The Benefits of Using An Online Bank Account For Your Business

Online bank accounts are a fast, convenient way to manage your money. If you’re running a business, online business accounts become even more important, because they allow you to keep your finances separate yet accessible.

Whether you’ve just got a gig job on the weekends or you’re an experienced entrepreneur, online business bank accounts keep your finances organized, give you instant access to your money through transfers and ATMs, and securely guard your cash so you can focus on the job at hand.

Read on to find out why online bank accounts are a must for business owners of any size.

If you’re a freelancer or a gig worker, you might not see the need to get a separate bank account for your finances. Or if you sell products through a platform such as Etsy or Ebay, you also might think your personal bank account is working just fine.

But the truth is, it’s actually really important to separate your income-generating accounts from your regular personal accounts.

If you’re working for yourself outside of a traditional job (where you work for someone else), you need a business bank account for the following reasons.

Separate business from personal

First, you don’t want to mix up your business transactions with your burrito orders and makeup purchases. If you’re trying to stick to a budget in your personal life (as is often the case when someone takes on outside work), you don’t want to jam it up with work transactions.

It gets very difficult to categorize everything separately and know what you’re spending on your business (gas, supplies, etc.) and what you’re spending on your personal life. The more business transactions (whether incoming or outgoing) you have, the more challenging that is going to be.

Make room for growth

Separating your finances also opens the door to growing your business. When you have a clear idea of what your business costs are compared to your business income, you can have a better idea of whether you can afford to invest in your business, which is vital for growth.

Why not try to improve your business, take on more clients, increase your revenue? You’ll be able to better tell whether you can afford to make those kinds of investments when you have a separate account.

Streamline your taxes

Finally, and I honestly think this might be the most important factor, you’re going to make it so much easier on yourself at tax time (or easier on whoever does your taxes for you). With a separate business account, it’s clear what expenses were for your business, versus which were for your personal life. The business ones, you can deduct on your taxes (the personal ones, not so much). 

So by clearly separating your accounts into business and personal, you’ll be saving yourself time and money, while acting like a professional and making room for your business to improve. Triple win. 

And don’t worry, setting up a business bank account doesn’t have to be difficult or overwhelming. You can do it online in just a few minutes if you choose an online business bank account. There are many other good reasons to use an online business bank account, too.

My favorite thing about online banking is how convenient it is. I’m not tied to business banking hours when I want to deposit funds, and I never have to make a special trip to the bank. If I receive money from a client at 9 p.m. on a Saturday night, I can deposit it right away, without having to wait until Monday morning. Lots of online business accounts, such as the business checking account available from Novo, let you deposit checks electronically just by taking a picture with your phone.

I can make electronic transfers whenever it’s good for my schedule, and I can check my accounts at any hour of any day – I don’t have to wait for a paper statement to show up in my mailbox and then make time to go over it. I can check that a withdrawal came out of my account just by logging in to my mobile app and seeing my recent transactions. 

Online business bank accounts are, by their nature, paperless, which means no more filing cabinet stuffed full of old paper statements. I can access a statement from the past just by downloading a PDF. When it comes time to pay my estimated taxes each quarter, it’s easy to see when a purchase was made just by consulting my transaction history.

Plus, many banks offer discounts on fees for choosing paperless electronic statements. Saving a tree AND saving money? Sign me up. 

One thing that’s very important to me is security. While a traditional bank might use a heavy vault to protect money, an online bank account uses state-of-the-art encryption.

Take Chase as an example: their mobile business banking app uses SSL technology to encrypt your information and two-factor authentication to keep it secure.

Bank-level, industry-standard encryption: accept nothing less for your online banking security if you want to keep your money safe. Plus, many banks offer fraud alerts as well as fraud protection, so you’re instantly notified if something goes wrong.

Your information is safe with an online business bank, but what about your actual money? Yep, that’s safe, too – even if something goes catastrophically wrong – if your online bank is FDIC-insured. That means the Federal Deposit Insurance Corporation will insure your bank account and replace your funds if your bank goes under. Always check to see whether an online bank is FDIC-insured. 

Sometimes, a bank may carry this insurance through a partner bank. For example, the business bank Bluevine and its deposits are FDIC-insured through Coastal Community bank, Member FDIC and their program banks. A typical business checking account would ensure that up to $250,000 of your money is insured, so if something happened to the bank, your funds are protected, just like your personal funds would be at a traditional bank. Through Bluevine, that’s increased 12X to up to $3,000,000.

One feature I find myself using all the time with my online business bank account is instant transfers. I can link my business bank account with my personal, traditional bank account and just transfer money whenever necessary. So, if I’ve received my pay from a client, I can leave some in my business bank account to cover my business expenses, and transfer some to my personal bank account to pay myself. 

You can usually link more than one account, too, so if you want to route some money to an online savings account, too, you can. 

For digital nomads and frequent travelers, having an online bank allows you to bank from nearly anywhere. You’re not tied to bank branches – you can go from one side of the country to the other and still access your account, make transfers and electronic deposits, and pay bills online, all without skipping a beat.

It’s also useful during a pandemic lockdown. While my local, traditional bank stopped offering lobby hours and required drive-through, limited access only, I could still conduct my business banking from my couch – no car (or mask) required.

For larger businesses, it might be useful to be able to give others access to the financials. Whether it’s your bookkeeper or accountant, or a partner or employee, sometimes you want or need other people to be able to do certain tasks, such as making deposits or reviewing transactions.

With online banking, you can do that easily. Like for instance, with a Chase Business Complete Banking^SM account, you can delegate certain cash management tasks to employees by giving them individual user IDs, which you can review later if necessary. You can also set dollar amount limits and control access, too.

An attractive feature whether you’re just starting out or have been in business a while, low fees make online business accounts especially tempting. It’s possible to even get an online checking account with no monthly fees at all. 

Fees are such an annoying feature of banks. They eat into your profits and don’t seem to offer much in return. When you can find a bank that offers free checking, it’s like you just put $15 back into your business each month. I’d much rather spend $15 on a software subscription or upgraded office supplies.

Some business bank accounts discount fees on other services, too, which is useful. So if you’re selling a product rather than a service, and you make a lot of sales (and therefore a lot of cash deposits, for example), then saving money on those transactions becomes a lot more useful.

Novo offers no-monthly-fee business checking, as does Bluevine.

Some banks even take it a step further. Not only do they not charge monthly fees, they actually pay you.

For instance, in addition to business checking with no monthly fee, you can actually earn 2.00% on Bluevine Business Checking balances up to and including $250,000. It’s hard to find that great a rate at regular savings accounts – even online ones! – much less on a business checking account. To qualify for that interest rate with Bluevine you just have to meet one of the following monthly eligibility requirements:

• Spend $500 per month with your Bluevine Business Debit Mastercard® issued by Coastal Community Bank pursuant to a license from Mastercard inc, which you can use everywhere Mastercard® is accepted.
• Receive $2,500 per month in customer payments into your Bluevine Business Checking account via ACH, wire transfer, mobile check deposit, or directly from your merchant payment processing provider.

Interest is not earned in the month when the requirement is not met.

Bluevine Business Checking account

The Bluevine Business Checking account offers no monthly maintenance fees, unlimited transactions and easy-to-use digital banking tools on an account that can be opened in minutes.

There's a free standard plan that earns 2.00% APY on account balances up to and including $250,000 with a monthly activity goal or a Premier plan with a 4.25% APY. Terms apply.

Pros:

• No monthly fees, minimum deposit or minimum balance required
• No overdraft fees, plus fee-free ACH transfers
• Earns a competitive APY
• FDIC-insured up to $3 million

Cons:

• Fees apply on cash deposits
• Out-of-network ATM fees
• No in-person banking services

Open Account

Now, one of the cold hard realities of running a business is that you need to pay for all the stuff you need to run that business. Whether that’s rent for your office, supplies for making your products, or hiring freelancers to help with your services, you’ve got to pay your bills. Online banking makes it extremely easy to do that.

Most online banks will offer direct bill pay, which lets you pay directly. I use this feature to automatically pay for my Adobe Suite subscription each month, so I never have to worry that my copy of Photoshop is expired. You can also use the direct payments feature to pay someone directly – for example, if you need to pay rent for your office space.

Novo will even send a paper check for you. Set it up in your Novo app and just click “send” – Novo will take care of cutting the check and mailing it, so you can pay by check just using the app. No checkbook required!

The best online banks will integrate with your accounting software. This makes it easy to keep track of all of your transactions because your accounting software can import them electronically from your bank account. 

And, keeping track of your transactions – what you made, what you spent – will make it much easier to claim the right business deductions at tax time. Taxes are already complicated enough, so I appreciate anything that streamlines the process!

If you use Novo, for example, connecting your bank account is basically a one-click process. You authorize your accounting software to access your bank (using two-step verification and 256-bit encryption), then you’re good to go.

You don’t need in-person branches to get great customer support. Most online business banks will offer a direct chat service on their website, plus offer an email address to contact them, in addition to a support page. 

If you’re more of a DIY-er anyway, and a lot of entrepreneurs and business owners are, you’ll find everything you need support-wise with online business bank accounts.

» MORE: The best business bank accounts for startups

There are a lot of reasons to use a separate bank account for your business, and even more reasons to make that bank account an online one. Consider separating your business finances from your personal ones, and get yourself set up with an online business bank account.

They are easy to use and easy to open, and many require little or no money to open an account. With a little extra effort and an online business account, you could take your business to the next level. Why not see where it takes you?