Getting you ready to switch business banks

o, your business bank isn’t working out. You might have a longstanding relationship with your bank, or maybe you opened the account recently. Either way, you’ve decided there are better options out there. Now what?

This step-by-step guide will walk you through the whole process of switching your business bank account, from breaking down your needs to managing your new account. Here’s what you need to know before you switch.

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About business banking

A business checking account is a must-have for businesses of all sizes. It helps you separate your business and personal finances, makes it easier to pay suppliers and employees, and gives you the tools to track your business’s growth.

Unlike personal accounts, business bank accounts typically come with business-specific features such as:

• Employee debit cards
• Invoicing capabilities
• Payroll processing
• Integrations with bookkeeping and accounting apps

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When to switch your business bank

Your bank should fit your business’s needs and offer features that make it easier to manage your business’s finances. It should also fit your budget. It might be time to switch banks if:

• Your account fees are too costly
• Your bank doesn’t offer scalable features to upgrade as your business grows
• Your bank’s customer service is unhelpful or unresponsive

If you feel that your current bank isn’t a good fit for your business, it’s worthwhile to switch. Below are some steps to make that process easier.

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Assess your business banking needs

Before you pick your new bank, take some time to consider your small business’s financial needs. Some accounts might be too complex and expensive for a single-person business or freelancer. Others might be too limited for a growing business. When you sit down to start researching new banks, ask yourself—and your team, if you have one—these questions.

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What services do you require?

Do you need advanced tools to manage your payroll or invoices, such as automated payment programs? Are you looking for a dedicated financial adviser? Consider the features that will help your business grow.

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What are your banking priorities?

Think about what matters most for your business. For example, you may prioritize a high-yield savings account if you want to collect interest over time. Pick a bank that matches your business's priorities, whether that's personalized advice, minimal fees, extensive digital solutions, or a broad network of accessible branches.

Some banks and banking solutions have wide branch availability, while others, like Novo, stand out for low fees and helpful customer service.

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Where does your current bank fall short?

If you have issues with your current bank, make a list of them. Ensure the new bank you choose has all of the services your current bank lacks. It’s also worth reading customer reviews of other banks and considering whether yours truly falls short by comparison.

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Research potential banks

Once you’ve identified your business’s needs, it’s time to compare potential banks. Take your time and don’t hesitate to consult an expert. Here are a few different options to look into.

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Check with your current bank

Check with your current bank about its other account options. Your bank might offer scalable plans so you can upgrade. Maybe you don't need to switch banks after all.

Changing accounts with your current bank probably won’t solve any issues you have with your customer support or financial advice. But if you’re just looking for more features or customization, you should look into your bank’s products.

The bank might also offer a business account with a partner institution. Staying within the same bank—or umbrella company—makes it easier to switch accounts without going through a new application process.

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Local and national banks

Traditional banks can be great for business owners requiring in-person services. If you'd prefer to visit a physical branch to conduct your banking activities, look into local and national banks that offer business accounts.

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Online banks

If you’re interested in convenient, accessible services and don’t need a brick-and-mortar branch, look into online banks. Online business accounts generally charge lower fees than traditional ones due to their lower overhead costs. Some online banks, including Novo, also offer live customer service and ATM reimbursements so you don’t miss out on these positive features of traditional banks.

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Credit unions

A credit union is a membership-based bank with customizable accounts and low rates. Some credit unions don’t offer membership to everyone. For example, Navy Federal Credit Union has low-rate business loans, checking accounts, and savings accounts, but membership is only available to members of the military and their families.

If a local or online credit union is available to you, check out its rates. Some business owners prefer the personalized services of a credit union over other options.

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Compare banking services and fees

Next, it’s time to balance your budget with the services you need. Compare the fees, features, and services of your potential new banks. Here are a few factors you’ll want to consider side by side.

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Fees and charges

If your business is just getting off the ground, you probably want to opt for a free business checking account. Some of the best online banks and credit unions offer free accounts with limited features.

Novo, on the other hand, is an online fintech that charges no monthly or hidden fees for its full range of features. You can sign up for a Novo account in minutes and access tons of convenient tools and services without the costs of a traditional bank.

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Interest rates and returns

When you’re opening a business checking or savings account, consider its APY. A higher APY means better long-term savings—or, at the very least, it can help to lessen the impact of inflation.

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Convenience and accessibility

Is it important for you to speak to your banking representatives in person? Does your business deal in cash? If so, you'll want a bank with plenty of local branches and ATMs.

However, some online banks offer unlimited ATM reimbursements so you never have to worry about finding a branch ATM. Online banks can also provide fast signup, quick customer service, and other features that match the convenience of brick-and-mortar banks—but with fewer fees.

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Security and fraud-prevention measures

Your business account will most likely handle a higher volume of transactions than your personal account. A breach could completely derail your payroll, purchases, invoicing, or all three. You can never be too cautious when it comes to fraud prevention.

Research shows that a password isn't enough to protect your online bank account from hackers. Look for banks that offer multi-factor authentication and fraud support to help protect your account.

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Open a new account

When you’ve found the right account for your business, it’s time to officially make the switch. This process doesn’t have to be complicated. It all comes down to being prepared and following the right steps.

Before you start, talk to your current bank about its switch services. It might offer a switch kit to facilitate the transfer. With a switch kit, your bank will gather your information and close your account for you, so all you need to focus on is opening your new account.

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Submit an application

The first step is to submit an application to open your new account. The information you’ll need for your application varies for each bank, but you should be ready to provide:

• Your personal ID
• Details about your business, such as address, trade name, and services
• Your employer identification number (EIN)
• Supporting documents such as your business license and articles of incorporation

Once your application is approved, you’ll have to make an opening deposit. A standard minimum is $25 to $50 for a traditional bank, but it could be up to $1,000 if you’re opening a high-yield savings or investment account.

At this stage, you should also download your new bank’s mobile app and connect with a customer service representative—they can offer more advice on switching accounts and help you through the rest of the process.

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Transfer funds and automatic payments

Talk to your bank about the best way to transfer funds to your new account. A certified check is an easy, free way to deposit funds. Just keep in mind that it might take a few days for the deposit to clear, so have some cash or another emergency fund on hand to handle your business payments in the meantime.

If the bank doesn’t offer a certified check, you might need to pay a small fee to wire the full amount at once or make several smaller transfers over a few days.

Next, switch all of your automatic payments to your new account. That includes your bill payments, rent, payroll, and any other automatic payments from your old account. If you skip this step, you could end up missing payments and incurring interest.

Consider any direct deposits made to your business, too. Make sure your clients or customers have your new account information so there’s no confusion.

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Update your information

Depending on how long ago you opened your business bank account, you might need to update your information. Make sure your address, licensing information, payroll, and other details are up to date when you open your new account.

This step is especially important if your bank offers a switch kit. Your information might be automatically transferred, so take some time to review everything and make sure it’s current.

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Close your old account

Finally, close your old bank account. This might seem obvious, but it’s easy to forget this step once your new account is up and running. Your old, unused account could keep incurring charges if you don’t close it.

Before you officially close the account, be sure to keep records—screenshots will work—of all your important and pending checks, transactions, and invoices. It could still take a few days for everything to finish transferring, so you’ll want to have those records to make sure everything is accounted for.

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Manage your new business bank account

The last step in switching your business bank is getting established with your new account. The sooner you get to know your new bank, the easier it will be to manage your finances in the future.

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Set up online banking

Download any necessary apps and set up your online account. Take some time to get to know the bank’s interface: Where can you find your statements? How about your transaction history? Can you check your credit score through the app? You might want to ask a customer service representative to walk you through the bank’s online features so you don’t run into any hiccups later.

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Establish a relationship with your new bank

Don’t hesitate to get in touch with your bank’s customer service. You should build a relationship with your new bank as soon as possible. If you haven’t already met with your dedicated financial adviser or customer service representative, set up that meeting now.

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Monitor account activity

It can take a few days for all of your funds to transfer from your old bank account. Monitor your account activity through online banking and keep track of your records. If you believe something wasn’t transferred, contact your old bank’s customer service right away.

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Takeaways

Switching business banks can feel like a hassle. You’ll have to take time out of your busy schedule to research the best options, update your information, and transfer your funds. But if your current bank isn’t working out, switching is always worth it. Just make sure you:

• Find the best bank for your business
• Transfer all of your funds and keep records of important and pending transactions
• Close your old account
• Establish a relationship with your new bank

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Better business banking will make it easier to handle your finances and set you up for long-term success. If you're looking for business banking with personalized customer service, ATM fee reimbursements, and no minimum balance, consider signing up for Novo. The application process takes less than 10 minutes.

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Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.

Novo is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A.: Member FDIC.