Most business owners can tell you exactly what their business needs to run. However, not all can tell you which account should hold the cash that keeps it running. Without a clear picture, it's easy to guess, or open accounts you don't necessarily need.

This guide breaks down each of the main types of business bank accounts so you can match the right one to your cash flow, your growth stage, and your goals. Live Oak is a business-first, fully digital bank, so we built our business bank accounts to be opened and managed online, with a U.S.-based team behind them when you want to talk to a person.

What is a Business Bank Account?

A business bank account is an account opened in your company's name, used only for money within your business. Keeping it separate from your personal account protects your personal finances, makes bookkeeping and tax time easier¹, and gives customers and vendors a professional way to pay you. Finding the right business account type is important, but can be simplified. Here are the most common types of business bank accounts. 

Business Checking Accounts

A business checking account is the workhorse. It's where customer payments land and where payroll, rent, suppliers and software subscriptions go out. If your business has any day-to-day activity at all, you need one, which is why checking is usually the first account a business opens.

Features vary by bank, but look for unlimited number of transactions, a debit card, mobile deposit, and tools that connect to your accounting software. Some banks offer more than one tier of business checking accounts, from simple everyday banking to accounts built for businesses moving money by wire or collecting payments by ACH. At Live Oak, you can choose from three types of business checking accounts, so you can start simple and move up as your operations grow.

Pros of a business checking account:

• It can handle unlimited day-to-day transactions, so you can pay and get paid without watching a counter (depending on the financial institution).
• It keeps business spending separate, which makes tracking expenses and filing taxes much simpler.¹
• Most accounts come with debit cards, online bill pay, and accounting software connections.

Cons of a business checking account:

• Checking typically earns little to no interest, so extra cash sitting here isn't working hard.
• Some accounts charge a monthly fee unless you meet a balance requirement, so be sure to read the fine print.

Business Savings Accounts

A business savings account is where your money rests and earns interest. It's the place for your cash reserve, the money you're setting aside for quarterly taxes¹, or the short-term goal you’re saving for.

Because savings accounts are built for keeping money, not spending it, some banks limit how often you can withdraw or transfer. With a business savings account at Live Oak, there's no minimum to open and no monthly maintenance fees, and you can schedule transfers from checking into savings automatically.

Pros of a business savings account:

• It earns interest on money that would otherwise sit idle in checking.
• It builds a cash cushion for slow months, surprise repairs, and tax bills¹.
• Keeping reserves apart from checking makes them harder to spend by accident.

Cons of a business savings account:

• Some banks cap withdrawals or transfers, so it isn't meant for daily spending.
• Rates can change at any time, and the interest you earn is taxable income.

Business Certificates of Deposit (CDs)

A business certificate of deposit, or CD, is a savings account with a deadline. You agree to leave a set amount untouched for a fixed period of time, known as a term, and in return the bank pays a fixed rate for that whole term. The rate doesn't move even if the market does, which makes CDs a good fit for money you won't need soon but want to put to work with a predictable return.

The tradeoff is access. Pull your money out early and you'll typically pay a penalty. Live Oak's business CD accounts range from 3-month to 5-year terms.

One way to get the best of both worlds is a CD ladder. Instead of putting everything in one CD, you split your money across several CDs that mature at different times. For a business, you can line the maturity dates up with expenses you already know are coming. Say you have $40,000 set aside. You could open four $10,000 CDs that mature in three, six, nine, and 12 months, timed to your next quarterly tax payment¹, a planned equipment purchase, and so on. Each CD pays its fixed rate, and cash lands in your account right when you need it, without an early withdrawal penalty.

Pros of a business CD account:

• A fixed rate for the full term gives you a return you can plan around.
• Laddering lets you match maturity dates to known expenses like taxes or equipment.

Cons of a business CD account:

• Withdrawing early usually costs you a penalty, so it's not the place for emergency cash.
• Most CDs require a minimum deposit, and your money is locked in until the term ends.
  

Which Business Bank Account is Right for You?

Start with what you need the money to do. Here's how each account type maps to a common business need:

Most businesses don't stop at one account. A common setup is checking for daily operations, savings for reserves and taxes, and a CD for money you're confident you won't touch for a while. Using different types of business accounts together lets each one do what it does best. Start with what you need today and add accounts as your business grows.

Business Bank Accounts Frequently Asked Questions

How many business bank accounts should my business have?

Most businesses do well with at least two: checking for daily operations and savings for reserves. Add more as goals appear, like a tax account or a CD. You can have multiple business bank accounts as long as each one has a clear job.

What's the difference between a business savings account and a money market account?

A savings account earns interest on money you're setting aside. A money market account works like a hybrid, often paying tiered rates on larger balances and sometimes allowing check writing. Live Oak offers business savings, not money market accounts.

Is a business CD a good place to store extra cash?

It can be, for money you won't need until the term ends. A CD pays a fixed rate in exchange for locking your funds up. Keep emergency money in savings, where you can reach it without paying an early withdrawal penalty.

Do business bank accounts require a minimum balance?

It depends on the account and the bank. Some accounts require a minimum to open or to waive monthly fees, and CDs usually require a minimum deposit. At Live Oak:

• Business Essential Checking: The $10 monthly maintenance fee can be waived with a $1,000 average daily balance.
• Business Plus Checking: The $25 monthly maintenance fee can be waived with a $25,000 average daily balance.
• Business Plus Analysis: The monthly maintenance fee is $100. You can contact us to learn how to offset the fee.
• Business savings: No minimum to open.
• Business CDs: Start at $2,500.

Can I open a business checking and savings account at the same bank?

Yes. Many business owners keep both in one place so they can see their full cash position in a single login and move money between accounts easily. At Live Oak, you can manage business checking, savings, and CDs together online.

Ready to find the right fit?

Whether you need a place for everyday cash, a home for your reserves, or somewhere to put money to work for a while, we can help you sort it out. Explore business checking, business savings, and business CDs, or call a Customer Success Manager at (866) 518-0286, Monday through Friday, 8:00 a.m. to 11:00 p.m. ET.

1. Live Oak Bank does not provide tax advice.

Member FDIC.