How to Choose a Good Bank as a Freelancer

When you’re looking at banking options for yourself as an individual, you need different things than you need as a freelancer. A personal bank account is usually part and parcel of building a larger relationship with your bank. After you’ve got the bank account, you’re likely to look at car loans and home mortgages from the same place you handle the rest of your finances.

But when you’re opening a business checking account, you’re looking at the whole enchilada. While you might be able to allow for some leeway in getting good service on your personal account, you have to know that any incoming payments will be handled promptly, and any payments you make to contractors or to buy new equipment will be paid out immediately. A frozen business account can cause big problems with your ability to do business.

Choosing the Right Bank

The first decision you have to make when it comes to your banking options is whether to go with a local financial institution or a bigger bank. You may have some personal preferences right off the bat — at the very least, it usually makes sense to try to do all your banking in one place. However, there are a few different considerations worth looking at before your final decision:

  • How do you handle your bookkeeping? If you use one of the many web apps that offer to tie into your bank account and pull in information automatically, you may have to keep your accounts with a larger bank to get full functionality.
  • Do you expect to expand in the future? You may be able to build a stronger connection at a smaller bank if you’re hoping to get a small business loan to expand down the road.
  • What services do you need? If you’re hoping to get a business credit card, going through a bigger bank can give you more options for rewards and specific services.
  • How much time do you have to devote to your banking? Certain banks have reputations as being difficult to work with, even though they may offer lower fees. If you don’t have the time to devote to making sure an extra add-on doesn’t wind up on your account, it’s important to choose a bank with an excellent reputation.

The Trouble with Business Accounts

Most banks consider business checking and savings accounts a great way to make money. Business owners are generally more willing to pay for banking services (especially those that might save time or money) than personal account holders.

You need to do some research and decide exactly what you need in terms of maintaining your business.

When you’re opening an account, someone is guaranteed to try to upsell you, at the very least. You may also find that some of the standard features of personal banking just aren’t available — it isn’t impossible to find a free business checking account, but it also isn’t all that easy.

You need to do some research and decide exactly what you need in terms of maintaining your business. Take a little time and go around to the banks you’re considering and actually sit down with one of their advisers.

As long as you’re firm that you’re still in the research phase, you should be able to have a conversation about what the bank offers without getting too hard of a sell to open a bank account immediately.

There is No One True Solution

Unfortunately, I can’t point to one particular bank account and say ‘this is exactly what you need.’ Each of us runs our freelance business differently, giving us different requirements. I will, however, tell you what I’ve chosen to use.

I have a business account with Bank of America — actually, it’s three accounts. I have two checking accounts (one for accounts payable and one for accounts receivable) and a savings account. By being religious about how I make deposits and pay for expenses, most of my bookkeeping is a breeze.

I chose Bank of America for convenience. I have several clients who pay with paper checks (something I encourage over PayPal when possible) and I can make deposits with Bank of America even when I’m working from the road. I’ve had to make deposits in at least six states now and I haven’t had a problem with that.

I also like that because I’m working with a big bank, I’ve been able to get problems resolved relatively quickly: someone gained unauthorized access to my business account last year. Bank of America resolved the entire matter and while I was worried out of my skull, it took minimal effort on my part to get the matter handled. I’ve heard horror stories about Bank of America’s customer service, but I haven’t had a problem myself.

I do pay a fee for my account. From previous employers, I know I’m on the lower end, but that’s partly due to the fact that I don’t need any credit card processing services or anything like that. For the record, my personal accounts are not at Bank of America — I’ve found better options than that.

I don’t currently have a line of credit open for my business (I’m a bit paranoid about credit in general) but I do have a card I’m considering and it is not through Bank of America either. I firmly believe in picking and choosing what works for me, and if you can handle the lesser convenience this approach offers, I certainly recommend it.

Photo credit: Some rights reserved by trekandshoot.

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