Longtime readers of Cornered Office may remember that I flailed my way towards a workable banking system over the course of several years. I actually lucked into a great system (at my existing personal bank) when I lived in New England, and then when I moved to Georgia ran into one problem after another for awhile (documented here and here). I finally got settled in with a small local bank, and all was well until I incorporated last year, at which point my account got messed up again, briefly, and now remains… less than optimal.
Banking is a big deal when you run your own business. You want to feel like your bank is making things easier for you, not harder. I mean, I guess the case could be made that banking is a big deal, period. Who wants managing/accessing their money to be complicated? No one. But it’s particularly true when you’re the one running the show.
So—in the continuing spirit of “learn from my mistakes” or perhaps “surely you are not as dumb as I was”—I thought I’d go over some things to consider when setting up banking for your freelancing or small business endeavor.
1) Start local. One of the biggest mistakes I made when preparing for my move was shifting to a giant national bank on the assumption that it would ease the transition, and also that it would mean easy access to ATMs even when traveling. While the second part is true, the first part often is not. Over time I’ve come to realize that smallish local banks just tend to be staffed with more attentive customer service, and they work harder to keep you happy. That’s aside from the fact that it supports your community to bank with organizations that have a vested interest in your area (rather than just being Field Office #375). My clients are all over the country, but I live here. The smaller, local banks tend to be more involved in the community, and that’s just good karma.
2) Know your priorities. The bank I’m currently at has an online banking system that served me well for the first few years (and that’s important to me). After I incorporated, my business account was moved to a different portal, which means my business and personal accounts are no longer linked online, which is inconvenient for me. I’ve sort of been dealing with it as “this is the way it has to be” because I’ve always gotten very good service there and figured this was a problem I’d have anywhere, but recently I learned that another local bank won’t force that separation on me. On the other hand, this other local bank doesn’t have as many convenient locations for me… although it does have an office in my local supermarket, which may be sufficient.
Point being: Know what matters, and then ask questions. Typical things to consider: How the online banking works, where offices are location, what fees are associated with things you’ll typically want to do, etc.
3) Find the perks. The way I discovered this other bank is that my accountant recommended it to me, because they have a Sooper Seekret (yes, that’s the official name) small business account available that pays a promotional interest rate. And because I’m always looking for ways to maximize my savings (because, as a freelancer, you’d better believe I stick every penny into savings that I possibly can), I went to check it out. Turns out that they really do pay more than anyone else, and there are no strings or rules (other than that you only get the promotional rate up to a certain balance). Checks are free. Unlimited transactions are free. Obviously they’re hoping I’ll move my other banking there, but it’s not required. In the course of our discussion I mentioned them not having a lot of local offices and found out that they will pay my ATM fees at anyone else’s machine for up to 10 transactions a month. Nice perk, right? They’re small and they know it. They’re doing things to draw customers in. My guess is that it’s working.
And it turns out that if I want to have my personal and professional accounts all there, they’d all be linked in the online interface, unlike my current bank. They didn’t know it, but that’s actually the biggest draw, for me.
4) Know the rules and traps. At my current bank, they have a list of ways to get free banking. They include things like payroll direct deposit or a minimum balance. (I keep my checking accounts free by having a linked savings account with a minimum balance in it that I never touch.) In this day and age, you shouldn’t ever be paying for banking. You’re letting the bank have access to your money; that’s enough to make it worth their while. That said, make sure you understand what fees you will be charged and under what circumstances. In an ideal world, you can do whatever you need—unlimited transactions, etc.—without any fees. But that’s not the case everywhere. Make sure you understand how the account works and for what you may be charged. A business account should pretty much be free-no-matter-what; different banks handle that differently, though, so ask.
5) Understand the paper trail. It’s important that you have access to your account(s) history for business purposes. I, personally, am not a fan of paper, and always go paperless on my accounts as soon as possible. How far back does their online banking allow you to go? How much paper do they send you? Do they charge you if you come in and ask for an account activity log from last year? These are all things you need to know.
I have to confess, this week I learned that I am loathe to switch banks because my current setup is basically working for me and I like the people there. The bottom line, though, is that I need a bank that makes my life as easy as possible. And that whole online access thing is a big deal, and the new bank is sounding pretty good. Plus, you know, I really need to maximize that interest so that I can retire by the time I’m 120. (Just a little freelancer joke for you, there.) (I’ll be here all week. Try the veal!)