Episode 253

Oct 18, 2019

Bank or credit union? Is it typical to pay fees? We talk you through what to consider when choosing a place to keep your money.

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Bank or credit union? Is it typical to pay fees? We talk you through what to consider when choosing a place to keep your money.

Sponsored by: Acuity Scheduling & The Jojoba Company.


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Michael Reynolds Hey, everyone. Welcome to the Massage Business Blueprint podcast, where we discuss the business side of massage therapy. I’m Michael Reynolds.

Allissa Haines And I’m Allissa Haines.

MR We’re your hosts. Welcome. Glad you’ve joined us today. We’re talking banking today. So as exciting as that sounds, I’m actually pretty excited. [Laughing]

AH Nerdy, nerdy, nerd alert.

MR Nerdy, nerdy. [Laughing] I know. I can’t help it.

AH [Laughing]

MR I have, like, I think seven different banks that I use personally and in business, so, like, yeah, it’s kind of my thing.

AH You know, I do too, although I’m scaling back a little bit and I’m organizing a little differently because every year when I go to my accountant meeting to file my taxes and stuff, he always looks at the little thing where you have to put, like, any interest you’ve earned and stuff and he’s, like, why do you have so many bank accounts? I’m, like, I needed them for structure.

MR [Laughing]

AH And I did for a long time, and do still need a couple, but actually let’s just jaunt off into a sidebar here.

MR Go for it.

AH The app, You Need A Budget, has, like, completely eliminated my need to have, like, a gazillion bank accounts because I used to need separate accounts for — well, like, I still have separate accounts for tax savings and emergency savings stuff. But, like, I don’t need — personally, I used to have, like, a personal checking account and then I had, like, three different savings accounts to — one for saving up for a new car, one for my personal emergency fund, one for if I want to save for vacations because I was typically very bad about if the money’s sitting in my checking account, I will spend it. And the You Need A Budget software completely eliminates that because it’s — like, it creates a virtual envelope system for your one main account —

MR Yeah.

AH — if you want to use it that way —

MR (indiscernible).

AH — and it’s helped me so much. So, yeah, now I don’t need 800 bank accounts for my business —

MR Yeah.

AH — and my personal life, but —

MR That’s legit. I still use separate accounts for those things, but your method is definitely legit.

AH Yeah, and I still have a couple separate ones but I just don’t — at one point, I was, like, wow, I could really use six different accounts, and now I don’t need to do that. It’s silly. I still keep my emergency savings separate because that’s a better idea for me.

MR [Laughing]

AH Anyhow.

MR Well, we’ll make a whole episode on that at some point, but today we are talking about how to choose a business bank for your massage business. And what we’re going to do is Allissa and I both have probably some similar and maybe some different ideas on choosing a bank, and so we’re going to start with —

Did we decide I’m going to go first?

AH Yes, please do.

MR Okay. So I think I’m going to go first before halftime and tell you what I look for in a business bank, and then we’re going to do halftime and then Allissa will tell you what she looks for in a business bank. And, hopefully, that will give you some ideas on what you might want to look for in a business bank for your massage practice.

So let’s kick this off. So choosing a bank for your massage business. So first of all, we are under the assumption that you are running your massage business out of a separate bank account, so we do recommend that. So we want to have that your personal finances are in personal account and your massage business is running off a business bank account — or a separate bank account for your business. So we’re going to go ahead and assume that.

So here are the things that I look for in a business bank. So first of all, the caveat here, I’m a big fan of online banks. Like, most of my banks are online. Like, I use, like, Ally Bank and Capital One 360 and Synchrony Bank, and I really like the online banks — and Azlo and things like that. However, for your primary day-to-day bank — and this applies to personal as well, but we’re talking about business right now. For your primary day-to-day bank, I really still like a brick-and-mortar. I like going — being able to go to a physical branch, walking into an office, and looking someone in the eye and having someone to talk to. I think that is useful in some cases. You may only need it once a year or once every couple years even, but when you need it, you need it. Like, if you want to deposit cash or if you want to get a money order or something or you need to just, you know, wire some money or have something that a person can help you with more easily and you want to walk in a deal with someone, there’s a lot of value in that.

So I very much agree with your primary operating account business bank being a physical brick-and-mortar. That being said, I also look for really, really good technology. So the issue with a lot of the online banks is there’s no physical person to go talk to in a branch. The upside of those online banks is their technology is usually really, really good. Their apps are great. Their websites work really well. They’re very easy to use. They have a lot of functionality. The downside, of course, of a physical bank that is maybe a smaller community bank or a credit union is their technology may not always be as mature.

So they are out there, though. You can find local banks that have really good tech. So I like to find maybe not the tiniest bank in your town, but maybe kind of a mid-sized community bank that has a more up-to-date app, maybe an up-to-date website that is easy to use and functions well — has a lot of functionality, doesn’t look like it’s from 1995. So that really is important to me because I want to be able to get things done via mobile and on the web. And so I’m a big advocate of credit unions and local banks, but I would demo their technology first and make sure that it works well.

So also, I look for no fees. Generally, you can easily get a business bank account with no fees. If someone’s trying to charge you a fee for a bank account, I would compare with something else because I have always been able to find bank accounts for business with no fees. Some people just charge fees because they charge fees, but that doesn’t mean everyone does. So a fee might be, you know, ten bucks a month. It may not be, you know, the end of the world, but why pay it if you don’t have to? So I would look for a bank that has a business checking account that does not charge any fees.

I also look for business-friendly people in the bank. Going back to kind of my preference of a brick-and-mortar bank, you know, I want to talk to people there and I want people that are business friendly. That means that they maybe have a lot of small-business customers. They maybe contribute to the small-business community. Maybe they do networking in the small-business community. Maybe they show some sort of affinity toward small business.

If you work with a bank that is not as friendly to small business, then, you know, they may not roll out new features at the same pace as another bank that is more pro small business. So that’s important to me. I just — it may not be a deal breaker or anything in the long term, but I just like working with a bank that knows how to work with small business. They contribute, they network, they talk about, you know, issues related to small business, and I can just talk to someone about my business. So that’s important to me as well.

So pretty simple. Those are kinds of the things — I also just like supporting local community banks. I think that a lot of community banks and credit unions, typically, are the ones that contribute to the local economy. You know, they sponsor kids’ baseball leagues. They sponsor other stuff in the community. They contribute to non-profits, so I just like the feel of that. I kind of like that concept.

So that’s kind of what I look for. Those three things, mainly, is a local brick-and-mortar, good service from somebody who is pro small business at the bank, and good technology. Something that is going to integrate with other applications and integrate with QuickBooks well. Something that’s going to integrate with Wave or whatever you’re using. Integrate with YNAB, if you use YNAB, You Need A Budget. You know, has enough technology that it’s going to not get in your way.

So that’s kind of my spiel. Pretty simple. We’ll do halftime, and then I’d love to hear Allissa’s list of what she looks for in a bank.

So Allissa, our halftime today is our friends at Acuity.

AH Yay.

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MR Yay. We love Acuity.

AH Yay. We do.

All right. My turn. So I’m glad you mentioned credit unions and banks because I wanted to do just a moment of what the difference is between them, if you don’t already know. So it’s partly about business structure. Whereas banks are private for-profit institutions — they’re companies — credit unions are not for profit and their members are members. They’re actually — I don’t know if they’re technically considered shareholders, but they are members of this organization.

With a lot of local credit unions, you need to — like, there are certain criteria in order to even open an account with them. You might need to live in that town or have your business in that town, or a credit union can be for a specific employee group or community. Like when I was in college, my — when I was in the University of Wisconsin, the University of Wisconsin had their own credit union system, and you could only have an account with them if you were an employee or a student as part of that system. And you’ll see that a lot of credit unions are named after the town they’re in even though they’ve expanded beyond that.

So banks tend to have slightly lower interest rates on their savings accounts, whereas credit unions can have slightly higher interest rates. I’m not sure why; I just know that that’s to be true. Last time I looked into changing banks and compared, I saw that and then I actually saw that in a pro/con list as well.

Credit unions tend to have more local personalized staff and service, so you will see the same, you know, eight tellers at your local credit union for the next ten years or so. They tend to be more long-term employers, and they tend to be more involved in the community in which they serve because they are really community based.

A downside, though, is that credit unions, as compared to banks, might have fewer branches and fewer ATM machines. But they’ve kind of resolved that in many ways because lots of credit unions have banded together so that if I am a member of, like, let’s say my local — it doesn’t exist, but I’m making this up — Plainville Credit Union, but I am 20 towns away and I go to the Holliston Credit Union, they are usually part of the same ATM network. So I don’t get charged an extra fee for using an out-of-network ATM. I don’t use ATMs much anyway anymore, but fewer physical locations may or may not be an issue for you so it’s something to consider.

And Michael talked a lot about technology. I have definitely found that the credit unions are usually, like, two steps behind in technology. That said, mine do what they need me to do. I actually have separate accounts at two different credit unions. I go to different places for my two businesses that I run locally, and one of them has a really great website, a really good app. The other one is a little bit behind which is weird. They just actually did a whole new updated system and I don’t like their new app, but it’s still — on its worst day, it still does the things I need it to do, like I can deposit checks remotely. I hate going to the bank, and the bulk of my clients pay with credit card or with a check, so I only go to the bank maybe once a month with the little bit of cash from a couple of massages throughout the month, which I really like. So there’s that.

Also, you need to look at fees. I don’t know that Michael talked too much — Oh, you talked about finding —

You can totally find a bank or credit union that offers a business checking with no fees, if you look around. But when you’re looking through that — when you’re thinking about that, don’t just think about, like, a monthly fee. You do need to know if they have any minimum balance fees. Like, if your balance falls below 500 bucks, are they going to charge you $5 a month? Some business checking accounts, they charge you per deposit or per withdrawal or per check written. That’s a thing I learned. And, yeah, you don’t want to do that.

So you want to make sure you’re looking through all of the fees and, you know, when you have a checking account, you’re likely going to have a companion savings account, maybe for your emergency savings, maybe for your tax savings, maybe for whatever. Look at the interest rates because savings accounts should have interest. So you want to do a little bit of comparing and see how you’re going to do. It’s not a huge amount of money you’re going to make on interest in your emergency savings account — your short-term savings account is what we’re calling it now.

Sorry, Michael.

But it’s worth looking into. So play with software. Play with an app. If you’re going and looking around for accounts, have the bank personnel show you the app and show you how it works. And that’s a really good test of customer service because if a person that you’re talking to at a bank or credit union is annoyed having to show you how the app works, that’s a really good signal of how they’re going to treat you later on if you have trouble with your account.

Another thing you may want to look at is who is paperless and who is not. Most banks are paperless now with their statements, and you can get images of the checks you’ve written online, but only for a certain amount of time. So be really aware once you choose an account of any particular rules. So, like, my credit union, I can download images of checks that I have written but only like from 90 days back. So if I only do my expenses quarterly and I miss a deadline, then I can’t always get a picture of — like, I can’t download the image of a check I’ve written. And I have records of these things anyway and there’s usually a way, if you want to pay, to get copies of those checks. So be aware of what the limitations are for any particular account, if you want to be really scrupulous with your bookkeeping.

And I think I rambled a little bit longer than I intended to but I just want to scan my notes and make sure there’s nothing else I forgot. No, that’s it. And also keep in mind that you can always change your account. You can open a new account at any bank and it’s not that big a deal. It’s not — you know, it’s an hour of work to change where all your deposits and withdrawals come from if you have a lot of autopayments set up. Not a huge stinking deal. Don’t stress about it. Change accounts if you need to.

And now I am done, Michael.

MR No, that’s cool. I want to cheat and go back because I thought of one thing I wanted to add as well anyway. So I’m going to ramble, too.

One thing I forgot to add is you may want to do some research and see if the bank you’re looking at is in an aggressive growth-acquisition strategy. The reason I say that is I have experienced banks that are really aggressively trying to grow by acquiring other banks, and in this particular case, in my example, they grew so fast that their customer service just dramatically decreased. They got just all sorts of things. They were growing too fast, they were acquiring banks left and right, customer service suffered, and it really just became less pleasant to work with them. [Laughing]

Now, that’s not the case of every bank doing that, but you may want to look at the bank or credit union you’re looking at and saying, okay, are they in a growth, like, an aggressive- growth mode and are they going to be growing by acquiring a bunch of banks and doing a bunch of integrations due to acquisitions, and is that going to distract them from customer service? So just be aware of that. That’s one thing I wanted to add

And I, personally, would look for a bank that is not doing that. I would look for a community bank that is more of a, you know, a slow growth, kind of a more organic, natural growth kind of pattern. Not looking to have hyper-growth because I want stability. I want that kind of consistency in customer service. So that’s just one thing I would add.

AH And that’s actually part of why I have accounts at two different credit unions. When I started my second business here, I wanted to keep them super separate. And that’s a little tricky to do when you’re a sole proprietor. Like, I don’t have LLCs registered. I don’t need them for my purposes, and when you’re a sole proprietor and everything gets done under your federal tax ID number or your soc, it gets a little harder to split things up. So I just did two separate credit unions.

And one of them is in the middle of being acquired by this other big thing, and I have definitely noticed the customer service going down a little bit and just — I feel like there’s always a delay when my deposits are — when I make deposits, it feels like it’s taking longer for them to get credited, and there’s always just something wonky. And I’m probably going to shut it down at some point; I’m just kind of using it as a savings account at this point. I’m not doing much from it. But I feel like I’m glad I diversified a little bit because it helped me learn about which one could maybe better serve me, and they’re both within like a quarter mile of my office anyway, so it’s all good.

MR [Laughter] Yeah.

AH But I’m a big credit union fan, and I encourage people to explore them first if that’s an option for you. And that is all I have to say.

MR All right. Well, thanks for your thoughts. That was fun to talk about today. It kind of appealed to my inner money nerd part of me. So —

All right. Well, thanks for joining us today. We appreciate you being a listener. You can visit us online at massagebusinessblueprint.com. We have a great premium member community you can read all about there. And if you have a question or comment for us or you want to talk to us more about choosing a bank, we’d love to — at least I’d love to talk about banks. [Laughing] Email us at postcast@massagebusinessblueprint.com. And we do get those emails personally. They go directly to Allissa and me, and one of us will answer as quickly as possible. So thanks again for joining us today. Have an awesome day. We’ll see you next time.

AH Bye.

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