How Many Bank Accounts Should a Business Have? A Guide to Smart Banking for Your Business

8 min
Dec 19, 2022

It always seems there are two types of business owners. 

Those who run a tight ship financially, tracking every receipt and neatly compartmentalizing every expense. 

And those who open their wallets and can’t remember which of their two dozen cards to use for a purchase.

Truthfully, it’s that latter that is most common.

So, how many bank accounts should a business have and what should they be used for? The answer isn’t the same for every business. 

We break it down into the pros and cons of having multiple accounts and which types of accounts should be prioritized.

Why Do Some Businesses Open So Many Bank Accounts?

So, why is it that some businesses have so many bank accounts — and how many do you really need?

The answer is… it depends.

Some businesses are chasing specific promotions. For example:

  • Business Banking #1 offers free ATM withdrawals! 
  • Business Banking #2 offers unlimited debit cards for your employees! 
  • Business Banking #3 offers high-yield earnings on idle cash!

But is it really worth it? Not always.

What ends up happening is:

  • Business Banking #1 requires you have a minimum deposit of $1,000
  • Business Banking #2 has a minimum balance requirement of $5,000
  • Business Banking #3 charges a hefty annual fee

Managing multiple accounts is a part-time job. And things are constantly changing.

One of the accounts that you opened nine months ago — and probably forgot about — might suddenly change its policies and it no longer makes sense for you.

Instead, we recommend having just a few business bank accounts that meet your needs and wants.

3 Advantages of Having Multiple Business Bank Accounts

We’re not suggesting that you shouldn't have multiple accounts. But you shouldn’t have trouble closing your wallet because you have way more cards than you need.

Here are a few reasons why you might want to select just a few accounts that complement your business needs.

#1: You Get Access to Different Account Perks

This can work if done carefully. Ultimately, you want to make sure the perks outweigh the costs with every account you choose.

Look for features that are particularly beneficial to your business. For example, if you frequently need access to quick cash, you should look for accounts that offer little to no ATM fees and unlimited withdrawals.

But if you’re hoping to maximize your profits, you may want an account with high interest rates.

Funds can usually be transferred between accounts easily, especially if you open them at the same bank. With this in mind, you'll want to ensure that you can easily move money from your high-interest account to your high-withdrawal account without any extra fees.

#2: It’s Easier to Stay Organized

Money comes in, money goes out. This is an unavoidable part of doing business.

Having separate accounts for inbound and outbound money can help simplify bookkeeping and tracking your financial transactions.

If we’re talking about having three separate accounts, for example, try opening one for each:

And here’s where it gets fun (yes, banking can be fun!). Try to match different account perks with the purpose for which the money will be used. For example, your “quick cash” account could be used for day-to-day expenses, while your high-interest savings account could be used for your receivables.

Organizing your accounts leads to improved financial management and efficiency.

#3: You’re Better Able To Protect Your Money

Financial security is essential to your business. Spreading your money across multiple accounts protects you from the threat of fraud if one of your accounts is compromised.

Also, keeping large sums of money in one account isn’t ideal because FDIC insurance only covers up to $250,000 per eligible bank account. If you have an account that you will be keeping large sums of money in, always check that it’s FDIC-insured.

3 Disadvantages of Having Multiple Business Bank Accounts

It’s not always going to make sense to have multiple accounts. A business just starting out, for example, will have fewer needs than a medium or large-sized business.

Here are a few of the downsides to juggling multiple bank accounts.

#1: More Accounts Mean More Fees and Requirements

Many banks impose fees, so the more accounts you have, the more you may be paying. Each bank will also have specific requirements to maintain fee-free banking, such as minimum deposits and daily balance amounts.

Not meeting requirements may result in hefty fines, increasing the cost of banking even more.

Many start-ups and small businesses lose valuable profits each month when hit with so many expensive, and often unexpected fees.

Always read the fine print when opening each account to be sure you’re not paying more than what you expect. 

#2: Multiple Accounts Can Be a Hassle To Manage

Above, we mentioned that multiple accounts can streamline your finances, but this isn’t always the case. 

Some business owners choose to manage their own finances, rather than hire a bookkeeper or financial team. Juggling multiple accounts can be overwhelming for anyone who lacks the time or experience.

Operating with one business account that encompasses everything your business needs to accomplish is ideal in this situation.

#3: Some Banks Won’t Let You Open More Than One Account Per Business

Check with your current banking provider to find out if multiple accounts are an option. Many banks won’t allow customers to open more than one business account.

Switching to another provider that allows its customers to open multiple business accounts is one option.

If you really like your current account but still feel the need for another, you can check with other providers to find a secondary account that complements the one you have.

Double-check that you can easily move money between the two accounts. Some banks charge fees to transfer money outside of their institution.

3 Types of Bank Accounts Most Businesses Should Have

You might be well on your way to deciding how many accounts make sense for you, but what type of accounts do most businesses use?

Below are the top three business accounts used to streamline and manage the financials of a business.

#1: An Operations Account

An operating account allows you to run the day-to-day operations of your business. This is the first account you’ll need as you get started. This account allows you to:

  • Receive income
  • Pay bills; and
  • Make payroll

Most businesses will already have this account and may be deciding what type of account they need next to help compartmentalize their finances. 

#2: A Tax Account

Unfortunately, a lot of businesses forget to stash away enough money to pay taxes, such as:

  • GST (Goods and Services Tax)
  • PAYG (Pay As You Go Tax)
  • Income tax
  • Superannuation
  • Etc.

Separating your tax money into a separate account makes it less likely that you’ll accidentally spend it on business expenses. 

Transferring the appropriate amount of money from your operations account into your tax account may also help you manage your finances better because you’ll have a clearer picture of how much money you actually have.

#3: A Profit Account

Many companies don’t consider the importance of a profit account. Can’t you just use your profits to operate your business?

You shouldn’t. When you make a profit, you should put it aside. 

Leaving it in the operating account makes it tempting to spend it. But, if it’s in a profit account then you can choose what you spend it on. For example:

  • Buying new assets for your business
  • Invest in growth strategies
  • Pay out dividends
  • Open a second location or build an e-commerce store
  • Etc.

When you start treating your profits as separate from operating costs and taxes, you’ll have a better understanding of where your business stands and how to scale your business for growth.

Other Account Types Your Business May Want

You’ve set up the first three accounts, so you’re all set right? Not necessarily. You may find value in some of these additional accounts, depending on how your business operates.

Petty Cash

Petty cash serves as a small fund that businesses keep on hand to pay for minor expenses, such as reimbursements, office supplies, or a staff luncheon.

You may choose to keep this cash in a lockbox and forego the account, altogether. Many times, the amount is small enough to be safely stored but not big enough to be missed if it were to be stolen.

Regardless of how small the amount of money is, you should still keep track of petty cash within your accounts and bookkeeping.

Loan Accounts

Business loans or credit lines are typically kept in a separate account. This helps business owners gauge …

  • How many repayments are required
  • How much interest is being paid
  • How the loan affects your cash flow

… and whether you can afford to make additional payments to pay the loan off sooner.

Credit Cards

Many companies use credit cards to help track work-related expenses incurred by employees, such as:

  • Flights 
  • Client dinners
  • Technology purchases
  • Office supplies
  • Gas
  • And more

Reconciling every credit card from an operating account may prove to be challenging. A separate account reserved for credit card expenses can help to manage expenditures made by employees.

Are you still left wondering, “how many bank accounts should a business have?” That's because there is no right or wrong answer. 

Take the time to prioritize your finances and open accounts that align with those priorities. Every business will need an operating account, so this is where to start. From there, you have the freedom to shape your finances in a way that makes the most sense for your business.