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Module 5: Banking Services

Other bank services for small businesses


Payroll services include accounting for payroll, retirement, workers’ compensation and federal and state taxes. Many banks offer a combination of a payroll account and an operating account. The latter is used for everything except payroll, which can simplify accounting. As each paycheck or transfer is presented to the bank for payment, the amount is moved from your operating account to your payroll account. This helps prevent fraud since the bank controls the movement of these funds, and the payroll account zeros out at the end of each day’s processing. You can also use payroll functions attached to your accounting software or online bookkeeping services, which function in much the same way.

Cash Management

Small businesses may receive payments from multiple sources, such as cash, checks, ACH and debit and credit card payments. For instance, if you have a significant amount of cash coming in, you may have to comply with state and federal laws and IRS regulations to tell authorities how much came in and from whom. This is particularly true if funds come from international customers. It’s essential to your business that you keep accurate records of these large cash transactions.

Merchant Services

To accept credit and debit card payments, small businesses need to use merchant processing services provided by a financial institution. Banks often serve as this processing gateway, connecting your businesses to card networks such as American Express, Discover, MasterCard, and Visa, which provide authorizations and fund transfers. Merchant providers may also offer card reader terminals at your place of business along with marketing support (signage, window stickers, etc.), data analytics and the ability to issue gift and prepaid cards.

The costs of merchant services are usually a percentage of the transaction. Sometimes a per-transaction fee is also included, depending on the service, your business volume, overall industry risk and potential losses through disputed transactions or fraud.

Training & Education

Financial institutions have a vested interest in your success. As a customer, they want you to have a solid financial footing so that you can grow and expand your business. As such, they work with a range of local organizations to offer you additional training, counseling, business plan development assistance and microloans.

Monitoring your accounts

Even with the most up-to-date systems, errors can occur. In reviewing your accounts, you may find that someone entered a 6 when they meant a 9, or that a customer return didn’t get properly credited back. There may have been a small miscount in your cash at the end of the day. Or a bank fee may have increased, and you forgot to change your projections.

Reconciling all of your accounts at least monthly will ensure that these issues are identified and resolved in a timely manner. It is highly recommended that you monitor your accounts weekly or even daily if you have online access to your bank accounts. Given the level of fraud out there, these reviews will automatically catch any suspicious activity so that you can report it to the bank.

If you spot an error, work with your bank to resolve it. You can report these online, via a customer service phone call or in the bank. If you notice any abnormal transactions, such as mysterious withdrawals of cash or purchases of items that you did not authorize, change your passwords immediately and notify the bank of the activity on your account.