In the not-so-distant past, the only way you could go into business was if you had access to an enormous amount of capital, Silicon-Valley style. It was not easy for the average person to start a business.
Fast forward to today, where becoming your own boss (albeit on a smaller scale than the Silicon Valley bigwigs) requires little more than a laptop and an internet connection – little-to-no capital necessary.
Fear turns to panic as you realize you’re not set up to actually make money.
Still, the pride of being a business owner turns to fear when you venture out into something new.
You quickly realize there’s more to it than just getting a website up, and the minute you wrap up that first client project, fear turns to panic as you realize you’re not set up to actually make money.
I’m going to jump to a conclusion here and say making money is the reason you’ve started your business in the first place.
With that in mind, it’s incredibly important that you find the right systems and gateways for getting paid – and that you have a reliable bank for your freelancing money to go into.
What You Need To Know About Making Money as A Freelancer
If there’s one lesson that’s been repeated time and again by financial experts, it’s the importance of separating your personal income/expenses from your business income/expenses.
Whether you choose to use a separate checking and savings account at your current bank, or go for a whole separate bank, you’ll need a one that will house all the money you make from freelance business.
Most Common Ways Freelancers Could Get Paid
Here are some ways you could get paid as a freelancer:
- Online payroll
- Online payment gateways and platforms like PayPal or Stripe
- ACH & bank transfers (although it’s a good idea NOT to give out your personal information).
- Credit card
- Check (which is why you need a good bank)
As a freelance business owner, it will be your choice which method of payment you prefer. But, no matter what method you use, you’ll need a good bank to house your money.
I personally use PayPal to accept payment, but I’m also able to take credit card payments through my invoicing software in 17hats.
Finding The Best Bank for Your Freelancing Buck
I’m a total money nerd and enjoy researching new ways to manage my money online. So, I’ve tried a few online banks over the years (full disclosure, I’m not affiliated with any of the banks I cover here).
The banks I cover below are based in the U.S. and have no brick and mortar locations.
If you’re not in the U.S., search online under your country’s top-level domain (.ca for Canada, or .au for Australia) for online banks you can use.
Look for these features:
- Free to sign up, join, or manage
- Flexibility for expansion (when you start making more money)
- Full-service online (without the need for you to walk into a bank)
- Free ATM (or ATM fee refund)
- Has a user-friendly mobile application
- Have the ability to link with a PayPal account, other bank, or online money tool
Here are the best online banks for your freelancing buck:
Simple Bank Checking
Simple checking is just as the name implies. Simple to setup and simple to manage online.
Simple was created for the younger generations with smaller cash flow, not a business. However, since I you’re just starting out and working for peanuts, Simple offers a quick and easy checking account to funnel your freelancing monies into.
Here is what makes Simple a good choice for the budding freelancer:
- Deposit checks and link it with your PayPal or other money accounts
- You get mobile alerts of withdrawals and deposits
- There’s a unique safe-to-spend feature that you’ll find very helpful when looking for money to pay for expenses
- Fully online and quick customer service support
- Visa debit card
- Send money and pay bills from the mobile app
- Free to set up, free transfers, and no deposit minimum
Although, Simple is not made for small businesses, it’s great if you’re just starting out as a freelancer. You can set up an account in minutes and start tracking your freelancing money separate from your personal money.
Simple worked well for me when I was making small money. But as soon as business started improving, I was on the hunt for a bigger bank with more features.
Capital One 360
If you don’t already have a personal account with Capital One, then a 360 checking and savings account.
Here’s what Capital One 360 checking can do for you:
- Free to sign up, transfer, and no deposit minimum
- Mobile app
- Earn interest for both savings and checking: As of this writing, Capital One has a 0.20% APY for checking accounts and a 0.75% for savings accounts
- Fully online and linkable to any other bank or money tool
- Full checking AND savings account
- The ability to create a separate savings account to stash away quarterly taxes or create an automatic savings plan
- You can open multiple checking and savings account under your personal account
- Mastercard Debit card and checks
You’ll love the convenience and customer service that comes with Capital One 360.
Discover Bank
Most people don’t know that Discover is also a Bank. Yes, they have a highly-rated checking and savings account that you can use for your business.
What makes Discover Bank unique is that you get cash back whenever you use their debit card (yes debit card) to make payments. You get $0.10 back on each transaction, for up to 100 transactions a month.
This means you could make an extra $120 a year just by using their checking debit card on everyday business expenses (or monthly and yearly business renewals).
Here’s what you get from Discover Bank:
- Earn interest in their savings account (as of this writing, earns 0.97% APY).
- Free to open and transfer money
- You get a checking and savings account
- Fully online bank with mobile app
- Excellent US-based customer service
The only problem I had with Discover was that they require a $500 minimum deposit to open a savings account, and a savings and checking account had to be open separately.
Other than that, Discover banking is entirely free (unless you overdraft or send wires). It also links to other banks and banking tools.
Now, for my personal favorite online bank for my freelancing buck.
Spark Business from Capital One
The name sounds like it was made for big businesses, right? Nope, it was made for the small business owner just like you.
Here’s why this bank is great for freelancers:
- Free to open, transfer, no minimum deposit, and no limits
- You can open both checking and savings accounts at the same time
- You get business tools like invoicing, resource guides, bookkeeping, credit cards, and the ability to take payments with a swipe of a card (similar to Square).
- Access to the 401k Sharebuilder IRA
- Cashflow and business resource library
- Fully online with mobile app
This is the only free banking built for small business owners. It’s free and requires no minimum balance.
Welcome to a totally free, online business checking and savings tailored to your small business.
Wrapping it Up
If you’re based in the U.S. and looking for a bank where you can manage your freelancing funds, online banking is the way to go.
All four banks mentioned here are fully online, so they move with you wherever you go. If you need an ATM, all four banks have a debit card and may refund your ATM fees (just check the fine print).
Best of all, these full-service banks easily link between your existing banks and your favorite money tools like Freshbooks, PayPal, Mint, and others.
Your Turn
How did you set up your banking as a freelancer?
Are there any banks not listed here that have worked for you?
I’d love to hear about them, especially those that have worked outside the U.S.
Thanks for a fantastic article, Christine! I still encounter freelancers and solopreneurs who aren’t managing their business money separate from the personal accounts, and much of it comes from uncertainty over which bank to choose and/or how to process payments. I’ll be sharing this with them! 🙂
Hi Sara,
Thanks so much for stopping by! I hear a lot of new freelancers asking these questions so I’m hoping this helps them find a bank that they’ll love using, and that will help them to manage their money so their business can grow.
I’m so glad you like this post and thank you for sharing! 🙂
Great article, thanks for sharing this awesome info! I’ve looked into several brick and mortar banks for my freelancing account and most of them charge fees for business account (or you have to maintain minimum balance). It’s good to know there are free options out there 🙂
Thank you for this article! As a new freelance writer, this is an area I’m still trying to figure out. And as someone who’s niche is not finances – this was a huge help for me.
Thanks again!
Hi, do I need to have a business account as a freelancer, or I can have a simple checking account? thank you.