When it comes to financial flexibility, most small business owners likely know that that having checking, savings, other types of accounts in their company’s names is often a huge help. However, new research suggests that the amount they pay to have those accounts could significantly exceed what they’d pay for accounts for themselves.
Through the end of the third quarter, business accounts tended to cost as much as 115 percent more than a standard online checking account, while also offering interest rates as much as 72 percent lower, according to new research from the consumer savings site Wallethub. They also had about 42 percent fewer account features, meaning that the flexibility they provide will be significantly diminished. Consequently, it is generally advised that owners should try to keep as many of their company’s accounts in their own name as possible, at least when starting out.
How much does it really cost?
The various monthly fees for these accounts break down pretty simply, more or less across the board, the report said. The average cost simply to operate such an account every month comes to $8.63, or more than $100 per year. Meanwhile, if business owners meet the minimum requirements to waive these fees, the average cost is still $1.20 per month. In general, the average balance they have to carry to waive that amount is a little more than $6,000. Owners of these accounts will also pay an average of $1.83 every time they use a non-affiliated ATM.
Moreover, small business account holders pay an average of $1.29 for being enrolled in online bill pay, and 71 cents for receiving paper statements, the report said. They also face overdraft and insufficient funds fees of $33 each, and require an average of $107 to open. And among the features on which they tend to miss out in comparison with other accounts, there’s the perk of not paying any monthly fee for meeting minimum requirements, having out-of-network ATM fees either waived or simply not exist, not paying for receiving paper statements, carrying interest, or getting free bill pay.
Owners who want to best clear out some space in their budget to accommodate potentially growing obligations might want to consider the ways in which they pay for other necessary expenses. For instance, if they can cut costs on small business insurance, including general liability insurance coverage, they might be able to save thousands annually.