Most people start using banking as children or adolescents. They are taught by their parents how to properly store their money in a bank and to keep it safe. While many people never move beyond personal banking, there are many people who will turn to business accounts as they become involved in their professions.

There are a lot of banking products that are available to the public and business world. Finding the right one for the right project can help a business save money and operate more efficiently. There are advantages and disadvantages to all products that a bank offers. Identifying these will help a business owner make the right choice and give them every chance to be successful.

Banking - Personal & Business

As mentioned, there are a lot of potential products and services that a business may choose from. Listed below are many of the common services, as well as some of the benefits and disadvantages of using such.

Checking Accounts

Checking accounts are the bread and butter of banking. People and businesses use them for their day to day transactions. They allow for easy cash flow. Checking accounts are the main choice when it comes to making or accepting payments as a business. When it comes to personal use, people have their paychecks deposited into these checking accounts and then pay their bills from it.

There’s not a lot of differences when it comes to business accounts vs. personal checking accounts, but there are a few. To sign up for a business checking account, the business will need to provide their registration paperwork and proof the business itself exists. The owner’s name has to be provided, or in the case of partnerships both owners. Another difference is the fee structure. Fees for business are often much higher than personal accounts.


  • Easy cash flow

  • Lower overall fees than other accounts

  • Seemingly unlimited transactions


  • Little to no interest

  • May require large base deposits to maintain low fees

Line of Credit

The line of credit is available for both individuals and businesses. For personal use, they function rather simply. A person can use them much as they would a credit card. They can use a line of credit to allow for easy handling of large purchases. A business will use them in the same way. However, these lines of credit are often secured against the business itself. This may sound bad, but is actually a good thing. Secured business lines of credit offer better rates and better fees.


  • Convenient - A line of credit allows for easy handling of operating expenses.

  • Security - A business doesn’t “need” to dip into their line of credit. However, it’s there for any short term expenses that may occur unexpectedly.

  • Builds Credit - For small businesses, the ability to build up their credit can be overlooked. A line of credit will allow an easy way to show they are a responsible company.


  • Fluctuating Rate - The credit rate on a line of credit is renegotiated every year or two. If the borrower will not pay the rate, then the line of credit can be called in. This is not as useful as a fixed term loan which keeps the rate the same.

  • Risk - A line of credit can be troubling for a small business. If the business is not successful, a sole proprietor may have to pay off the line of credit in full.


Many people think that a mortgage is something that individuals use to purchase a home. However, businesses will often use mortgages as well. A business or “commercial” mortgage is used for commercial properties. Like a personal mortgage, these commercial mortgages will offer the company the chance to own the property in question, or to redevelop a property they already own.


  • Rental Potential - Whether you’re mortgaging a personal or commercial property, there is potential to make a profit renting unused or undervalued space.

  • Increase Equity - Owning instead of a renting a property will increase your business or personal equity.

  • Capital Gains - Property prices almost always rise. By purchasing, a business can enjoy substantial capital gains.

  • Predictable - Knowing an exact monthly payment allows that money to be nicely tied into any business forecast.


  • Commitment - A commercial mortgage can sometimes prove an unwise commitment if the property in question is wrong for the business and they are unable to move it.

  • Big Down Payments - These deposits can be quite large for properties.

  • Maintenance - All maintenance is now the responsibility of the company. Many rental situations might offer maintenance as part of the rental price.

Need To Know Facts For Businesses and their Banking

The list above is useful and comprehensive. However a business owner should consider many factors when they are making their banking decisions.

  • Good Accounting Saves Money - Every business needs to consider their accounting needs. Choosing an account that is incompatible or uncomfortable for accountants is not beneficial. For small businesses, many banks will offer in house accounting of accounts with them. This can reduce outside expenses.

  • Business Size is Important - If a business owner is small, they should look into services that benefit their small business. Their needs aren’t going to be the same as a large corporation.

  • Liability Matters - Businesses headed by a partnership or sole proprietorship need to always consider their liability when using any banking services. If liability is potentially an issue, they need to look into turning the company into an LLC.

  • Don’t Go It Alone - Small business owners need to avoid the temptation to use personal accounts for banking. These can make accounting for a business difficult. These owners will quickly regret their choices.

  • Avoid Overextending - Just because a business qualifies for a business loan or line of credit, it doesn’t mean they need to use them. Business plans should take advantage and use banking services. They should avoid being used up by banking services.