You know that time is money, and you've heard that online banks can help. Using online banks can help you save time, maximize the return on your company's cash, provide easy access to your funds, and help with record keeping. You should learn the Internet bank basics that you need to know before choosing to set up your Internet bank accounts.

As with any bank, Internet bank accounts can come with a number of different features that may or may not be important to your business. When evaluating Internet banking institutions, you should compare the following items:

1. Interest rates - How much will your money earn while it sits in online savings accounts?

2. Transfer limits - A good business Internet bank account will allow your business unlimited transfers without incurring additional fees.

3. Data export compatibility - Make sure that the statements and transaction histories provided by the Internet bank are compatible with the accounting software that your business uses.

4. Fees - How much is this Internet bank going to charge you for their services?

5. Features - Different online banks may offer different features for their customers. Make sure you are getting all the functionality that you need.

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Compare the current interest rates of Internet savings accounts

Comparing savings interest rates will let you know how hard your money will be working for you while it sits in the bank. You can place money into ordinary savings accounts if you may need to access the money, or a fixed term Certificate of Deposit (CD) if your business will not need to draw down the savings for a certain amount of time.

I recommend: You can visit each bank's site individually to check rates, but it is much easier to look at sites with comprehensive interest rate comparison charts. Bankrate.com has a list of current interest rates of nearly every major online banking institution. To check CD interest rates by state, use this link to Interest.com.

Select the Internet bank feature set that's right for your business

Different banks offer different features to online banking customers. Even within a single bank, you may find more than one type of business account available. Compare different account types not just between different banks, but also within each bank.

I recommend: Check every bank's account features section. The Bank of America offers four different bank accounts that you can compare. Wells Fargo also offers a detailed list of account features.

Identify secure online banking options

When choosing an online banking institution, security should be your biggest concern. Just because a bank has an Internet site doesn't make them a legitimate or secure option.

I recommend: Check this list at the FDIC website to make sure the US banks that you are considering are FDIC insured. If your business is outside of the United States or has a need for overseas accounts, the International Association of Deposit Insurers (IADI) has a comprehensive list of countries that offer similar protections.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  When comparing interest rates of different online banks, make sure to note the difference between introductory rates that expire in a short amount of time and permanent interest rates.
• •  When comparing Internet checking accounts, make sure that you take note of transaction limits and usage fees.

For over a decade now, individuals have been using Internet bank accounts to make their lives easier. However, businesses have been slower to accept and utilize the conveniences of online banks. In an age where businesses are trying to streamline and automate as many business activities as they can, it only makes sense that this philosophy should also be applied to their banking activities.

An Internet bank can offer businesses of all sizes:

1. Internet checking accounts.
2. Internet savings accounts.
3. Other types of online banking accounts and services such as CDs, IRAs and money market accounts.

After identifying the types of accounts you want to open, your next step is to find online banks that have a good reputation and that are FDIC insured. To sign up for a business bank account with an online bank you will need to:

1. Fill out an application for a business bank account.
2. Submit tax ID number, a copy of business license, incorporation documents and financial reports.
3. Make your initial deposit.

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Select an Internet bank

Before you can open an online bank account you need to select an Internet bank.

I recommend: Bank of America and Wells Fargo Bank have both been rated as top 10 online banks by "Kiplinger's Personal Finance Magazine."

Complete online banking account application

Complete your business bank account application online by filling in general information about the location of your business, type of business you own, profitability of your business, etc. You may also be asked questions about your company's tax ID number and you may be asked to submit financial statements for your company.

I recommend: If you don't already have an EIN to set up your business bank account apply for one on the IRS website. Visit Microsoft Office's website for interactive templates for financial statements. Bookkeeperlist also offers a great template you can download and use.

Deposit money into your Internet bank accounts

The final step for setting up an online bank account is to fund your account. This can be accomplished electronically or manually.

I recommend: If you don't feel comfortable mailing in your initial deposit you can make your initial deposit via Western Union or via your online bank's wire transfer link. Use Bank of America's wire transfer services or Wachovia's wire transfer services.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  It is important that you understand the risks involved in using online banking systems before you sign up for an account. Protect your money by taking proper precautions such as installing firewalls and changing your password frequently.

Like any business, Internet banks use a little bit of jargon that can sometimes make it hard to understand account specifics. Before you invest your money with an Internet banking institution, invest a little time to understand they language they use.

Many of the Internet bank key terms are the same as terms used by conventional banks. However, terms such as pending transactions and posted transactions, are common for online banks. Consider the following suggestions to help you understand the terminology:

1. Read the definition of online banking to determine if the service is appropriate for you needs.

2. Know the terms associated with deposits into an online banking account.

3. Get to know terms that are less common in the online banking industry.

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Know the definition of online banking

In some cases, Internet banks only have services offered online. In other cases, the online banking account is simply an extension of an account with a conventional bank. Many online banks also offer telephone, email and text support for customers who need assistance that isn't regularly available online.

I recommend: Investor Glossary offers an easy to understand definition of online banking. This website also offers definitions of many other financial and investing terms. You can find a detailed definition of Internet banking, along with the benefits and drawbacks of online banking, at wiseGEEK.

Understand common deposit terms for online banking accounts

There are numerous types of deposits that can be made into an Internet banking account. Knowing the difference between the types can save you a considerable amount of hassle and a few headaches. An ACH deposit, or Automated Clearing House deposit, is an electronic deposit that posts to your account through the National Automated Clearing House Association, which services payroll services and online merchant accounts, such as PayPal.

I recommend: Investopedia.com offers information on common online banking terms, including deposit terms such as transaction deposit. Investor Words offers definitions about common deposit types, including deposit in transit, which is a deposit made to an account but hasn't yet entered the bank system.

Familiarize yourself with lesser known Internet bank account terms

Besides understanding what an online banking account is and the types of deposits, there are also some other terms with which you must familiarize yourself. For example, asset backed security is when a bank or lending institution uses your assets, such as your online banking accounts, as insurance that a debt or loan can be covered in the event you fail to pay it as scheduled.

I recommend: Bankrate.com offers detailed information about Internet checking accounts and Internet savings accounts, including explanations of some common online banking transaction terms. AllBusiness.com offers in depth definitions to help you fully understand the ins and outs of Internet banking terminology. American Banker offers a comprehensive banking glossary that includes easy to understand explanations of common online banking terms.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  When you are reading documents associated with your Internet bank accounts, make sure you fully understand the document prior to accepting the terms. If you don't understand something, contact the customer service department of the online banking institution.

If you are business savvy, you are probably used to doing nearly everything online, and now you can add online banking to that list. There is no reason to go to the bank when you can perform most of the transactions you need online, whether that includes paying bills or transferring money at any time of day or night. You should take advantage of the flexibility online banks offer, but you need to know what to expect before you sign up for an Internet banking institution.

Finding Internet bank advice and ratings online can help you in your endeavors to find the perfect business Internet bank account for you. Many sites online will tell you exactly what to expect from Internet banking institutions, so be sure to check the following sources:

1. Look for Internet banking institutions on top lists.
2. Check reviews of online banks before signing up for Internet savings accounts.
3. Use online forums to find information about Internet banks.
   

Action Steps
The best contacts and resources to help you get it done

Consider Internet checking accounts that are highly ranked

Before committing to a particular Internet bank, you should check out the statistics on it. One way to do so is to look for lists of the top Internet banks. Make sure that your potential new bank shows up on lists of institutions with features that are important to you. These could include high interest rates, best online customer service, or best all around bank.

I recommend: The Digerati Life lists the best high interest savings accounts in online banking. Bargaineering lists the top 5 Internet banks.

Read reviews of Internet banks before setting up a business account

Whether written by a professional reviewer or an actual user, reviews of Internet banks are often the best way to learn about your potential new bank. A review should describe real-world experiences with the bank, letting you know what to expect before signing up.

I recommend: Forbes features reviews on several online banks. MoneyNing provides a user review on the HSBC Direct Online Bank.

Observe real experiences with Internet banking institutions through forums

If your goal is to learn first-hand about Internet banks before committing to one, online forums are a great resource. People are candid about their experiences with particular online banks, and will share details you won't find in professional bank reviews or websites.

I recommend: Read about user experiences with GMAC Bank on the forums at FatWallet.com. Wisebread provides a forum where money-conscious readers discuss their experiences with online banks.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Don't place too much stock in one user review or forum comment about an Internet banking institution. However, if the majority of reviews or stories about a particular bank are negative, you would be wise not to sign up with that one.