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For some businesses, it may make sense to have multiple business banking accounts. Depending on the type and size of your enterprise, operating multiple business banking accounts could provide benefits such as potentially helping to support cybersecurity, cash-flow management, budgeting, savings, and goal tracking.
Key Takeaways
- Having multiple bank accounts may help a business potentially reduce exposure to certain financial risks, help streamline cash-flow management, and help with budgeting and organization.
- Potential downsides may include the challenges of managing multiple accounts and fees.
- Best practices for managing multiple accounts may include using automation tools, monitoring account fees and interest rates, and keeping records organized.
Can You Have Multiple Business Banking Accounts?
Particularly for a new business, you may not know how many business banking accounts you can have. But there may be no limit to how many business banking accounts a company may open, although banks may have specific requirements for opening and maintaining an account.
Different types of business banking accounts may be useful to help organize finances, manage risk, help manage operations, and potentially earn interest, depending on the account.
Why Businesses Open Multiple Accounts
Some business owners may choose to have more than one small business banking account to help with financial management. One common setup may include both a business checking account and a business savings account. Business checking accounts may be used for everyday spending and may include a business debit card and access to ATMs. Business savings accounts could help you set aside reserves for future goals and may offer a higher Annual Percentage Yield (APY), but potentially less flexibility.
Separating funds into different accounts for different purposes may help simplify reporting and support financial decision-making. For example, having two business checking accounts — one for income and one for other expenses — may provide more visibility into cash flow. Some businesses may also open dedicated checking accounts to help track and manage large projects.
Benefits of Having Multiple Bank Accounts
There are potential benefits of having multiple bank accounts, including the ability to separate funds for operations, savings, and payments to help maintain financial controls. Using multiple business banking accounts may help potentially reduce exposure to certain financial risks, help with your cash-flow management, and help with both budgeting and organization.
1. Better Cash-Flow Management
One potential benefit of having separate business checking and savings accounts is that you can manage everyday expenses while potentially earning interest on money you set aside. Cash-flow management may help support small-business stability, and some businesses choose to open more than one bank account to help manage it. Separating your accounts for income, expenses, and reserves may help you monitor inflows and outflows more accurately, which could make forecasting and planning easier.
2. Managing Financial Risk
Spreading funds across separate banks could help reduce your exposure to potential issues, such as operational disruptions, fraud, and cybercrime.
3. Budgeting and Organization
Another potential benefit of having multiple bank accounts could be allowing you to assign specific purposes to funds. For example, you might choose to have one account for receiving invoice payments, one for paying payroll, and one for covering routine office expenses. A look at the balances may give you a clearer picture of your finances, while dedicated accounts may make it easier to stick to budgets and monitor progress towards your financial goals.
Potential Risks to Consider
Finding a business banking account may involve considerable time and effort to help determine whether the financial institution aligns with your business needs. Tracking fees and interest could add complexity to bookkeeping for small businesses, while maintaining minimum balances could put pressure on businesses going through a downturn. Securely managing multiple logins may also present a cybersecurity challenge.
How Many Accounts Does Your Business Need?
Determining how many bank accounts your business needs may depend on its size, complexity, and financial goals. A multinational company may have very different needs from a mom-and-pop shop, and an online services business may have very distinct requirements from a tradesperson who runs on cash and checks. However, a straightforward setup with more than one account — such as an operating account and a savings account — might meet some small businesses’ needs.
Best Practices for Managing Multiple Accounts
Managing multiple business banking accounts may seem like an operational challenge, but technology may help. You may consider using accounting software that downloads transactions from your banks automatically and may make it easier to monitor account fees and interest rates. Automation tools could also help keep your finances organized.
1. Consider Automated Transfers
Setting up automated transfers may be an option for some businesses, potentially helping the correct sums go to the right accounts, or helping to make sure you're able to cover payroll each period.
2. Monitor Account Fees and Interest Rates
Interest rates and fees may change after business banking account opening incentives have expired. Verifying rates earned on savings accounts and noting fees paid on all accounts could help you determine whether each bank account continues to meet your needs.
3. Keep Records Organized
Maintaining clear documentation may be helpful, not only for internal reporting but also for tracking cash flow, profitability, and goals. Accounting software may be able to sync with different types of business banking accounts, potentially making reporting and reconciling easier.
When Multiple Accounts Make Sense
If you have decided that multiple bank accounts are right for your business, then digital banking could help you manage them. Learn more about digital banking and how it might be beneficial for your business.
Consider American Express® Business Banking
Get more for your business with Amex® Business Checking and Amex® Business Savings. Business Banking that keeps everything connected—from account management to money movement—online and in the Amex® App1.
Learn more about American Express® Business Banking.
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