Ever since starting my own small business, I’ve been on the look out for ways of holding cash in a business account but still earning a competitive interest rates. Now, if you are a sole proprietor, you can just use consumer savings accounts at places like Capital One 360. But the choices narrow quickly for LLCs or Corporations. By law, checking accounts for these entities aren’t even allowed to pay interest.
Now, there are some banks out there that offer decent rates on business savings accounts, but I didn’t really find any that offered everything I wanted – a historically competitive interest rate, ability to link and transfer money online to other accounts, and good customer service. HeritageDirect came the closest with a good rate and linked accounts, but in the end I decided on opening up a Fidelity Business account.
The account is basically the same ‘Fidelity Account’ available to consumers. You can trade stocks, mutual funds, bonds, and all that fun stuff, although I don’t plan to. There is no annual fee, and I can put cash in one of their numerous money market funds. Their Fidelity Cash reserves fund (FDRXX) has an opening minimum of $2,500 and a current yield of ~5% APY. You can direct deposit straight into the fund, and also get checkwriting ability. I can even get an ATM/Check card and do online billpay, although I’ll have to shuffle funds a bit to do so. Finally, you can link multiple bank accounts to transfer money electronically.
Since I’ll probably open up a Self-Employed 401k with them as well, this will let me keep some accounts at the same place. I have spoken to their reps a lot over the past few weeks and continue to be happy with their customer service.
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I have an Individual account, an IRA account and a Roth IRA account with Fidelity for the last 2 years. And my “loose” cash within the Roth IRA account is in the FDRXX fund. It has been performing around 4.98% for the past few months. So far I have been extremely happy with their service. Reps are always available and eager to help and answer any question at all times of day and night. And I have talked to some reps for more than 30 min. They are a bit conservative in the investing strategy advice for my taste but that’s what most people need 🙂
I opened a Capital One MM with a 5% APY for my business earlier this year. I had to call a CSR to open an account (only personal accounts can be opened online), but it was pretty painless. It has a good rate and check writing privileges, but you can’t initiate electronic transfers from the Capital One end. They’re supposed to revamp their web site on 9/15, so hopefully they’ll get that squared away.
Johnathan, you are the man! I was just working with a client yesterday that had $600,000 in a money market account earning 1.9%. I thought to myself, “why don’t they put this money somewhere else that can earn 5% or more?” And now you have provided the solution!
Thanks man!
Anyone here use a Heritage Direct Savings yet? I already have an established business account, but am looking to earn a bit of interest. I am wondering if there are any maximum withdrawals for the month.
Thanks for this suggestion! I was looking for advice on business savings accounts and stumbled across this idea. Since the time of this original blog post, ING has come out with a 3.15% busines savings account – but there isn’t much else out there for business funds.
If you have any new ideas on this topic for maximizing returns on idle cash please comment on it or send me an email. It doesn’t necessarily have to provide returns greater than 3.15% – I just want to know what my best options are. Fidelity still has that business brokerage account, and I’m about to submit an application to enroll my LLC in that – but if something better has since come out please let me know.
Thanks!
Can you confirm that you can do BillPay with a Fidelity Business account. I have one and when I tried to enroll in BillPay it told me the account was not eligible and then there this:
“Note: Fidelity BillPay is not intended for corporate use, Custodial UGMA/UTMA, or business accounts.”
I would be interested to know if you managed to get around this policy as I too would like to do online BillPay from my Fidelity business account the same as I do from my business checking bank account.
Thanks
My business imports Extra Virgin Olive from Italy. Would like to open a business brokerage account that allows stock trades and flexability to hold us dollars and Euros since most of the importing requires payment in Euros. Any ideas?
Thank You!
Try this:
https://content.etrade.com/etrade/estation/pdf/Business_App1.pdf