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Save Smarter: 3 Steps to Choosing a Savings Account for Your Business The more money you save, the more you'll have for a rainy day.


Starting and growing a business is an exercise in the unexpected. Tomorrow will likely be very different than today; It pays to be prepared.

One simple way to ensure you always have money on-hand to seize unexpected opportunities and tackle challenges in real-time is to open a business savings or money market account. Both make it easy to keep tabs on your savings, and generally offering better interest rates than checking accounts.

With that in mind, here are three steps for determining the best type of savings account for your business.

1. Calculate how much you have in liquid savings, as well as how this figure might change over time.

A business savings account is designed for surplus cash you don't need to access on a regular basis. In general, it's a smart option for entrepreneurs who have $5,000 or more in savings, says Carl Wynja, a regional president at U.S. Bank.

Unlike checking accounts, business savings accounts typically don't include checking services, but they offer real benefits: higher interest rates and the ability to separate your savings from the ebb and flow of revenue and operating expenses.

Once a business' savings exceed a certain amount—this varies, but a general marker is $10,000—Wynja often recommends opening a money market account. Compared to business savings, money market accounts typically require higher minimum balances to offset fees, hence the $10,000 threshold, but "pay a higher interest rate depending on the tier of balance you have," Wynja says. A balance that exceeds $100,000, for example, can pay more in interest than a balance of $50,000, which will pay more than a balance of $10,000.

2. Determine your business' needs and goals in the short- and long-term.

Once your business has enough excess cash to justify opening a business savings account, the next step is to consider whether that balance is likely to remain relatively steady or fluctuate widely. If you have more than $5,000 in extra cash but expect you may have to dip into your savings in the near future, sticking with a checking account might be the better option.

Wynja advises that business owners work with a banker to come to an informed understanding of the best account for their business. No matter the eventual outcome, just having this conversation is an opportunity to review the financial health of your venture and plan for its future.

Whenever possible, Wynja recommends small businesses maintain a savings equal to three-to-six months of operating expenses as a buffer against unexpected events or market conditions. An easy way to do this is to activate a business savings sweep, which automatically moves daily excess balances from your checking to savings account. This way, you can work towards your saving goal while ensuring you maintain a minimum in your checking account to cover expenses. "It's easy to track and monitor through your bank, online, or on the mobile app," Wynja says.

Many clients are actively saving toward a tangible goal, such as a successful contracting company that wanted to purchase its own office space. "Our bankers met with them to look ahead over the next year, two years, and five years to figure out where they wanted to go with the business," Wynja says. The team worked with the company to estimate how much a down-payment would cost to set up a savings plan; cash was deposited into a money market account. Eventually, the client was able to purchase the space it was leasing.

3. Compare account variables.

Interest rates are one of the most important variables in choosing an account that's right for your business. High yield interest rate accounts, for example, boast attractive rates but can come with more requirements, including maintaining a higher balance or using a debit card a certain number of times a month to avoid fees. Frequently, these accounts are capped; above a certain threshold, such as $25,000, the interest rate drops.

If you have questions, ask. "When you are an expert at running your business, also being an expert in banking and finance can be a challenge," Wynja says. That's where bankers come in. Wynja and his colleagues are able to draw on years of experience helping small businesses navigate the very paths and obstacles you might be facing.

"We know what's worked, what didn't, and the potential risks," he says. "Our job is to make a smoother path for you to run and grow your business."

Deposit products offered by U.S. Bank National Association. Member FDIC.