One of the very first things you need when starting a business is a business checking account.

Fundamentally, you never want to co-mingle your personal money with your business’s funds.

You will want to pay your start-up expenses out of that business checking account.

And you will obviously want your revenue to be deposited into that business checking account.

That way you have a paper (or digital) trail of funds flowing in and out of your business.

Now you may be wondering “How do I pay for business-related expenses if I don’t have money in my business checking account?”

The answer is called a capital contribution.

You make a deposit from your personal funds into your business account.

The key step here is that you need to record this as a capital contribution to your business so that it is not mistakenly seen as income.

Capital contributions are not taxable to the business nor are they taxable to you when they are ultimately distributed back to you.

If you have formed a partnership (LLC, PLLC) or corporation for your business, you will need your federal employer identification number (EIN) to open a business account.

Some banks will also request your articles of organization as well.

Personal vs. Business Banking

Choosing a bank for your personal checking needs is typically straightforward. Basically, you shop around for the best deals—the lowest daily minimum balance, unlimited transactions, no ATM fees, cash back for opening the account and, of course, free checking.

It’s not uncommon for people to do their checking with one bank, have their mortgage with another and their investments somewhere else.

There are a couple of reasons that business banking is more complicated.

First, there are likely to be many more deposits going into your business checking account.

Most of us have only a handful of deposits into our personal checking account each month.

If you are running a practice, you will have deposits from each insurance company multiple times per month.

You will have daily deposits of patient co-pays, co-insurance and deductible.

Even if you are using a platform that processes payments, those payments are deposited into your business checking account.

If you are running a practice, you will have deposits from each insurance company multiple times per month.

Second, you may have more expenses being paid out of your business checking account per month than your personal.

Business banking fees are determined, in part, by the number of transactions going in and coming out of your account each month as well as amount of money moving through.

For example, if you have a large volume of transactions but relatively little money you are likely to pay higher banking fees than the business with fewer transactions and more money being deposited into the bank each month.

Banks make money by using your money for loans and other investments.

The more money that passes through the bank and the longer it sits there, the more money the bank makes.

That’s why if you keep the required minimum deposit, they give you free personal checking.

Keep a high enough balance they may even pay you interest. But business checking accounts tend to mean more work for the bank because of the higher number of transactions.

How to Reduce Your Business Banking Fees

There are a couple of ways to minimize your business banking fees.

First, business checking account fees are negotiable. Smaller banks are more likely to negotiate than the big banks.

And the more revenue your practice generates, the better your bargaining power.

As an aside, remember that every aspect of running your practice is dynamic.

If you’re first starting out, you may not be successful in getting the bank to lower their fees.

You can always come back to them in a year or two when you have a proven stream of deposits coming into their bank.

Second, most banks offer a suite of integrated services that can help streamline your business.

The more services you use, the lower the fees you pay.

For example, the bank offers credit card processing as one of their services.

You will want to compare third-party credit card processing fees with the bank’s bundled fees.

Remember that every aspect of running your practice is dynamic.

At first you may think that you can get lower credit card processing fees from an outside vendor, pay the business checking account fees and still come out ahead.

Sometimes, though, the a la carte pricing is higher than the bundled fees from the bank.

And, because the credit card processing and bank are the same, you may get faster access to your money.

Choosing Your Business Bank

The ideal bank acts as your partner.

You want a bank that demonstrates a firm understanding of a medical practice’s unique cashflow needs.

As we all know, medical businesses function differently than other businesses.

You want a bank that assigns a dedicated banker who understands and values your practice.

Your business banking needs will be much more complex and you’ll want to have a dedicated person and their team to help you navigate to that end.

Getting money into your business checking account is an obvious part of revenue cycle management.

You need a bank that facilitates the revenue cycle not impedes it.

Final Words

In the end, banking fees will comprise a trivial component of your practice’s expenses.

This is not the thing that is going to make or break you.

The more important consideration is your relationship with the bank and your banker. It’s about the bank’s ability to help make running your practice easier.

Take your time on the front end to do the due diligence necessary to choose a bank for your business banking account.

Once you choose a bank you’ll have to provide all of your payors with the bank info for how to deposit money into your account.

If you change your banking information down the line it’s likely to negatively impact your cash flow during that transition.