Savings are essential to a financially healthy business. When business slows down or emergencies threaten to jeopardize the future of your business, savings can help you keep the doors open. Plus, if you have plans to expand your business, you’ll need funding to bring your dreams to life. Whatever the future holds for your business, a savings account should be part of your plan.

This blog breaks down everything you need to know about business savings accounts. Read on to get tips on how to make your business profits work harder with a high-yield savings account.

What are the benefits of savings accounts for business owners?

18% of businesses fail within their first year, and by year five, half of businesses will close. The first few years of running a business are also the most challenging. To engender long-term success, business owners should store funds they don’t need right away in savings accounts.

4 key benefits of business savings accounts

• Prepare for the unexpected: Emergency funds are essential for both personal and professional expenses. A robust emergency fund enables business owners to pay for unexpected expenses. Business owners should always be prepared for the unexpected. Equipment could break down, or profits may fall short. A business emergency fund softens the blow of surprise expenses.
• Plan for the future: Maintaining a business savings account can also alleviate the financial burden of expenses essential to long-term success. Many small businesses save throughout the year to fund essentials such as tax payments, maintenance costs, and licensing fees.
• Embrace growth opportunities: When businesses have cash reserves to fall back on, they’re better positioned to leverage growth opportunities as they arise. Just as businesses can endure unexpected challenges, they can also enjoy surprise buzz. Savings enables businesses to take risks. With reliable savings, entrepreneurs are better situated to embrace opportunities as they come. 
• Maximize your earnings: Earn interest, and make your money work harder. Businesses should maintain a variety of savings accounts to prepare for both unexpected expenses and future opportunities. Options like SECU’s business high-yield money market offer competitive interest rates with flexible access to your funds.  

Should your business open a savings account?

During the early stages of a small business, savings may not be the top priority. However, business savings accounts are essential to long-term success. Starting a business savings account should be among a business owner’s first goals in achieving financial health.

Maintaining a savings account on a startup budget often isn’t feasible. Many traditional banks impose minimum balance requirements and fees on business savings accounts. However, SECU offers competitive business savings account rates with flexible access to funds.

When should your business open a savings account?

Savings ensures businesses have a reliable source of finances in case of an emergency. Equipment could break, the business could slow down, or a storm could cause damage to the storefront. Business insurance can offer protection, but it’s not guaranteed.

Plus, savings are essential to bringing long-term goals to fruition – whether upgrading equipment or expanding into a new line of business.

The bottom line: Businesses should open a savings accountas soon as they have the financial means to do so. Focusing on savings can drive long-term growth and protect businesses from risk.

How much should your business keep in savings?

A business’s savings goals should align with how established they are. Early-stage businesses may want to invest more in their growth and save less during the first few years of business.

Businesses in this phase should focus on developing and maintaining an emergency fund to protect the business from risks. This account should offer easy access to funds without the risk of delay. Saving at least six months of operating costs in an emergency fund can protect small businesses from financial setbacks.

SECU’s business share savings is a secure and flexible way to store funds away for a rainy day. To open an account, businesses just need to make a $10 donation to establish membership.

Meanwhile, more established businesses may focus on saving for specific growth opportunities. Businesses can make their savings work harder by leveraging high-yield opportunities like business money market accounts and certificates of deposit.

SECU’s business high-yield money market offers competitive rates, flexible access to funds, and no fees for withdrawals, additional deposits, or transfers. Plus, members can always seek guidance about complex money matters from our team.

Grow your money and your business with SECU

Small businesses can take advantage of competitive interest rates and enjoy the personalized service of Maryland’s largest credit union with a business high-yield money market. Make the most of your earnings while saving towards the future of your business.