How to switch business bank accounts without disrupting your business
Changing banks can be good for business — and the switch can be seamless. Presented by Chase for Business.
Your business is evolving, and your bank is no longer meeting your needs. Does the benefit of switching outweigh the burden of paperwork, fees and business disruption? It very well might.
The right bank for your business is meant to make your life easier, and once it’s no longer meeting your needs, it might be time to make a change. This guide will walk you through each step of the process, helping you transfer business bank accounts smoothly and avoid common pitfalls.
Reasons to switch your business bank account
The best bank for your business is one that helps you succeed — not one that stunts your growth. If it feels like your bank is holding you back, it may be time to reassess the relationship and open a new business bank account elsewhere. Look for these signs that it might be time to change business bank providers.
You’re paying too much in fees
If you’re getting hit with charges from your bank for every transaction and wire transfer, or struggling against account balance caps, the money lost can add up quickly. Your bank’s complex fee structure can eat away at your profits and make it difficult to manage your budget. Switching to a bank with transparent fees and charges can help you put more money back into your business.
Your bank isn’t growing with you
As your business expands and changes, so will your banking needs. What was once a perfect fit for your side hustle may no longer be a match when you’re opening your second location. Does it make sense to change business bank accounts? Ask yourself whether your current bank offers scalable products and services to help you grow, including:
- Competitive business loan options with lower interest rates and flexible conditions to help you grow on your own terms
- Strong business savings and certificate of deposit (CD) options with high rates of return and lower fees to maximize cash flow
- Advanced merchant services for secure transactions and seamless accounting and payroll software
- Modern technology and tools like a powerful mobile app to manage your finances from anywhere
Your digital banking is limited
Doing your business banking on the go is just one of the benefits of online banking. A bank with subpar or limited digital tools can disrupt your workflow, cost you time and money, and keep you from focusing on growth.
Your physical branch access is limited
Even in a digital-first world, it’s important to have access to a physical branch and real human resources when necessary. If a complex issue arises, it’s often easier to go straight to the bank to resolve it quickly — which could be an issue if you don’t have a bank nearby.
You need more specialized banking help
If you’re part of an industry that has unique financial needs, such as high regulation or strong seasonality, you need a bank that understands the ins and outs of your business. Whether you work in health care, agriculture or another specialized field, a bank that can provide tailored solutions and nuanced support will help your business thrive.
You have concerns about security and trust
Your business and customer data could be at risk if your bank's security protocols aren’t up to industry standards. Strong fraud protection and a demonstrated commitment to data security and protection — as well as being FDIC insured to protect your deposits — are all markers of a reputable institution.
You’re not feeling supported
When you have a question or issue, a bank that’s available to provide you with quick and helpful solutions can make a huge difference. Long wait times, unhelpful representatives or a complicated support system are all signs that it might be time to switch.
How to smoothly switch business bank accounts
With the right planning, switching business bank accounts can be a breeze. Here's an actionable guide to help you transition with minimal disruption.
Plan your transition
- Review your current account and needs: Start to notice your financial behavior. Review your average monthly balance, transaction volume and the types of fees you're paying. Once you understand how you’re using your bank, you’ll be ready to choose a bank for your small business that better fits your needs.
- Research and compare options: Once you understand your needs, research all of your options. Compare fees, interest rates, account features, customer service and digital banking tools to see what works best for your business. Look at the banks’ official websites as well as customer reviews, or ask around your network for other peoples’ experiences.
Make the switch
- Open a new account: After you’ve chosen a bank, it’s time to open your new business bank account. You’ll likely need a form of government-issued ID, your tax identification number and business formation documents, though requirements vary by state.
- Keep both accounts open: Keep your old account open with enough funds to make sure any pending transactions clear. This gives you a buffer to help avoid overdraft fees on upcoming scheduled payments.
- Transfer funds and set up payments: While both accounts are open, transfer a portion of your funds to the new account. Then, update recurring payments and direct deposits like scheduled transfers or payroll to your new account.
- Update third-party services: If you sell your products or services on an eCommerce site or use other third-party sources such as accounting software or payment processors, make sure you update your banking information with them.
Finalize the process
- Notify vendors and clients: Sending a formal letter or email with your new banking details lets your vendors and clients know about your business bank account switch. While not every vendor or client will need this information, any that pay you via direct deposit will need your new account details to avoid disruption.
- Transfer remaining funds: Once you’re certain all transactions and services have been successfully moved, transfer your remaining funds to your new account. Download your past bank statements for your financial record.
- Close your account: Finally, after you’ve completed all the steps above, you can close your account. Download a final statement or a confirmation that the old account is closed. Once you’ve done this, reach out directly to your old bank to double-check that they don’t require anything else.
How to switch business bank accounts FAQs
Switching banks can be daunting, but the right information and planning can make the transition feel seamless.
How easy is it to switch business bank accounts?
Through careful planning and consideration, you can make the transition more easily. After you choose a new bank and open an account, the process involves updating all direct deposits and recurring payments with the new account details. Once your banking information is updated and you are no longer receiving charges to your old account, then you’ve successfully switched.
Can I keep my old bank account open temporarily while transitioning?
Yes, in fact, it is recommended that you keep your old bank account open for at least two months to ensure deposits and bill payments are properly linked to your new account.
How long does it take to switch business bank accounts?
The timeline varies, but it is common for the process to only take a few days once you’ve chosen a new bank and redirected all your payments and direct deposits. However, it’s typically recommended to keep both accounts open for at least two months to ensure a successful transfer.
Will switching banks affect my business credit score?
No, it does not typically directly impact your credit score if the account was closed in good standing. However, while the process of switching does not typically affect your score, if you forget to update a payment from your old account that causes a missed payment, or if you close your old account with a negative balance, it can indirectly do so.
