As a successful business, you’ll need an effective way to manage your finances. If you’re generating revenue via sales and spending money on materials or goods, for example, these funds will need to be sent and received securely.
Choosing the right type of business account is about more than simply visiting your nearest bank. Instead, you’ll want to compare the different options available to find the right fit for your enterprise. To learn more, take a look at these three different types of business accounts:
1. Checking Account
A business checking account is one of the most popular options for new and existing enterprises. With this type of account, you can deposit and withdraw funds easily, which makes its flexibility a big advantage for businesses with a healthy cash flow.
However, different providers have varying terms, so do your research before opening a checking account. Some have limits on how many checks you can write over certain time period, for example, while others may have a minimum balance that needs to be maintained.
2. Savings Account
As your business becomes more successful and funds begin to accrue, you may have a large balance in your checking account. While some firms decide to leave these funds in a checking account, this may not be the most effective way to manage your company’s finances.
A business savings account can be a viable alternative and one which could help you to grow your capital. Most standard business checking accounts don’t offer interest, but business savings accounts do. By transferring funds into a savings account, you can earn interest on the capital you’re not actively using. To learn more, take a look at this post on the benefits of business savings accounts from advancepointcap.com.
3. Certificate of Deposit
A certificate of deposit can be a way of earning an even higher rate of interest on your business capital. However, the downside to this is that you’ll need to put your money into a certificate of deposit for a specific time period. This can range from one month to five years, although the interest rates available usually increase the longer you’re willing to tie your money up for.
Remember – some bank-issued certificates of deposit are guaranteed by the Federal Deposit Insurance Corporation (FDIC) but not all of them are. Although uninsured banks typically offer the highest interest rates, your capital isn’t secured by the FDIC, so be sure to consider your options carefully.
Dealing with Your Company’s Finances
In many cases, businesses can benefit from having more than one type of account. You may have a checking account for regular expenditure and income, for example, and transfer funds into a savings account at regular intervals. By using the financial products that are available you to, you can ensure your funds are protected and maximize your returns.
However, managing a company’s finances can be a difficult task. If you’re unsure which type of account is right for your business, don’t hesitate to seek professional advice.