A money market account is a savings account that typically pays a higher interest rate than a traditional savings account. They are intended for consumers who want to save money and earn a higher return on their investment that don't need to withdraw funds from the account frequently.
As a small business owner, you can use a money market account to save for unexpected expenses or opportunities and earn some extra income to help grow your business. If you're ready to start making your business's rainy day fund increase, keep reading to learn more about money market accounts!
What is a Money Market Account (MMA?)
A money market account, also known as an MMA, is a special type of savings account offered by banks and credit unions with higher interest rates than regular savings accounts. By investing in an MMA, you can benefit from higher yield returns and the secure safety of FDIC-insured deposits.
In addition, MMAs usually offer the convenience of check writing and direct deposit capability - allowing funds to be transferred from your MMA to other accounts quickly and easily. With a money market account, you have an incredibly simple way to maximize your savings without sacrificing liquidity or ease of access.
How Does a Money Market Account Work?
Money market accounts are designed to offer the safety of a traditional savings account while allowing you to take advantage of the often higher rates of return. Put simply, money market accounts can help your money work harder for you.
MMAs also have attractive benefits like easy access to funds and FDIC protection of up to $250,000 per depositor. By depositing funds into an FDIC-insured account, you'll know that your money remains secure while it earns greater returns than most other savings accounts. So, exploring a money market account is worth considering if you're looking for a safe investment option with the potential for greater returns than those available from a bank savings account.
Get started with First Internet Bank today →
What are the Benefits of Having a Money Market Account for Your Small Business?
Having a money market account as part of your small business's financial strategy can be beneficial in more ways than one. These accounts usually offer higher interest rates than traditional savings accounts, making them a great way to earn more return on your investments. Let's look at some of the pros and cons of a money market account.
Pros:
- Higher interest rates
- FDIC-insured
- ATM cards for sole proprietors
- Easily transfer money to another account
Cons:
- Higher average daily balances
- Monthly maintenance fees
- Limited transactions
- Rates fluctuate with the economy
How to Set Up a Money Market Account for Your Small Business
Setting up a money market account for your small business is a smart way to grow and protect your hard-earned profits. Money market accounts offer a secure, convenient place to store cash while helping you earn significant investment returns with minimal effort. To get started, make sure the money market account you choose is FDIC insured and offers competitive rates. Look for an account that allows online transfers, making it easy to move funds efficiently and securely. You'll also want to check if any fees are associated with the account, as this can impact the amount of profits your small business takes home. With careful research, you can find a safe and prosperous money market account that works well for your needs.
Fundid Recommendation: Set up your money market account through First Internet Bank. Enjoy their competitive rates and open your account with as little as $100. Then, just watch how fast your money grows with its high annual percentage yield.
What is the Difference Between a Money Market Account and a Traditional Savings Account?
A money market account and a traditional savings account are both great options for saving, but they offer different benefits. A money market account is similar in structure to a regular checking account, but it pays higher interest rates than a traditional savings account. You can also make limited withdrawals from the money market account each month, making it a great option if you need access to your funds on occasion.
A traditional savings account offers lower interest rates but no limitations in terms of accessing your funds — you can withdraw them any time you need cash. Ultimately, the difference between these two accounts comes down to choosing between accessibility and higher earnings, depending on your goals with respect to saving.
With First Internet Bank, their money market account is currently at 3.04% APY*, and their regular savings account is at 0.90% APY.
*Annual Percentage Yield (APY) as of February 9, 2023. APY may change at any time before or after the account is opened.
Set Up Your Money Market Account with First Internet Bank
Money market accounts are an incredibly valuable asset for small businesses. Considering the factors covered in this guide will help you make an educated decision when deciding whether or not investing in an MMA is right for you. Set up your money market account with First Internet Bank today to start securing a better future financial state!
With First Internet Bank, your business can:
- Earn 3.04% APY*
- Apply online in minutes
- Access easy-to-use online and mobile tools
- Open an account with as little as $100
*Annual Percentage Yield (APY) as of February 9, 2023. APY may change at any time before or after the account is opened.
Frequently Asked Business Banking Questions
Do I need an EIN before I open a business bank account?
Yes, you will need to include your Employee Identification Number (EIN) in your documents to open a business bank account. If you are a sole proprietor or single-member LLC, you may be able to use your Social Security number.
Should I have a separate bank account for my business even if I am a sole proprietor?
If you're a sole proprietor, setting up a separate bank account for your business is a great idea. Not only does it offer an easy way to keep track of your business's income and expenses, but it also helps you stay organized with both tax filing and recordkeeping.
How do I open a business bank account?
First, you will want to decide who you want to bank with. Do you prefer a local branch that you can visit in person? Or does an online bank better suit your business's needs? Many banks have both online and physical locations, so you can decide what management style works best for you.
Be sure to research the various accounts offered by the banks you are considering. This will help you select one that offers competitive interest rates and the most essential features for your specific business model. Before applying, get all the necessary paperwork together, such as your Employer Identification Number (EIN). Each bank will have its own application process, but many banks will allow you to apply online and open your account in minutes.
