Running a small business is a time-consuming process. In addition to building the business and attracting and retaining customers, there is the added stress of finances. A business owner needs to plan to fund payroll, purchase products and pay taxes. A small business owner may look to a bank to help with some of these issues.
Commercial Banking
Commercial banking involves a division within a bank that focuses on business accounts and working with business owners. Some banks may refer to these services under the term "business banking" instead of commercial banking. The bank may offer services such as payroll processing, a way to pay your quarterly taxes, and financial planning services. The financial planning may also include the management of retirement accounts in addition to financial planning for the business. Many commercial banking divisions focus on lending money to help businesses stay afloat.
Advantages
Commercial banking can help a small business by making it easier to manage day-to-day financial tasks. An established commercial account with a bank will make it easier to borrow money when you grow your business. Often a business is assigned a representative who works directly with the company to find the best services and solutions for the issues the business is facing. For example, the company may save money by outsourcing payroll processing. Banks also offer invoicing services, with personalized invoices, and can set up transfers to other banks which will simplify accounting procedures. Some banks offer retirement account management for your employees as well as other employee benefits. This can save you money, and make it easier to manage all of the services you offer employees. Some banks allow you to make deposits online by scanning checks. Your bank may offer you discounts on your merchant services fees. Commercial banking allows you to set up direct deposits for your employees as well as for any invoices you need to pay to others, which will save you time.
Disadvantages
Commercial banking or business accounts are often more expensive than traditional bank accounts. Banks may charge fees for night deposits, for processing a certain number of checks and for the payroll services. Depending on the size of your business, some of the services offered may not be needed, and you may still be charged for the services even if you're not fully using them. Different banks may offer different services and charge different fees, and it can be difficult to compare the services. Signing up for a commercial account before your business is ready for one will cost you and may slow the growth of the business. If you choose the wrong bank, you may have a difficult time opening a new account and transferring all of the services to another bank. This can cost you both time and money.
Making the Choice for Your Business
As your business grows you may reach a point where you need commercial banking services. Visit several different banks to find out which services they offer, and the fees they charge. Look for a bank that features good customer service. Carefully examine any fees that it charges and see if the changes will be more beneficial or detrimental to your bottom line.
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