What is a business high-yield savings account, and do you need one?
Every business needs a place to deposit savings for potential liabilities, upcoming tax payments, and more.
When you're choosing a destination for your excess cash, a business savings account may seem like the obvious choice — but a business high-yield savings account (HYSA) could be an even better option.
Although business HYSAs can be hard to find, your account balance will earn higher interest rates than it would in a regular business savings account — in some cases as high as 4% APY.
This embedded content is not available in your region.
A business HYSA is a high-yield savings account available to businesses only. These accounts pay higher interest rates than regular business savings accounts, which often reward you with as little as 0.01% APY.
Business HYSAs come with several benefits. Like other business savings accounts, business HYSAs give you a risk-free place to store your excess cash. They also allow you to separate your personal savings from your business savings. And when linked to a checking account, they can help you avoid overdrafting. However, the competitive interest rates on business HYSAs are an added incentive.
How much more interest can you earn with a business HYSA versus a regular business savings account? Most business HYSAs currently offer APYs between 3% and 4%. At those rates, if you keep $50,000 in an HYSA with daily compounding interest for one year, you could earn somewhere in the range of $1,523 to $2,040 in interest.
There aren't many major banks that offer business HYSAs, but Live Oak Bank, Stearns Bank, and Amplify Credit Union are among a handful of financial institutions that currently offer accounts with above 3% APY.
Unlike consumer HYSAs, you have to run a business in order to open a business HYSA.
To qualify for one of these accounts, you'll need to provide business-related information and documents to the bank. The specific documents depend on your business structure, but at minimum, they usually include:
Government-issued ID and Social Security number for all account signers
EIN (if applicable)
Name of an individual with significant management responsibility
Additionally, some business HYSAs have features designed specifically to support businesses versus individuals. For example, some accounts allow business owners to grant access to certain employees or financial officers, with the ability to create role-based permissions for viewing, transferring, or managing funds. Others are designed to easily sync with accounting software such as QuickBooks. And since businesses often deal with a higher volume of transactions, some business HYSAs come with higher limits on withdrawals and transfers.
Business HYSAs are not one-size-fits-all. Yes, you'll want to find an account with a competitive interest rate, but it's important to evaluate other features before deciding whether a particular account is a good fit.
Here's a checklist of what to look for to ensure a business HYSA will best serve your needs:
Rates: Interest rates are competitive. If there are rate tiers, your average deposit balance will easily qualify for a high rate.
Fees: The account either has no monthly maintenance fees, or you can easily qualify to have them waived. The fees are competitive for specific services you plan to use, such as domestic and international wires.
Balance requirements: If there is a minimum opening deposit requirement and/or a minimum average daily balance requirement, you can easily meet them.
Deposit insurance: The bank offers FDIC or NCUA insurance to cover deposits up to the federal maximum of $250,000.
Accessibility: You can easily access the banking services you need, whether through a mobile app, local ATMs, or a physical bank branch.
It's also worth noting that some banks review your ChexSystems report to determine if you qualify for a business account. These reports show your history of managing personal bank accounts, including red flags like overdrafts and bounced checks. If you have negative information in your reports, you may need to find a bank that doesn't use ChexSystems to approve applications.
Yes, if you're a sole proprietor, you can apply for business HYSAs or other types of business bank accounts.
Just like HYSAs for individuals, the interest you earn on a business HYSA is taxable. Your bank will provide you with a Form 1099-INT each year to show you how much interest you need to report on your tax return.
Read more: How to avoid taxes on savings account interest
Some banks and credit unions do not have deposit insurance for business accounts, including business HYSAs. Before applying for a business bank account, be sure to check the financial institution's website to see what insurance is provided.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Miami Herald
4 hours ago
- Miami Herald
Jean Chatzky sends powerful message on Social Security, 401(k)s
For many Americans, preparing for retirement means carefully evaluating key financial milestones tied to different stages of life in order to maintain financial security and preserve the quality of life they hope to enjoy. Everyday costs - such as groceries, utilities, mobile services, and transportation - play a major role in shaping workers' financial priorities and determining how much they can put toward savings and investments. Jean Chatzky, former financial editor for NBC's "Today Show" and now with AARP, recognizes these challenges. She works to guide people through smart strategies for boosting their Social Security benefits and making the most of employer-sponsored 401(k) plans. Don't miss the move: Subscribe to TheStreet's free daily newsletter Assessing one's future income sources - including Social Security and personal retirement accounts such as 401(k)s - is a key part of building a secure retirement plan. Chatzky encourages Americans to think strategically about when to begin collecting Social Security, as claiming early can significantly shrink monthly payments. For those who anticipate a longer lifespan, she suggests holding off until age 70 to receive the maximum possible benefit. When it comes to married couples, Chatzky advises that the spouse with the higher earnings history delay tapping into benefits - especially if the other partner is likely to live longer - helping to ensure greater long-term financial support. She also highlights the upside of continuing to work while drawing Social Security, whether one does so for financial reasons or to stay active and connected during retirement. Related: Tony Robbins sends strong message to Americans on 401(k)s Beyond Social Security, Chatzky highlights both the opportunities and potential pitfalls tied to retirement accounts such as 401(k)s. She underscores the fact that many Americans are at real risk of depleting their savings during retirement. To help combat this, Chatzky shares practical approaches aimed at stretching retirement dollars further and minimizing the chance of financial shortfalls later in life. Chatzky emphasizes her belief that regularly setting aside money is essential for making more room in one's budget to invest in a 401(k) plan. "This is why saving in a 401(k) plan works," Chatzky explained in "Money Rules," a book she authored that offers solutions to personal finance challenges. "The money is swiped out of your pay before it ever lands in your checking account so you never see it. It's invisible, which makes it safe, for out-of-sight means you can't pull it out of the ATM." "If you can't see it and you can't touch it, you won't spend it," Chatzky wrote. More on retirement: Dave Ramsey offers urgent thoughts about MedicareJean Chatzky shares major statement on Social SecurityTony Robbins has blunt words on IRAs,401(k)s Chatzky advises people that there is no need to limit this philosophy to one's 401(k) contributions. "Have money swiped out of your checking account as soon as you get paid," she wrote. "Barricade it by parking it in places that penalize you for early withdrawal like 529 college savings accounts, IRAs, and certificates of deposit." "Even putting the money in an Internet savings account that doesn't come with an ATM card can do the trick surprisingly well," Chatzky continued. Related: Shark Tank's Kevin O'Leary warns Americans on 401(k)s Chatzky explains one way to look at retirement savings tasks such as boosting 401(k) values to achieve goals: as financial security maps. "The only way to find financial security is to draw yourself a map," Chatzky wrote. "Folks who have specific financial plans that detail what they want - say, retirement at 67 with a paid-off mortgage, membership at the local golf club, and enough money to take two trips to the Caribbean a year - save more than people who don't have specific financial plans." Chatzky points out that people tend to get sidetracked by everyday distractions, which is why having a clear financial plan is essential. Without a direction, it's difficult to make meaningful progress toward retirement goals. Of course, she acknowledges that plans can - and should - evolve. One day, she explains, you might realize you no longer see yourself retiring in your current home and instead imagine starting a new chapter somewhere more adventurous or serene. When that moment comes, the solution isn't to abandon planning altogether - it's to create a new roadmap that reflects your updated vision. To Chatzky, regularly refining one's goals is far more effective than drifting without any at all. Related: Dave Ramsey sends strong message to Americans on Medicare The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
USA Today
5 hours ago
- USA Today
Customer data possibly leaked in Aflac cyberattack, the third insurance hack this month
The Aflac breach potentially impacted files with customers' Social Security numbers and health details. Insurance company Aflac disclosed this week that cybercriminals breached its U.S. network and may have accessed customers' personal information, the latest in a string of cyberattacks on insurance companies announced this month. Aflac, which provides home and life insurance and manages data for more than 50 million policyholders, said in a June 20 federal regulatory filing it identified suspicious activity on its U.S. network on June 12. The company said it believes it stopped the intrusion within hours of identifying it, calling the attack part of a 'cybercrime campaign against the insurance industry.' The breach potentially impacted files containing customers' personal information, such as Social Security numbers and health-related details. Aflac said it is investigating the breach with the help of third-party cybersecurity experts and has not yet determined how many customers were affected. An Aflac spokesperson told Reuters that the characteristics of the incident were consistent with the hacking group Scattered Spider, which has a reputation for targeting multiple companies in a single industry in waves. More: This is how you stop online trackers from collecting your health data Latest Tech News: Is TikTok getting banned? Trump says he'll 'probably' extend deadline again It's the largest insurance provider yet to disclose a breach this month, after cyberattacks on Erie Insurance and Philadelphia Insurance Companies disrupted their network operations. Aflac said the attack did not affect its systems and it is able to continue providing services as usual while it responds to the security breach. Contributing: Reuters. Kathryn Palmer is a national trending news reporter for USA TODAY. You can reach her at kapalmer@ and on X @KathrynPlmr.
USA Today
8 hours ago
- USA Today
Can you work while collecting Social Security? Here's what to know in 2025
Can you work and collect Social Security benefits at the same time? The short answer is yes, but it depends on your personal situation. In some cases, workers who receive retirement benefits, or other types of Social Security benefits, can see some or all of their monthly benefits temporarily go away. That's where the Social Security earnings test comes in. In a nutshell, depending on your age and how much earned income you have, some or all of your Social Security benefits can be withheld. Does the earnings test apply to you? And if it does, what can you expect to happen to your Social Security benefits? Here's a quick rundown of what all working seniors need to know. The 2025 Social Security earnings test For the purposes of the Social Security earnings test, beneficiaries who have applied for retirement benefits fit into three categories. Each category has different rules and limitations when it comes to the potential withholding of benefits. So the first step in figuring out how the earnings test could affect you is to determine which category you fall into, expressed as such: If you're in the third category, it's an easy answer: The Social Security earnings test does not apply to you. You can work and earn as much money as possible, and it won't affect your Social Security payments whatsoever. If you're in one of the first two categories, the general idea is that some or all of your Social Security benefits can be withheld if your income exceeds a certain threshold. Here's what I mean. If you will reach your full retirement age after 2025, the earnings test is the most restrictive. You can earn up to $23,400 for the year, or $1,950 per month, with no impact to your benefits. Beyond that, $1 of your Social Security benefits can be withheld for every $2 in earnings. For example, if you earn $30,000 in 2025 and won't reach full retirement age during the year, you will have exceeded the earnings test threshold by $6,600. That means $3,300 would be withheld from your Social Security checks. Finally, if you reach your full retirement age during 2025, the earnings test limit is much higher at $62,160, or $5,180 per month, and only months before your birth month are considered. In other words, if your birthday was April 12, only earnings from January through March are subject to the earnings test. Furthermore, for earnings above the threshold, $1 is withheld for every $3 in excess earnings. Should you wait to claim Social Security if you're still working? First, I want to point out that I deliberately used the word "withheld" when discussing the earnings test limits. If you exceed the earnings test limits and get a lower Social Security benefit as a result, the withheld benefits are not necessarily lost. Once you reach full retirement age, your monthly Social Security payment will be adjusted upward to reflect any withheld money. Second, there's no perfect answer to the question of whether you should claim Social Security while you're still working if the earnings test is likely to affect you. Depending on your financial situation, it could certainly make sense to claim benefits even if some of the money is likely to be withheld. But on the other hand, if you're working and don't necessarily need the extra money, it could make more financial sense to wait. The bottom line is that the Social Security earnings test is a big factor in determining whether older adults who are still working should claim benefits before full retirement age. But it isn't the only factor. It's important to consider your financial situation, family situation, health and more to decide the best move for you. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. The $23,760 Social Security bonus most retirees completely overlook Offer from the Motley Fool: If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets"could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. JoinStock Advisorto learn more about these strategies. View the "Social Security secrets" »
