Understanding Business Savings Accounts
Businesses can have a savings account, which offers benefits such as deposit insurance coverage, coverage for business expenses, and interest earned.
Updated 
8 min. read
Can a business have a savings account? The answer is a definite "yes." A business bank account offers multiple benefits for a business owner. It can help maintain accurate records for tax purposes, establish a credit record, and assist with evaluating your company’s performance.
A business savings account can work in conjunction with a business checking account by providing an emergency fund, overdraft protection, flexibility to invest in technology or new inventory, and the ability to fund your expansion dreams — all while earning interest on your deposits.
For a business owner, it’s important to understand the differences between your business banking accounts and personal accounts so you can make the best decisions to grow your enterprise. Here’s an overview of the types of business savings accounts, their features, and benefits.
What is a business savings account?
A business savings account, along with a business checking account, is a tool to help you manage your funds based on the goals and needs of your company. A business savings account lets you earn interest on your funds while maintaining access to them.
By comparison, a personal savings account is meant for personal use — things like building a rainy-day fund, covering the cost of home repairs and renovations, planning for family or personal travel, saving for your education or your children's, and other individual goals.
Using a business bank account instead of a personal account not only helps set a professional tone for your enterprise but also will aid in tracking performance, creating a budget, and maintaining accurate records.
Benefits of business savings accounts
For solopreneurs in particular, it's easy to wonder why you'd need multiple bank accounts. After all, you're just one person. But a comparison of business checking vs. savings accounts shows many potential benefits of business savings accounts that can help set up your enterprise for long-term success:
1. Separation of personal and business savings
By separating your personal and business savings with a dedicated business account, you can better manage your funds and allocate them toward your personal life or business.
Keeping your personal and business finances distinct also helps professionalize your enterprise, especially during the start-up phase, as well as assist with tax planning and other administrative tasks.
2. Interest earned
A business savings account will generate interest on the funds in your account and allow for easy transfers to a business checking account when funds are needed.
3. Coverage for planned or unexpected business expenses
Whether you’re looking to set aside funds for tax payments, equipment upgrades or repairs, or seasonal inventory, a business savings account can help manage cash flow.
Business owners should track their anticipated business finances to determine how much they would like to save.
4. Increased control over business spending
Earmarking a set amount for savings is part of the process of charting cash trends, planning for regular expenses, and preparing for unexpected costs.
5. Potential protection from overdrafts
Opening a business savings account at the same bank may offer protection from overdrafts on your business checking account.
6. Deposit insurance coverage
Organizations such as the Federal Deposit Insurance Corporation (FDIC) will insure deposits up to a certain amount. Please visit FDIC.gov for information about deposit insurance limits.
Types of business savings accounts
Being unique is what makes a business so appealing. So, there's no one answer to what the best type of business savings account is for everyone. There are three common types of business savings accounts, any of which could be a good fit for your business's needs.
Here’s some key information on how they work and how they differ from each other.
Description | Pros | Cons | |
|---|---|---|---|
Traditional Savings Account | An interest-earning account available from most banks that is usually easy to open with no or a low minimum deposit required | Interest bearing, easy to open, funds are accessible, minimal risk, FDIC-insured | Low annual percentage yields (APY), potential for monthly fee, taxable |
Money Market Account | A common savings vehicle that typically requires a larger minimum deposit than a traditional savings account while offering a higher interest rate. These are usually variable rate products | Higher yields, easy access to funds, can be used to write checks and make debit purchases, FDIC-insured | Minimum balance requirements, potential for monthly fee, limits on withdrawals and transfers, taxable |
Certificate of Deposit (CD) | A type of savings account that guarantees a certain interest rate for a set period of time | Predictability of returns, higher returns vs. savings accounts, flexible terms, FDIC-insured | Penalty for early withdrawal, taxable |
Choosing the right business savings account for your needs
How do you go about deciding which type of account is right for you? When choosing a business savings account, you may consider your short- and long-term goals and how the account could help you reach them. Some factors to keep in mind are:
1. Interest rates
Interest rates will vary by bank and type of savings account. A standard business savings account will typically require the lowest minimum balance and provide a lower interest rate than other types of business savings accounts.
To earn a higher interest rate, you might consider a business money market account, which offers a variable interest rate, or a certificate of deposit, which offers a fixed interest rate for a set period of time. BMO, for example, offers a higher interest rate on its Elite Business Money Market account.1
2. Fees
Similarly, fees will vary by bank and type of savings account, with most banks requiring a minimum balance to waive a monthly maintenance fee. A CD typically does not charge any monthly maintenance fee.
3. Minimum balance requirements
Most business savings accounts will charge a fee if you don’t meet a minimum balance requirement. BMO’s Business Savings Builder account will waive the $10 monthly fee if you maintain $500 average collected balance per statement period.2
4. Accessibility and convenience
First, think about whether you prefer to conduct your banking mostly in-person, mostly online or perhaps some combination of both.
Depending on your preferences and the type of business, you may want to choose a bank that offers the best blend of real-world and online convenience in terms of operating hours for branches and accessible telephone and digital customer service.
5. Customer service
Some questions to ask:
- What are the hours of operation for specific services you anticipate needing?
- Are these services offered in languages other than English?
- How robust is the online customer support?
- Savings reward
Consider the types of savings incentives available and how they might help support your enterprise. BMO’s Business Savings Builder account, for example, rewards business customers with $10 every month their balance grows by $500 more during the first year.2
6. Set Savings goals
Some banks allow you to set and track against a specific goal for managing your business. BMO’s Savings Goals allows you to set goals for everything from paying down a business loan to purchasing new equipment.
7. Insurance coverage
Your deposits are automatically insured up to a certain amount, depending on the organization. Please visit FDIC.gov for information about deposit insurance limits.
8. Overall business needs and goals
For your business banking needs, you might want to take a holistic view of how savings and checking accounts will provide the best level of support.
How to open a business savings account
Here are the types of documents most banks will require to open a business savings account:
- One or more types of personal identification
- Social Security number
- Employer Identification Number (EIN)
- Company Name registration
- Partnership Agreement and/or Articles of Incorporation
- Certificate of Good Standing
View this helpful list of documents you’ll need to open a BMO business bank account.
Business Savings Account FAQs
Need more info? Here are answers to some frequently asked questions about business savings accounts.
Can a business have a savings account?
Yes. No matter the size or stage of your company, a business savings account can work in tandem with a business checking account to help you manage your business finances. Whether you're looking to separate personal savings from business savings, prepare for unexpected expenses or future expansion, or set additional controls for your spending, a business savings account can accomplish these goals and more, while earning interest.
Can an LLC have a savings account?
Yes, an LLC not only can have a savings account but must open and maintain its own bank account to separate a business legally from its owners and maintain limited liability protections.
Can a business open a high-yield savings account?
Yes, a business can opt to open a money market account or certificate of deposit to set aside funds for emergencies, new initiatives, future expenses, or other business uses.
Are business savings accounts taxed?
Yes, similar to personal savings accounts, interest earned in business savings accounts is taxed. Account holders for business savings accounts are required to report interest earned as taxable income to the Internal Revenue Service.
How much should a business keep in savings accounts?
Most businesses should plan on keeping three to six months of cash on hand for operating expenses that are easily accessible in bank accounts. However, the amount you decide to set aside may depend on multiple factors, including whether your business is a start-up, your industry and type of business, daily cash flow, and expansion plans, as well as other considerations.
Compare our savings account options to decide which one is the best fit for your business.
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Have questions?
1 We may offer higher Elite Business Money Market account interest rates when you are an Account Owner of both a BMO Elite Business Checking account and an Elite Business Money Market account. See the BMO Business Service Fee Schedule for BMO Elite Business Checking for details about Relationship Packages. For current interest rates, ask your BMO Banker for a current Interest Rate Sheet or call 1-888-340-2265.
2 For every month your Business Savings Builder account balance grows by at least $500, we will credit the account with a $10 savings reward within 5 calendar days after the end of the month. To calculate if your balance has grown by $500, we will compare the Ledger Balance on the last Business Day of the previous month to the Ledger Balance on the last Business Day of the current month. Interest and savings reward payments will not count towards your balance growth. Tip: Deposits made on weekends and holidays will not be processed until the next business day. To ensure your deposit is counted for the current month, avoid scheduling your recurring transfers or deposits towards the end of the month.
Your account is eligible for 12 savings rewards beginning with the month your account is opened. The first savings reward is based on your savings growth from the Business Day the account is opened through the last Business Day of that month. If your initial deposit is not received until the month after account opening, the account will only be eligible for 11 savings rewards.
Your account must be open when the savings rewards are paid. Savings rewards will be reported to the IRS for tax purposes and you are responsible for any applicable taxes.
Exclusions:
- Savings rewards are available for new accounts only. An account switched into Business Savings Builder from a different product is not eligible for savings rewards.
- Savings rewards are limited to one Business Savings Builder account per customer as Primary Account Owner. Only your first account opened is eligible for savings rewards.
- You are not eligible to receive savings rewards if you have previously opened a Business Savings account between February 3, 2020, and October 18, 2021, and participated in the Business Savings account – Savings Rewards offer.
A minimum opening deposit of $100 is required for Business Savings Builder accounts. Business Savings Builder is a variable rate account. For account and fee information or current interest rates, call 1-800-546-6101.
Accounts are subject to approval and are provided in the United States by BMO Bank N.A. Member FDIC