What are the advantages of opening a business savings account?

When your business is still small, you can think of opening a dedicated savings account for supporting your business. A business savings account can help you in a number of ways if you were to face any troubles in the future. It can firstly help you reduce the impact of a financial blow that can occur in certain emergency situations. This is because it will encourage you to build an emergency fund with which you can save your enterprise if things were to go bad. And what’s more, you can earn a little interest while the money sits in the account.

The next obvious question is about how a business savings account works. Now, the basic principles on which it operates are the same as that of a personal savings account. The only difference will be that a business savings account will offer more options for you to choose from in order to decide where exactly your cash is invested while it sits in the account. This is almost like a money market fund. There are also a number of benefits that are offered by banks that can work in your favor; for example, you can ask them to invest the money in a high risk money market account in order to provide higher returns.

There are other benefits that you can get from opening a business savings account as well. Firstly, you can start earning a lot more interest on the money than it would provide if it were in a conventional checking account. They are also FDIC insured like all personal accounts. The FDIC or federal deposit insurance corporation will provide coverage for all deposits up to a limit of $100000. This way you will be assured of your principle amount even if the bank were to go bankrupt.

The business account will also allow you to link both the checking and savings account to enable easy funds transfer. Now this is a very good form of overdraft protection because if you were to withdraw more than what you have in the checking account, the bank will automatically withdraw funds from the savings account and not charge you a penalty. Apart from this, you will also have an additional source of income when you open a business savings account. You will get enhanced liquidity as a result of this account. Your money is not locked up like in certificates of deposits or treasury bills, but it will be readily available for emergency use.