What is a Money Market Account and How Can My Small Business Benefit From One?
A money market account is both a checking and a savings account. Though they are available to individuals, businesses are able to open these types of accounts as well. And they come with all sorts of benefits. Generally speaking, a money market account can earn more interest than a traditional savings account, they allow check-writing and can come with a debit card, and accounts are FDIC insured.
One thing to note is that money market accounts may come with certain restrictions, such as how much money you are permitted to spend in a given month. Money market accounts are funded by the depositors at a bank, and these restrictions will vary from bank to bank.
Money Market Accounts for Business
A business money market account is often confused with a money market mutual fund, but they are not the same thing. A money market mutual fund is offered through investment companies, not banks, and they are not FDIC insured.
A business money market account can serve as an important component of your business’s financial tools. They’re specifically designed with small businesses in mind. One main reason for this is that small business owners need to hold business accounts that are separate from their personal accounts in order to avoid legal liabilities. A money market account can hold a majority of your business’s funds, which can be transferred as needed into other business accounts to maximize income on interest. That said, interest rates in these types of accounts actually tend to be higher than traditional business savings accounts.
Additionally, having a credit or debit card associated with your money market account allows you to keep an electronic record of your business’s income and expenses, making it easier to manage your business’s cash flow from month to month.
How to Decide If They’re Right For You
When searching for a money market account for your own business, there are a few factors to consider. Check and compare interest rates between different account types, and compare a small bank’s rates to the rates at a large one. Also be sure to keep in mind that interest rates tend to fluctuate. As market interest rates rise, so will rates for business money market accounts.
By choosing the right money market account, you can more easily keep track of your business’s income and expenses and make use of a company card, all while earning income from your account’s interest. With benefits like these, it is certainly something for your small business to look into.