A business bank account allows a sole-proprietorship, a partnership or a corporation to carry out financial transactions under an official business name. The Internal Revenue Service requires personal bank accounts to be separate from business bank accounts -- for tax purposes. Banks, credit unions and other financial institutions provide a range of business accounts for the effective management of cash and interest bearing investments (mutual funds, bonds and money market fund shares).
Business Checking Account
A checking account allows businesses to deposit and withdraw cash and funds from a bank through ATM cards, electronic debit cards or checks. Some business checking accounts require a minimal deposit before establishing a new account while others require only proof of business and identification. Checking accounts provide a wide range of financial services to a business at highly competent rates. Banks allow various types of checking accounts, depending on the financial needs of a business and the legal requirements of a bank. Some banks, for instance, allow an unlimited amount of checks to be written for cash withdrawal per month. Others restrict the number of checks a business can write. Banks also have different minimum monthly checking account balance requirements.
Business Savings Account
A savings account is an interest-bearing business option that is maintained by a financial institution. It provides businesses a constant stream of interest by saving and managing a business' liquid assets. Savings accounts are not linked with checkbooks and debit cards. Instead, cash is withdrawn through an ATM card or a personal visit to the bank itself. Some business savings accounts require a minimum deposit to be maintained at all times. Regulation D, 12 CFR 204.2(d)(2) of the FDIC manages transfers, payments and withdrawals performed by a savings account. Banks are bound by law to comply with these regulations. Bank statements and passbooks list all monthly business savings account transactions.
Business Certificate of Deposit (CD)
A certificate of deposit is a time-bound (one month to five years) bank-issued instrument of debt. Businesses can utilize CDs by putting aside a portion of liquid assets for a specific period of time. A certificate of deposit bears a maturity date, which determines the interest rate accrued upon maturity. The Federal Deposit Insurance Corporation (FDIC) insures and guarantees the safety of all bank-issued CDs. Not all banks, however, are insured by the FDIC.Typically uninsured banks provide higher interest rates but less security on CDs than an insured bank. Businesses have the option of looking into various types of CDs, including callable CDs, brokered CDs, liquid CDs, variable rate CDs, add-on CDs and zero-coupon CDs.