To common users of banking services, money transfers are money transfers. As in, you don’t consider them complex: just a tool to send and receive funds. But then, you face a plethora of terms like bank transfers, wire transfers, electronic payments, online transfers, and so on. And you start to wonder – “is there a difference between all of these?” and “what should I use?”. Well, let’s figure it out together! In this article, Genome will primarily focus on bank transfers and wire transfers and how they differ and compare wire payments to other transfer options as well. Wire transfer:
Businesses worldwide are as diverse as they come: startups and corporations, low-risk and high-risk, traditional and e-commerce, etc. So, it is only fair for the financial industry to present these various companies with different types of business accounts.
Let Genome help to figure it out for you. In this article, we will explain the main types of corporate accounts, so you can determine which of them suits your company the best.
Types of accounts in a business-financial world
First and foremost, let us clarify: yes, you do need a business account if you own a company. The account will help you to stay in control of your corporate finances and intelligently separate them from your personal ones. Also, it will allow you to apply for a merchant account (which we will talk about later) if your business needs to accept payments from customers.
Now that we have established that, let’s oversee the main types of corporate bank accounts.
Checking account for business
Checking accounts are the basis of company bank accounts. Business checking accounts will seem very familiar if you are a regular personal account user.
So, what are they? These are business accounts that you open in your company’s name and use for primary financial operations and day-to-day banking.
The main features of a business checking account include the following:
- Business account(s) opening;
- Money transfers;
- Issuance of cards;
- Card payments;
- Money withdrawal;
A checking account will be perfect for companies that need to send and receive transfers frequently, require corporate debit cards and have regular money flow, and need to access it routinely.
Savings account for business
This type of commercial account is more specific. Business savings account caters to companies that want to save funds for their business-related operations. At the same time, they can earn interest and use it for corporate expenses. The money earned can be very helpful in emergencies when you need funds.
On the other hand, you can’t use the money from your savings account that often. The number of withdrawals is usually limited. Meanwhile, your minimum balance needs to be pretty high.
Thus, a savings account will be more suitable for businesses that have excess capital. If, for instance, you need to save some money but make transfers frequently, you can get both savings and current accounts.
An investment account is in a way similar to a savings account, as they share a common goal for the clients – to accumulate funds. The difference lies in the execution. Using the investment account, you buy assets that, in time, will potentially generate high returns. Thus, compared to a savings account, an investment account can earn you more money in the long run, and you will be the one making decisions regarding the assets you choose to invest in.
Unfortunately, the risks are also higher. To run an investment account, you or your business partners need to be well-versed in the investment process. Also, companies need to consider the market fluctuations that can influence their investment and result in capital loss.
Business certificates of deposit (CD) accounts
Such accounts are similar to savings accounts. But there’s a catch. Business certificates of deposit accounts have stricter requirements. Although they offer higher interest rates than regular savings accounts, the funds in the CD account will be locked for a set period. This period of time can last from a couple of months to even years.
The company can use the funds when the fixed withdrawal date comes. If the account owner chooses to withdraw money before the date, they will have to face a penalty.
Still, the high interest the business certificates of deposit accounts provide can be very tempting for companies with excess capital. So before getting the CD account, read carefully through the terms and conditions – you want to ensure that the fixed period during which money will be locked, the interest rates, and the fees are beneficial.
Business money market accounts (MMAs)
The business money market accounts represent the middle ground between savings accounts and business certificates of deposit accounts. The MMAs interest rate is generally higher than for savings accounts but lower than for CD accounts. Also, there’s no withdrawal date for business money market accounts, so you can use them, but most banks limit the number of outgoing transfers companies can make monthly.
Also, note that business money market accounts still can have high minimum deposit requirements and mind the fees for using the MMAs.
Foreign currency accounts for business
It is a very distinct type of a company bank account. Foreign currency accounts cater to companies that need to send and receive payments in various currencies from different parts of the world.
So, for instance, if a corporation has multiple vendors in many countries, it would be more beneficial to them to have such an account.
The downside is that foreign currency accounts are not very common, and banks usually charge clients a lot for using them. If you want to have a foreign currency account, you need to be mindful of constant exchange rate fluctuations.
Merchant accounts are not a substitute for any type of commercial account we listed previously. Instead, it is an added bonus, meaning you need a business account to start a merchant account.
But what is a merchant account exactly? Using such an account, you can accept clients’ payments for goods you sell online or in-store. For instance, Genome’s merchant accounts allow clients to receive payments in 20+ currencies and over 40 alternative payment methods.
You can’t use the funds while they are in your merchant account. The transactions you receive from customers will be stored inside the merchant account for a certain time and then transferred to your business account. After that, you get access to funds and can use them for your corporate expenses.
Now that we have reviewed different types of bank accounts for business, let’s take a look at what Genome offers!
Types of business accounts at Genome
As an Electronic Money Institution, Genome offers both business and merchant accounts.
You can start a business wallet at Genome and get a business IBAN in 2 days – all you need is to start the application process online.
Genome’s business wallets allow you to start multi-currency accounts inside of them, you can have up to 5 business accounts in each currency – EUR, USD, and GBP. A shared account feature will allow you to manage the account together with your team.
Our clients get access to SEPA, Faster Payments, and SWIFT transfers and can make and schedule batch payments.
Genome also issues corporate virtual and physical Visa debit cards for online and in-store purchases, all are Apple Pay, Google Pay, and Garmin Pay-compatible.
As mentioned before, Genome’s merchant accounts allow customers to pay you in over 20 currencies, use cards, and 40+ alternative payment methods. You can have multiple merchant accounts at Genome and track all your metrics with many reports and analytic tools our team created.
What are business bank accounts?
These are accounts that financial institutions provide for companies. Using such accounts, a company can access all the monetary operations it requires to run its business, such as transfers, deposits, money withdrawals, merchant services, etc. Many types of corporate bank accounts exist globally, and we explained the main ones in this article.
What type of bank account is best for business?
It depends on what the primary needs of the company are. For instance, a checking account will suffice for corporations that just need to receive and send money transfers and pay salaries to their employees. If you want to earn some interest, a savings account or its alternatives (business certificates of deposit account and business money market account) may be what you need. And, of course, if a company needs to accept funds for its merchandise, a merchant account is required.
What accounts should a small business have?
Again, it all comes down to which financial services a small business may require. They can start with a checking account and a merchant one if they have customers.
Do you need a specific bank account for a business?
Yes, you need a business account, as you shouldn’t use a personal account for corporate expenses. It is very uncomfortable to mix personal and corporate money for tax purposes, and some banks can fine you and close your account if they find out that you do this.
How many bank accounts do I need for a small business?
You need a business account first and foremost. Choose one of the options we listed in the article.
How to choose the right bank account for your business
We advise you to read our article, where we describe various types of corporate accounts. When selecting an account, pay attention to terms of services, fees for using the said account, its services, and if the bank works in your target markets.