much in liquid assets your business currently has. From there, you can decide which type of account is best for you.

Business savings account: A business banking savings account is designed for surplus cash you don’t need to access on a regular basis. Unlike checking accounts, business savings accounts typically don’t include checking services, but they offer higher interest rates and the ability to separate your savings from the ebb and flow of revenue and operating expenses.

Money market accounts: If you’re feeling stable in your business and its profits, a money market account can be a good option. Once your business savings reaches a certain level, it can be a strategic move to transfer some of it into a money market account, which often provides higher interest rates than traditional savings accounts. Many money market accounts provide the convenience of check-writing, making it easier to manage your business finances. They often have minimum balance requirements, which can vary between banks and some accounts may have limitations on the number of withdrawals or transfers you can make per month.

Determine your business’ needs and goals in the short and long-term

Once your business has enough excess cash to justify opening a business savings account, the next step is to consider whether that balance is likely to remain relatively steady or fluctuate widely. If you have extra cash but expect you may have to dip into your savings in the near future, sticking with a checking account might be the better option. If you’re still feeling confident about opening a business savings account, you can start considering how you’ll use it to help your business grow.

Maintaining a savings equal to three to six months of operating expenses can serve as a buffer against unexpected events or market conditions. An easy way to do this is to activate a business savings sweep, this automatically moves daily excess balances from your checking to your savings account. This way, you can work towards your savings goal while maintaining a minimum in your checking account to cover day-to-day expenses.

Many business owners are actively saving towards a goal for their business, whether that be a new office space or the funds to take on new employees. A business banker can help you determine how to achieve your goal quickly and efficiently by looking at your finances one year, two years and five years out, so you have an idea of where your savings should be in order to meet your goals.

Compare account interest rates

Interest rates are one of the most important variables in choosing a savings account that’s right for your business. High yield interest rate accounts, for example, often have higher interest rates, but they can come with more requirements, like maintaining a larger balance or using a debit card a certain number of times a month to avoid fees. Accounts like these sometimes have a cap — in order to get the higher interest rate, you have to have a large amount of money in your account at any given time.

A thoughtfully chosen savings account for your business can provide a valuable financial asset and peace of mind. By considering your unique needs, goals, and financial situation, you can select the most suitable account to support your business's growth and stability.