What’s the Best Checking Account For Your Freelance Business?

So what are the best checking accounts for freelancers and business owners? I’ve done the research and tested many different banks. Here are my top business banking & checking account picks!

This post is constantly being updated with the latest news and banking information available. Recently updated in October 2016.

As a self-employed freelancer, most of my financial business is done online or with mobile apps. But choosing the best business checking account can be daunting. Plus, you want to make sure you don’t spend extra money on fees.

I’ve seen the benefits of technology and how going digital makes me more productive and streamlines my life. Oddly enough though, many consumers and small business owners (about half) still bank at traditional banks! It’s time you embrace technology and the benefits it offers, by finding the best business checking account.

Click the link to jump to a particular section.
1. Capital One 360
2. EverBank Business
3. Ally Bank
4. PayPal Business
5. Discover Bank
6. Chase Business
7. TD Bank BusinessDirect

Or click here to get the free checking account comparison checklist!

Some business owners I’ve spoken to don’t even have separate accounts for their business and personal transactions. Eek! Separating out your business and personal income, expenses, and other financial records is very important. Here’s what I mean.

Open separate business & personal accounts

If you do nothing else for your business opening a separate business checking account is a must! The main reason is because it will be a whole lot less of a headache for you. By separating your business transactions you create a line between professional and personal.

This is especially handy come tax time when you create year-end reports for your bookkeeper or CPA. And if you’re ever audited, you can prove your business is legit much more effectively. Besides, you wouldn’t want the IRS (or your CPA) poking through your personal income and expenses in order to locate your business transactions. Would you?

You can also customize the name on your account, and your checks, so you appear more credible to other contractors and freelancers you pay. Even if your business isn’t a LLC yet, you can still apply for a DBA (Doing Business As certificate) and different Tax ID number.

Lastly, another advantage is that you can link your bookkeeping software to your dedicated business account, which makes it super easy to print out monthly and yearly reports. You won’t have the hassle of excluding personal transactions from the business ones while categorizing them.

For personal accounts and transactions I use Mint.com track all of the incoming and outgoing expenses, but for my Chase business checking account I use GoDaddy Bookkeeping to track the different types of income sources (PayPal, direct deposits, checks) and to calculate quarterly taxes.

For the simplicity of all these factors and that it casts a more professional light on your business, it’s vital you open a business checking account.

Keep in mind that this is in addition to the business credit card that you may also have. Credit cards are a great way to generate start-up capital, provided that you use them properly. Look for a card that doesn’t cost anything in annual fees, allows you to implement spending limits, and that provides you with protection should your card fall into the wrong hands.

Checking accounts for NON-LLC freelancers

So what are the best accounts for freelancers and business owners? I’ve done the research and tested the top business checking account picks.

Please note; you don’t necessarily need to open a “business” checking account if you’re a sole-proprietor. In the eyes of the IRS, a sole-proprietor isn’t a legal business entity like an LLC or INC business is, so you can save money by using a personal account for business purposes.

The main reason for this is because my business is still small enough so it doesn’t make a huge amount of income every month. This also allows me to avoid the costly monthly fee that’s usually associated with a business account.

1. Capital One 360

While this bank used to be called ING Direct, I’ve had no issues with the Capital One takeover and still enjoy this bank as my account. Capital One 360 accounts come with no minimums, no fees, and free checks, so it’s a no brainer for me and my business.

A Capital One 360 account provides customers with a free MasterCard debit card, access to 38,000 fee-free Allpoint ATMs and 2,000 fee-free Capital One ATMs, as well as free mobile check deposits.

These features are super useful since a lot of my business is done virtually and on-the-go and since Capital One Banks are pretty popular (at least in the South) I can find an ATM whenever I travel.

Interest rates for checking accounts are generally low, but at least a Capital One 360 account will help you grow your cash a little bit since they offer some of the better rates compared to a brick-and-mortar bank.

Capital One

One of the things that I like most about Capital One 360 is the fact that you can have multiple checking and savings accounts — and they now have separate business savings accounts that have zero fees and offer 0.40% interest. This is very convenient for setting aside funds for income taxes throughout the year, money for conferences and business events, as well as a business emergency fund.

Additionally you can set up goals for your various accounts and track  your progress throughout the year. This is something I love doing so I know where I’m with my revenue for the year!

2. EverBank Business

EverBank is an up-and-coming online bank (similar to Ally) and offers many different kinds of business bank accounts depending on your needs, but I’m only going to focus on these two main ones.

  • Small Business Checking – This account is perfect for sole-proprietors (it’s not available to LLC or corporations) and comes with no monthly fee. Plus, you’ll earn a small interest for your daily checking account balance. You need $1,500 to open the account.
  • Business Checking – This account is great if you’re an LLC with a higher monthly balance and want more features. The $14.95 monthly fee is waived if you keep a balance of more than $5,000 every month. Plus, the first 200 transactions are waived. You need $1,500 to open this account as well.

3. Ally Bank

UPDATE: Ally Bank was originally listed as a great bank but after doing some research, and receiving comments from other freelancers, it’s no longer a recommended bank for freelancers.

They are however great if you’re using a checking account for your household funds or other personal needs. So if you’re simply looking to keep personal funds separate, they require no minimum balance, no ATM fees and no monthly maintenance fees.

Ally Bank offers customers interest-bearing on personal checking accounts. They also offer CDs, IRAs, and savings accounts. Plus, their customer service is fabulous! I’ve even met some of the team at the Financial Blogger’s Conference a few years back.

4. PayPal Business account

Another great option is to avoid checking accounts all together and just use a Premier or Business PayPal account. If you use a service like FreshBooks, you can choose PayPal as one of your payment options for freelance clients, or even coaching services, and then use the funds in the account just as you would a regular bank account.

Upon request PayPal will issue a debit card that’s attached to your PayPal balance, and you may even qualify for a PayPal Smart Connect line of credit which can come in handy when you need to pay bills for your business.

The balance in your PayPal account also earns a small amount of interest similar to a Money Market business checking account would at a traditional bank. And the best part about using a PayPal account as a substitute bank for your freelance business is that it’s completely free.

PayPal biz account summary

You can also make deposits to your PayPal account if you receive checks from clients. Just take a picture of the check with PayPal’s mobile app on your Android or iPhone, and the funds will be deposited within 2-3 business days.

With your PayPal account you can print off profit and loss reports, earnings reports, pay bills, and transfer funds to other bank accounts. Basically anything you can do with a regular bank account, you can do with a PayPal business account — and more.

5. Discover Bank

You may not realize that Discover Bank isn’t just for using credit cards to earn cash back, or balance transfers to get out of debt faster. They actually offer some pretty great checking accounts and banking options for individuals (see my point above about bank accounts for non-LLC businesses).

They have both regular checking accounts and money market accounts which is great to earn a bit of interest on your money. They also offer cash back with all their products — without using credit cards and going into debt. Yep, you can use your Discover Bank debit card to earn $0.10 on every purchase you make.

Discover banking

That can really add up when you’re making purchases for your business, like flights, meals, books and office supplies. As small business owners we need all the extra cash back we can earn to re-invest into our businesses.

Their customer service is also outstanding and I’ve never had any issues with security. Their mobile app allows you to check your balance, make transfers and even deposit checks with one click.

They also have some of the best interest rates available with a money market account and you can get unlimited free checks while you have an account.

Checking accounts for an LLC business

What if your business is not a sole-proprietor but an actually LLC or INC entity? Here are the best checking accounts for your LLC small business.

5. Chase Business checking

Chase offers 3 different tiers of business checking accounts depending on your needs.

  1. Chase Total Business Checking. This is the business account I currently use since I filed for a DBA and Tax ID number here in Texas. It comes with a $10 monthly account fee, which is waived if you keep a regular balance of $1,500 or more each month. It allows for international wire transfers, up to 200 transactions and $7,500 worth of deposits, for no additional fees.
  2. Chase Performance Business Checking. This is the next level up in checking accounts and offers the same features as the Total Business Checking except it allows you to have 350 transactions and up to $20,000 in deposits for no additional fee. The $20 monthly fee is waived if you keep a minimum balance of $50,000 or more.
  3. Chase Platinum Business Checking. This is the most robust option of all three, and is likely for large businesses and corporations. It has a $95 monthly account fee that’s waived if you keep a qualifying balance of $100,000 or more. It provides up to 500 transactions and $25,000 in deposits each month, with no additional fees.

Generally you have to find a local branch to open your business checking account, but that isn’t too difficult as they have quite a few branches all over the U.S. and the world. It’s how Starbucks is for coffee — there’s usually one on every corner.

The online site and mobile app make it extremely easy to keep track of your balance, income, and expenses. Like I said, there are ATMs everywhere, and pretty much all online software, invoicing programs, and bookkeeping software will link to Chase because it’s so popular.

business debit cards
Debit cards I use for my freelance checking accounts!

7. TD Bank BusinessDirect

For another solid business account option, TD Bank BusinessDirect is a great choice! They offer free bill pay, full compatibility with Quicken and QuickBooks and a free business Visa card with special discounts for cardholders.

Since it’s owned by the same company that does TD Ameritrade, you can access your business finances along with your investments.

TD Bank BusinessDirect provides you with peace of mind with enhanced account security and real time transaction information. It also has the benefit of brick-and-mortar banks if you aren’t quite ready for the virtual-only business yet.

Currently, TD Bank does not offer interest on its checking accounts, with the exception of its Business Interest Checking Plus Account, for which it offers 0.05%. You should know that they only offer checking accounts in certain states with the U.S. so this might not be the best option for your business.

How to choose the best bank for your business

Confused yet? There are lots of different factors that go into choosing the best checking account as a freelancer. You want to make sure it’s simple and easy to access your funds, especially if you’re a location independent freelancer who travels a lot (like I am).

Secondly, you don’t want to pay a lot of monthly account maintenance fees since your business is small and may not have large amounts of money coming and going.

In order to determine the best checking account for your freelance business, I’ve created a handy checklist comparison. And it’s completely free! 

What bank account do you use as a freelancer business owner? Leave a comment below sharing your experience.

 

[I was not paid to write this and can personally recommend these banks since I use them for my own business finances. Note: some of the links are affiliate links which help keep this site going.]
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49 comments

  1. Thanks for the information! I’m starting up my own LLC, so I need to open up a separate checking account for my business. It’s good to know that there are programs that offer special discounts for cardholders. As a startup company, I could use as many discounts on a new company account as I can get.

  2. Gabby says:

    Great info, but Ally just flagged my account as business and now they’re shutting it down. It’s completely ridiculous, but there’s not a thing I can do about it. I have my freelance income deposited into my Ally account and use it to purchase things like annual hosting fees, etc. for my website. It’s small potatoes when it comes to income, yet they’re calling it a business…

    • Carrie says:

      Good to know, Gabby. I didn’t realize that Ally would flag freelance income/expenses as a full-fledged business account. I don’t think that’s right at all, but I guess you can’t do anything about it. This is good info for anyone else who is using their Ally account for small freelance transactions.

      • Dave says:

        So Ally does not have business checking accounts? Too bad. The personal account has been perfect and saves me a lot of money and time, not to mention their support has been perfect!

    • Chris says:

      I just found out about that issue with Ally as well yesterday. I called to see if I could add my LLC and was told they don’t offer business accounts and that they would shut you down if found to be doing business transactions. Really pretty lame actually. I don’t know what is required of a bank to work with businesses but it is probably some government compliance deal. Big brother to the rescue again!

      • Kacey says:

        I used Ally in tandem with Braintree when my business was just a Sole Proprietorship. (Shhhh…don’t tell.) I’ve just formed an LLC and am now looking at internet banks for business checking. My criteria are no monthly fees or minimum balance and mobile deposits. I haven’t pulled the trigger yet, but Radius Bank is looking pretty good.

        Does anyone have any experience with them? And for personal banking, their Hybrid account looks pretty great.

        • Kacey says:

          It turns out Radius is only opening checking accounts for clients within their New England footprint (currently MA and NY). Bummer. Now looking at both US Bank Silver Business Package and Spark Business Checking, but was hoping to find a “least evil” bank like Ally.

          SmallBusinessBank (Gardner Bank) is another option I’m seriously considering.

          Note: For sole proprietors getting shut out of Ally, EverBank has a small business checking ($1500 to open, no monthly fee) for sole proprietors.

      • J Goldberg says:

        Well, had you bothered to read the user agreement before “agreeing” to it and signing on, you would’ve known their policy.

        It is illegal for then to pay interest on business holdings.

        If you’re actually in business, you really should already know this though. Next time do your due diligence before whining after the fact..

  3. Jim A says:

    While Ally has no idea if/when they’re coming out with an honest to goodness Business Checking and Savings account deal, Capital One 360 is in the testing phase of business checking accounts under the “Spark” line. I’ve been invited to be one of their testers. Only thing holding me back from making 360 my full-time biz account is the lack of integration into my GoDaddy Bookkeeping account. In the meantime, I’m using a regional bank (Huntington) for all my business accounts. A free checking account, believe it or not.

    Carrie, if you wanna know more about the 360 Biz Checking account I’m testing, I’d be happy to chat about it.

    • Kevin says:

      Jim A- I’m very curious about your Spark / 360 Biz Checking account you are testing… Any chance of sharing a few details here? Or how it would be possible for a small, high income sole-proprietorship to gain entry to this test? I’m currently a Spark business credit card user if that helps? 🙂

    • Hayley says:

      Jim, I’d love to know more about the Spark testing. I used to have all of my accounts with 360, but when I switched to an LLC and they didn’t have a business checking option, I had to go elsewhere.

    • Marie C. says:

      I just made my first transaction with Spark Pay on 9/4/15, Today is the 9th and there still has not been a deposit made into my account although it states on the home page “deposits made every night”. Also, after making my first transaction i soon received an email stating that due to my business being a “high risk business” (An apparel shop?) They will withhold 25% of each transaction for 120 days. Are you kidding me?!

      As for the Business checking? It takes 5 days for a mobile deposit to clear which is unheard of. Any other deposit takes 5 days as well.

      Capital one hasn’t been very convenient for business at all. Has anyone had a different experience?

      • Dori says:

        I just got off the phone with a representative. They said it is still in BETA testing so the IT department is still working out the kinks for deposits and it will be awhile before the system can readily push through deposits.
        I’ve had an ING account before Capital One bought it and I have been grandfathered into keeping my account because NOW, the rule is if you live in a state that has a Capital One Branch – you must open an account with the branch. You CANT open an online CapitalOne360 account. This goes for the Spark business account as well unless you live in a state that does not have any Capital One branches.

    • Rachael Witmer says:

      Hi Jim,

      This is an old post, but I’d love to find out what came the CapOne 360 business account testing. I’m opening either a DBA or an LLC and I love my 360 personal bank account.

  4. Joe says:

    Ally shut down my account because I was depositing money I made from my freelancing business in. They are very strict about this. Deposit one paypal payment there and they will shut down your account.

    • Carrie says:

      Thanks for the input, Joe and everyone else who had experience with Ally Bank. I have removed them as a recommendation and replaced it with another good alternative.

  5. Sonia says:

    So Carrie I am now looking for a business checking account without all the fees, found some but not sure which one to go with. Its just for income purposes, direct depositing and because my business is an LLC, I’m having a difficult time.

    • Carrie says:

      Sonia, have you sat down with your accountant and had a discussion about the best checking account for your needs? I’m sure they will be able to help! Otherwise you can make a checklist of what you’re looking for in a bank for your business and find the one that checks the most boxes. Good luck!

  6. Kyawt Aung says:

    Do not open your business account with CHASE. I had a customer who used CHASE quick pay for my service and later call the bank that the payment was fraudulent. My account was frozen because someone claimed that payment to my account was not correct.

    CHASE told me I have to find out the person and ask the person to go to CHASE that the payment was the correct. Is that make sense? Instead of punishing the person who did the fraudulent claim, the bank punish my business account by freezing it. I could not write checks or make payment anymore. The business is basically freeze without able to make financial transactions. Many hours of stressful phone calls without making progress just asking me to get the person who did fraudulent claim to CHASE branch. The should have been tracing down the person who did the fraudulent claim.

    My suggestions is when you open the account at CHASE, you may pleased the smiles and attention of bankers. The HELL might be waiting behind the smiles and beyond the local branches.

    • Carrie says:

      I’m sorry to hear that your experience with Chase was so poor. I’ve always had an awesome experience with them and still use them for my business and personal accounts. Sometimes things happen though, so it’s always smart to do research and beware of what’s happening.

  7. Jackie says:

    Hello Carrie.

    thank you for the info,
    I just registered my dba (am into graphics and web design)
    My question is , is it wise to use a paypal account attached to my personal account, I understand paypal needs a tax id to pen a business account. please i will need your opinion on this, Thanks

    Jackie

    • Carrie says:

      PayPal offers a Premier account and a Business account. Both of them are different and have varying fees associated with them. I simply use a Premier account with my personal name and Tax ID number.

  8. Roy says:

    Hi Carrie,
    I just contacted Discover Bank and they told me that they don’t have checking and savings for small business owners. Too bad since I was looking forward to opening with them.

    Roy

    • Carrie says:

      Yes, that’s true Roy. I use Discover for personal spending allowance that I allocate for myself each month. I like to think of it as a commission-based reward system for being self-employed. When I make a big sale or land a big client, I reward myself with a small allowance. It makes being your own boss more fun! 🙂

  9. David says:

    Thanks so much for writing this up… very helpful! I’ve also had a good experience with Chase, but I’m not so sure “every-corner” Starbucks is a great comparison. I’m moving to Massachusetts soon, which has two Chase ATMs and no Chase branches. In fact, Chase only has branches or ATMs in half of the states.

  10. Ashley says:

    Love the PayPal idea. I tried searching their site but couldn’t find it: Do they have a routing number/account number for external partners to deposit funds directly? Thanks!

    • Carrie says:

      Great question, Ashley. Yes, you can deposit funds directly from your PayPal account into an external bank, savings, or money market account. You can also request a debit card from PayPal and use your account balance that way.

  11. Amy says:

    Hi Carrie,

    I have been a banker for nine years, and am in the process of choosing a bank for the small business I am starting up. I ran across your blog when I was looking around online, and thought some clarification could maybe help everyone. For anyone with their own business, it is utmost important to have a separate account for their business income/expenditures, but it’s not generally recommended to run it through a personal account. All back office operations in banks/credit unions will look for activity that appears to be a business running through a personal account per federal regulations (just like they look for money launderers, etc.). From a personal standpoint, I really recommend going the route of LLC/Inc to help protect the individual, and to really research the laws and regulations in the state in which you are going to do business as there are some oddball items out there.
    Hope this helps anyone trying to go it on their own with a business!

    • Carrie says:

      Thanks for the clarification, Amy! I definitely agree that you should always separate your business and personal accounts and then move them to a small business checking once you’re more established. It’s even more important when you’re an LLC and make things legit!

    • Carrie says:

      You can read some of the first comments posted from other freelancers to see why Ally isn’t the best choice for a freelance business bank account. Thanks!

  12. Drew Reed says:

    I like how you said that there are different types of checking accounts for different purposes. My wife and I were looking at starting an account so we could pay our bills more easily. I’m still not sure which one to go with, but it sounds like this article will help her decide. Thanks for sharing!

  13. mary says:

    I have the chase small business account as well, but it only allows INCOMING wire transfers for international. Do you know which is the BEST for outgoing? And how to find the fees? I can’t seem to find any online. I’d love to see a compare between banks that have outgoing wire transfers for international. I Send 4-6 a month.

  14. Josh says:

    Hey Carrie – I personally have done business with PayPal (and only PayPal) for my ecommerce website for the last 12 months and I haven’t had any problems, but ever since I’ve done more research, I’ve seen a surprising amount of people say they’ve been screwed over by PayPal by freezing their accounts unfairly and keeping their money. One example I saw was from an Entrepreneur.com article that come across my Facebook news feed about a new PayPal feature and several people jumped right in and claimed PayPal is notorious for freezing accounts unfairly and keeping their money – and that everyone should avoid PayPal at all costs.

    It’s kind of worrying me and I think I’m going to try avoiding them as much as I can while still allowing it as a payment option for my website and future freelance transactions (haven’t begun website design freelancing yet, but I plan on starting soon in the future). Have you heard anything about PayPal freezing a lot of accounts?

    • Carrie says:

      I haven’t heard that about PayPal, Josh. In fact, I use my own PayPal Premier account every day and am constantly transferring funds back and forth. I’ve never had an issue with it in over 4 years.

  15. Krystal says:

    Forgive me. I am a little confused…. Could I maybe open my personal account under my DBA name or do I have to open a “real” business account.

  16. Great post. Thanks so much for putting it together. I was especially interested in Ally as a business banking option and now I know it’s a no go.

    One update for you – Paypal no longer allows for taking pictures of checks and adding the funds to an account via its app. I just got off the phone with a rep and she said that was discontinued because they were having too many problems with it. She doesn’t anticipate it returning as an option.

    Thanks again!
    Kurt

  17. April Cook says:

    I have been thinking about starting a freelance business, and this is helpful information. I didn’t realize that I would need a separate checking account for my business, but it makes sense. I like that customizing your business account will make you look more professional. how bog would you say a business needs to be before you get a business account? Thanks for the information!

  18. Frank says:

    Hi, this is a really great blog and this article is fantastic. I came upon it as I am trying to find out which bank in the US, specifically in California, will open a bank account for me in my dba name (and thus also lets me have checks that feature my dba name only). I am trying to avoid confusion: I am not talking about an LLC business account, that’s easy. I mean dba, which is substantially different. I know that most major banks do not open accounts and issue checks for a sole proprietor who only has a dba certificate, they always want an avtual LLC registration. Could someone clarify if the banks listed here will open an account based on a dba name only?

    • Carrie says:

      My only advice is to ask a local bank or chat with an online representative to see if they will be able to open an account with your DBA name only. Since opening my account with Chase several years ago, they allowed me to use a personal account with a DBA. But I don’t think they allow this anymore. Good luck!

  19. Sandy says:

    Hi Carrie, I would like to work as a general transcriber for a transcription company, it’s an independent contractor job and they pay with PayPal. Can I open a premier PayPal with an EIN, or do I have to use my S.S. #? Also, do I need any kind of permit or city license for this type of job? Thank you and I love your blog.

    • Carrie says:

      Hey Sandy, great question. Yes, you can open a Premier account with PayPal using your EIN. This is what I’ve done in the past and it worked great. My husband recently got an independent chef contracting job and is doing the same thing. You don’t need any permit or license for this type of job. You’ll probably just have to fill out a W-9 form with the company so they can properly issue you a 1099 at the end of the year.

      • Sandy says:

        Thank you Carrie for the quick reply. You helped me with my questions. I will continue to read your blog because you inspire me to work from home so I can take care of my family. My Chihuahua dog appreciates you too!!!

  20. Pavel says:

    PayPal charges 2.9%+$0.30 per transaction – how is that a good banking option for a small freelancing business?

    • Carrie says:

      Great question, Pavel! First off, paying a small amount like that for transactions through PayPal is nothing compared to the overhead and other expenses most small businesses have to pay to get up and running, so it’s not that bad when you think about it. Plus, it’s a tax deductible expense (PayPal fees, I mean).

      On the other hand, I talk a lot about using accounting software that allows you to only pay $0.50 PER PAYPAL TRANSACTION so that’s why I highly recommend it, and use it myself. You can read more about my explanation in this post: http://www.carefulcents.com/avoid-invoicing-fees/

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