Should You Open a Business Savings Account?

Reasons You Might Need Another Account Besides Checking

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Savings accounts are common for personal use, but as a small business owner, you also may have considered whether it’s worth opening this type of account for your business.

To help guide your decision, we’ll discuss what business savings accounts are; cover their benefits and limitations; address the timing of when to open a business savings account; and answer some frequently asked questions on the topic.

Key Takeaways

  • Business owners can open savings accounts specifically for business use. These can be good places to store business funds you don’t need on a regular basis.
  • Business savings accounts might be used for a number of reasons, such as to save for unexpected or planned expenses, to earn interest, prevent overdrafts, or increase security measures.
  • Business savings accounts can require minimum balances and come with opportunity costs.
  • While many businesses may benefit from having a savings account, it might not be a high priority if your business is in its early stages and isn’t able to meet the minimum account balance requirements.

What Is a Business Savings Account?

A business savings account can often be opened in conjunction with a business checking account. Typically, a business checking account is used for revenue and regular transactions such as paying bills and making purchases, and business savings accounts are reserved for storing funds.

Business owners can move money between checking and savings accounts according to their financial demands. Usually, money is kept in the savings account and moved into the checking account as needed. Below, we’ll discuss the advantages and drawbacks of having a savings account for your business.


You don’t have to automatically open business accounts at the same bank where you have personal accounts. Fees, rates, and offerings will differ between banks, so compare your options to make sure you’re getting the best fit for your business’s needs.

What Is the Point of a Savings Account?

There are a number of reasons why small business owners might consider opening savings accounts. We’ll discuss a few of the common purposes.

Save for the Unexpected

Savings accounts are great places to store cash to prepare for the unexpected—both good and bad. Having a rainy-day fund for emergencies or unanticipated expenses is important for small businesses, and can bring peace of mind for you as the owner. Cash on hand can also allow you to take advantage of business growth opportunities as they arise without having to jump through all the hoops involved with borrowing money.


A common rule of thumb is to have three to six months’ worth of operating expenses on hand to use as a cash buffer. However, this amount can fluctuate depending on a variety of factors, including your industry, what stage your business is in, and business goals.

Plan for Upcoming Expenses

Putting money into savings on a regular basis can help you to plan for future costs and invest in your business’s growth. Budgeting in advance to prepare for upcoming expenses such as renovations, business taxes, or even retirement can help to alleviate financial stressors.

Earn Interest 

You can earn more interest—money that the bank pays you for using your funds—by keeping your cash in a savings account than you would in checking. Some savings accounts, such as a high-yield account, have a higher interest rate or annual percentage yield (APY) than others.

Prevent Overdrafts

Linking a business’s checking account to its savings account can help prevent overdraft fees. If there aren’t enough funds in the checking account to cover expenses, money can be automatically transferred from the savings account. This can help protect against unexpected fines.

Increase Security

Business savings accounts are typically protected by the Federal Deposit Insurance Corporation (FDIC). This means that if a bank is unable to pay you back your money and/or has closed down, the FDIC will ensure that your funds are repaid up to an insurance limit of $250,000.

Limitations of a Savings Account

While savings accounts can come with many benefits for your small business, there are some limitations to consider before opening an account. For instance, savings accounts may require a minimum balance amount to prevent you from being charged a fee. If you aren’t able to meet this minimum threshold, you can end up regularly paying money to maintain an account.

There is also an opportunity cost of keeping too much of your funds stashed away. If you keep more money than necessary in your business savings account, you could be missing out on opportunities to grow your business, or investing the funds in places that might bring higher returns.

When You Should Open a Business Savings Account

Savings accounts can be very beneficial for business use. When deciding where to open an account, business owners should be attentive to a bank’s terms and potential fees.


Some experts recommend opening a business savings account in conjunction with a business checking account in the early stages of your business. This can be a good way to get in the habit of regularly putting aside savings for your business.

However, opening up a savings account probably may not be as much of a priority if your business is still fairly new or isn’t bringing in enough income to meet the minimum account balance requirements.

Frequently Asked Questions (FAQs)

What do I need to have to open a business savings account?

The specific documents required to open a business bank account will vary depending on the bank. Most banks usually request you provide your business’s employer identification number (EIN). If you’re a sole proprietor, however, you’ll use your Social Security number, formation documents, ownership agreements, and business license.

Which types of savings accounts will earn you the most money?

High-yield savings accounts can be a good option to earn more money from interest than traditional accounts. When deciding where to open a high-yield savings account, pay attention to account details such as the annual percentage yield (APY), fees charged, and minimum balance requirements.

How many business banking accounts should I have?

There is no set answer regarding the amount of business banking accounts a small business should have—it depends on the business’s financial needs and goals. Having multiple business banking accounts can help keep your finances organized, make it easier to prove your creditworthiness, increase security, and take advantage of various offerings. However the more accounts you have, the more complicated it can be to manage, as each one may come with its own set of fees and requirements.

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  1. SCORE. “How Much Cash Should a Small Business Keep in Reserve?

  2. Federal Deposit Insurance Corporation. “Learning Bank - Checking & Savings Accounts.”

  3. Federal Deposit Insurance Corporation. “Learning Bank - Deposit Insurance.”

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