Freelancers, also known as digital nomads, are a growing breed, who don’t believe in being chained to their desks for nine hours a day. Freelancing allows people to work in their own time from a place of comfort. While being your own boss and freelancing has its own set of perks, it is very important for freelancers to choose the right bank account as they have a fluctuating and variable income. Just as important as it is for a small business to have a separate business account for better manageability of earnings, this also stands true for freelancers. If you are planning to turn to freelancing, here are a few pointers that can help you pick the right bank account for yourself.
1. Business/Current Account
Freelancers can easily run their freelancing business using a current account. However, it is advised for a small business to have a separate business account for better manageability of funds. In general, the best account for a freelancer is one that does not entail monthly service deductions. The best suitable account is the one that allows a freelancer to retain as much hard-earned money as possible.
Bank of America and US Bank, as shown on their website, offer business accounts in various tiers. These ranks or tiers help freelancers in different stages of their business’ development and can be chosen based on the financial needs. It is best to compare benefits provided by the banks from their websites, to suit your needs. Also, enrol in a bank which provides online banking options. Having different accounts to keep personal and business money will help you ensure that your expenses are well managed.
Once you’ve decided to open a separate bank account, look for paperwork that needs to be completed. Most banks want specific documents that are clearly mentioned on their website. Do thorough research and select the best suitable option as per your needs.
Look for the following:
- Free sign up, joining, or managing
- Flexibility for expansion
- Free ATM
- 24/7 online service
- Offers linking with an online money tool
Discover Bank in the US is a highly rated checking and savings account that offers additional benefits. For instance, on every swipe via a debit card, the bank offers $0.10 cash back. This means that you can save extra just by using a debit card for all business expenses. Capital One 360 is also a great option as it allows users to link its account to any other banks or money tools. Plus, there is no minimum deposit criteria and it offers excellent customer service.
2. Net & Phone Banking
In today’s competitive market, all the banks offer online and telephone support to all its customers. As a freelancer, it is very important to ensure that your bank values your time and offers a decent online banking facility. Also, keep a check on the charges banks levy for offering an online transaction facility. US Bank, for instance, offers barrier-free facilities to all its customers. Along with audio-assisted ATMs, the bank has a dedicated Accessibility Banking Program Coordinator who is available online and answers your queries. BARCLAYS in the UK offers its customers round-the-clock net and phone banking facilities to ensure hassle-free transactions.
3. Transparency About Interests & Charges
Business accounts, unlike current accounts, have set charges for standard transactions. Since most of the business accounts are free to start, it is important to look for hidden and/or additional charges that can come along the way. So it’s important to compare fees closely when scouting for a bank to meet your business needs. Capital One 360 Bank charges $30 for outgoing domestic transactions. Also, only the first chequebook is free. Rest can be requested by paying $5. However, don’t let the charges be the only selecting criteria. Look for rewards and other services that a bank offers and can help you save time and money in the long run. Capital One 360, for example, offers 1.60% API with its high yield Savings Account. American Express National Bank, on the other hand, does not require any minimum balance and offers 1.55% API.
4. Charges If You Are Invoicing Abroad
One of the biggest considerations when working with international clients is the mode of payment. Whilst selecting a bank account, it is crucial to look out for payment/transfer charges the bank applies. International money transfer providers like PayPal, Western Union and, several banks charge margins of up to 5% on the live exchange rate. Hammer out all the details. Also, fix a time for payments as invoicing international clients in foreign currencies makes you susceptible to fluctuating rates. The best currency to invoice your clients in is the one discussed in the starting of the contract, the most used being US dollars. Having an international account evades hidden fees that come with wire transfers, thus letting you receive quick deposits.
5. Charges If You Are Paying Abroad
The majority of online payments are done with credit or debit cards, with a lot of people now using PayPal in conjunction with their own banks to make payments abroad. Having said this, payment methods could still vary from country to country. Also, most banks offer credit card payment options to its users and allow them to carry out transactions from anywhere, any time. Among the credit cards accepted are Visa, MasterCard, Discover and American Express. All of these work well for online transactions, only if they are secure and if the banking system within the country accepts them. You should not forget that your Debit/Credit card is designed to work only in the currency of the country it has been issued in or domestically but when you go abroad and use the card to either shop or withdraw cash, your bank will charge you for that Foreign transaction which makes up for around 2.5 -3.5% figure of the total transaction amount. Keep a check on the fees and wisely make all your transactions.
Extra Tip: Look For Banks That Offer The Cheapest Small-Business Accounts
Before settling with a bank, it is always a good option to discuss it with other freelancing friends. You need to know which bank accounts work well for small businesses. Learn about their experiences, ask them questions and then accordingly decide for yourself. Look for additional features, including online support, mobile apps, free debit/credit cards, and many other added benefits.