Freelancers and small business owners usually have fluctuating income experiences. This is especially true for the self-employed individual who is just starting out. At some points, they can have an abundance of work with very little time to do it. At other times, it can be tough for them to find work no matter how much effort they put into marketing. Since their bank accounts fluctuate so much, it would be wise for them to find clever ways to avoid banking fees, overdraft fees, and even account closings. They may be unable to earn a steady income right away, but they can employ some banking techniques to keep themselves level.
When opening a bank account, the first thing every independent businessperson should do is read the fine print. Bank accounts are full of terms and conditions. Too many small mistakes can amount to unnecessary fees at the end of the month. This is not good for self-employed persons because they are responsible for their own income. Every little fee reduces their bottom line. Learning to read fine print is a requirement for any small business owner. If the fine print is too hard to understand, have the contract interpreted by a legal rep before opening the account.
It is also a good idea to look for a bank that offers free business checking. This may be a little difficult to find but these banks do exist. These banks are technically free because they have no minimum balance fees. The word technically is relevant here because it is possible to incur fees in other ways. For example, making a withdrawal at an ATM that is not from the banking institution can bring about a double fee. One fee will come from the machine and the other fee will come from the bank. Using the ATM card wisely is the best way to avoid any fees. It is also a good idea to keep a minimum balance of at least one dollar even if the bank will not charge for having a zero balance.
Fortunately for small business owners, there is a law on the books allowing banks to offer interest-earning checking accounts for businesses. The Dodd-Frank Wall Street Reform and Consumer Protection Act is a friend to freelancers and small business owners. Unfortunately, some bankers are not happy about this law. Some banks are even attempting to increase their other fees to offset the interest earned in the account. In any case, this is still good news for the little guy. Just remember to read over the fine print thoroughly before opening any account.
With the emergence of online banks, it has been easier for small business owners and freelancers to obtain business checking accounts. Many of these accounts have no monthly or inactivity fees and they allow a person to open up an account with no money. This is like a dream come true for the self-employed since it can relieve them of a lot of their worries. Opening an account through one of these banks is the perfect way for a budding entrepreneur to establish their business without having any capital.