Common business checking account fees (and how to avoid them)

Business bank accounts are essential tools for managing your company’s finances. They separate personal and business funds, making bookkeeping easier and providing access to services specifically designed for businesses.

However, these perks often come with fees and other caveats that can add up quickly if accounts aren’t managed properly. Knowing how these accounts work and how to keep costs down can save you money and avoid paying more than you have to in the long run. Here’s a look at what you need to know and how to sidestep unnecessary charges.

What is a business checking account?

Business checking accounts are like personal checking accounts but with added features tailored to suite the needs of businesses. These accounts let you deposit funds, write checks and track expenses. Depending on the bank and their offerings, they may provide more advanced features like payroll management.

A dedicated business account matters because it helps streamline the process bookkeeping, tax preparation and financial reporting by having all related funds in a centralized virtual location, making it easier to get a clearer picture of your business’s financial standing.

However, these accounts come with fees that vary depending on your bank and the account tier you choose.

Business checking account fees: What to expect

Business checking accounts aren’t one-size-fits-all, and neither are their fees. Here are the ones you’ll most likely come across and what they might cost you.

Monthly maintenance fees

Many banks charge a monthly maintenance fee, typically up to $15 for a basic account at most major banks. Some banks waive maintenance charges if you meet specific requirements, such as keeping a minimum balance or linking additional accounts. Check with your prospective bank before committing to a new account.

Transaction fees

Some banks limit the number of free transactions you can make each month, such as up to 150 at most financial institutions. Transactions tend to include deposits, withdrawals and payments. Once you hit the limit, you could be charged $0.40 to $0.50 for each additional transaction.

Cash deposit fees

Check your account’s cash deposit fees if your business deals heavily in cash. Banks often allow a certain amount of cash deposits, for example, $5,000, before charging fees of around $0.30 per every $100 deposited. These fees can add up quickly for businesses like bars, restaurants or brick-and-mortar stores.

Wire transfer fees

Wire transfers are a quick way to send money directly from one bank to another, but they don’t always come cheap. While some banks offer free outgoing domestic and international wire transfers, others charge as much as $95 for domestic wires and $135 for international ones. However, fees of up to $35 for outgoing domestic transfers and up to $50 for international transfers are more common. ACH transfers are usually cheaper but take longer for the money to arrive.

ATM fees

Using an out-of-network ATM to withdraw money can cost you anywhere from $2 to $5 per transaction from the ATM’s servicer, plus another similar fee from your bank. However, some banks waive their fee.

Overdraft and insufficient funds fees

If you spend more money than you have in your account, you may get hit with overdraft or insufficient funds (NSF) fees for each transaction bringing your balance below $0. These fees typically cost between $25 and $36 per transaction, sometimes without daily limits.

Additional service fees

The fees above are the most talked about, but there lesser-known fees to keep on your radar. Leslie Kim, senior vice president and business banking product lead at U.S. Bank, mentions that “fees to move merchant funds/credits to a business checking account are also important to small business owners. Business owners that accept card payments should evaluate these fees as consumers tend to prefer card payments.”

Eve Elliott, vice president and business banking officer at Rockland Trust, also recommends business owners find out what fees banks might charge for:

• Online banking or bill pay

• Business mobile banking

• Treasury management services, such as ACH or fraud protection

• Foreign currency exchange or purchase fees

• Stop payment fees on checks or transactions

• Paper statements

• Account research fees to request old account records or statements

How to avoid business checking fees

When added together, these fees can be a sizable burden of small businesses. The good news, however, is that, many of these fees are avoidable with a bit of planning. Here are some strategies to minimize costs.

Choose the right account

When it comes to avoiding fees, “The most important advice is to ensure the checking account is the best business account based on the business owners’ needs and banking activity,” says Kim. Shop around for accounts that match your business’s specific needs.

Many banks offer different business accounts that may work better for small businesses and startups. For instance, some banks waive fees for the first year of business or accounts tied to certain industries. Others offer unlimited transactions for a slightly higher monthly fee. It could be worth it, depending on how many monthly transactions you process.

To help you make the right choice, Elliott suggests you consider questions like:

• What does day-to-day banking look like for your business? Are you depositing several checks? Are your deposits made at the bank or electronically?

• How do you receive payments?

• How do you pay your vendors?

• What is your average account balance?

“Let [your banker] know all the details about how you bank,” she says. “The more information we have, the better we can assist in avoiding [fees].”

Keep a minimum balance

Banks often waive monthly maintenance fees if you use their business debit or credit card or maintain a minimum balance. You can monitor your account and aim to stay above the threshold to avoid paying extra.

Keeping a minimum balance helps avoid overdraft fees by providing a financial cushion. You could also link your checking account to a savings account or credit line for overdraft protection. Setting up balance alerts is another way to avoid insufficient fund fees.

Opt for online banking

Switching to online banking can save you money. Many banks waive fees for online transfers and electronic statements. Plus, online banking offers 24/7 access to your account, making it easier to manage funds and spot potential fees.

Monitor transaction limits

If you frequently exceed transaction limits, consider upgrading to an account with higher allowances. You could also try bundling smaller transactions together to reduce the number of individual actions. High-transaction businesses, such as retailers, should pay close attention to these limits when choosing a business account.

Use fee-free ATMs

If your business frequently requires cash withdrawals, look for banks with large ATM networks or those that reimburse out-of-network fees. Your bank’s mobile app or site can help you find the nearest fee-free ATM.

Negotiate with your bank

If you have a long-standing relationship with your bank or maintain significant balances, don’t be afraid to give them a call. Banks can waive or reduce fees for loyal customers who ask.

Which bank has the lowest fees for business accounts?

Online banks typically charge fewer or lower fees than brick-and-mortar banks, which need fees to cover higher overhead costs.

Fintech banks are also a growing alternative to both types of banks. These financial technology companies aren’t actually banks but instead provide banking solutions through third parties that securely access a traditional bank’s system. From there, the advantage depends on the Fintech bank’s capabilities, but you may be better able to manage your account on the move or even use AI to get financial advice.

Here’s a comparison of a few popular banks in these spaces and the fees you might encounter for the most basic business account.

Additional tips for managing business banking costs

Beyond avoiding fees, these four tips can help you get the most out of your business checking account:

• Review statements regularly to find and address errors or unexpected charges. Kim also advises meeting or talking with your business banker regularly to stay a step ahead and reduce or eliminate the fees you see in your account.

• Consolidate accounts if you’re juggling multiple accounts to simplify account management and reduce fees. “Having the entire banking relationship at one financial institution can have additional perks and fee waivers,” Kim says. “Finding a bank that offers a full suite of products and services, like U.S. Bank, is a great first step.”

• Stay informed by periodically reviewing your account terms to ensure they meet your needs. Banks frequently update their fee structures.

• Automate bill payments, which may help you avoid late fees and streamline cash flow.

The bottom line

Business checking accounts are vital to running your company, but fees can chip away at profits. By understanding common costs, choosing the right account and implementing smart strategies, you can keep your banking expenses in check and focus on growing your business. Consider reviewing your current account’s fee structure and comparing it to competitors to ensure you’re getting the best value for your business needs.