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Novo Bank Overview
When starting a business, one of the most important first steps to take is separating your personal and business finances. Splitting up your personal funds and business funds is crucial because it protects your personal assets in the event of legal trouble.
If you are mixing personal and business, then a lawsuit against your business could result in you losing your house which is…not great. But when you split up your personal and business, you mitigate this risk and limit your personal liability.
Without splitting up personal and business expenses, you’ll also lose out on a significant number of tax deductions. This is because without good records, you’ll have no way to prove your write-offs.
In order to divide your personal and business expenses, you’ll need a business checking account. This will be the central point for your business’s financials. All of your income will flow into this account and all of the expenses will flow out of it.
This will make your accounting infinitely simpler and save you so much time when preparing for taxes.
Currently, Novo Bank provides one of the best business checking accounts on the market.
What is Novo Bank?
Novo Bank is a business banking platform built for online entrepreneurs and creators. Technically, it is a platform and not a bank because they do not hold your money. Instead, they simply provide a creator-friendly interface and features for businesses to use.
All of the money in your Novo Bank account is actually held with Middlesex Federal Savings, a bank that has been around since 1890.
Novo provides an online-first banking experience to entrepreneurs that want a system they can fully manage from wherever they are. No matter what your issue or question is, you’ll never have to go into a branch to get an answer. That’s because they don’t have a single physical branch.
For creators that are looking for a simple and streamlined way to manage their business’s finances, Novo was designed to provide just that.
The Platform Highlights
Novo Bank accounts offer some competitive services to help entrepreneurs with their finances. Let’s dive into them:
- Free business checking account with no account minimums
- Focuses on creators and entrepreneurs with integrations and features that make sense
- Reserves allow you to set aside money for taxes ahead of time
- Users are able to receive their Stripe payouts one business day early
- Cash-back perks allow users to save money on popular services like Google Ads
Nova Bank Features: In Depth
Free Business Checking Account
The core feature that Novo Bank provides is a completely free business checking account. This account is free to open, free to maintain every month, and free to close if you decide you want to move to another bank down the road.
When compared to some of the business checking accounts from the big banks, this is a significant feature. Many of the options offered by banks like Chase and Wells Fargo require you to keep thousands of dollars in your account in order to avoid hefty monthly fees.
This is not something you’ll have to worry about with Novo. There are no hidden fees and free really does mean free.
Novo Reserves
Personally, this is my favorite feature that Novo offers. Setting up a reserve within your Novo account allows you to segment out your funds into separate sub-accounts.
The most beneficial use case that I have for this feature is setting aside tax money. When you are self-employed or running your own business, you no longer have an employer withholding your taxes for you.
Novo reserves can serve the same purpose and within a few seconds, you can set up a reserve for your tax money. Every time you get paid, you can set a portion of it into this reserve so that when tax time comes around, you can ensure that you have the funds to pay the IRS.
Novo Bank Cash Back Perks
As a client of Novo, you’re able to take advantage of a number of discounts with popular companies. These are popular merchants that online businesses spend money with on a regular basis.
Currently, Novo users can get discounts and free credits for the following brands:
- Google Ads
- Quickbooks
- Snapchat Ads
- GoDaddy
- Stripe
- Zendesk
If you use any of these services, you could potentially save thousands of dollars by taking advantage of the free offers on Novo.
Novo Bank Integrations
As a Novo user, you are able to integrate your account with a number of other popular services. This can allow you to streamline your business finances without having to log on to your Novo Bank account on a regular basis.
As of writing this article, Novo integrates with the following services:
- Shopify
- Slack
- Stripe
- Zapier
- Quickbooks
- Xero
By taking advantage of these integrations, you can pull all of you business financials into one place, and send out updates to your team when big deposits hit your account.
Early Stripe Payouts
Another unique feature that Novo offers is early Stripe payouts. If you use Stripe to accept payments for your business, Novo will allow you to get your payouts one business day early.
All you need to do to take advantage of this offer is to connect your Stripe account to your Novo Bank account. When you do this, Novo will deposit all of your Stripe payouts into your account early.
While this might not seem like that big of a deal, the speed of cash flow is very important to some businesses. Especially if you are reinvesting a significant portion of your income back into the business, getting access to your cash a day early can make a big difference.
Take a look at my in-depth review below for more!
How To Open A Novo Bank Account
The process for opening a Novo Bank account is very simple. Here is the step-by-step process to open a business checking account with Novo:
- Click here to sign up for a Novo Bank account
- Select Get Started
- Enter your business email and create a secure password
- Provide Novo with your Business Information
- Submit Your Application and wait for a response
After submitting your application, Novo might email you to ask for additional information to verify your business. This is so that they can confirm that your business is legit and actually exists.
Once they have all of the information they need, they are typically able to get you a decision within a few hours. As long as your business is operating above the board and does not violate Novo’s terms, there shouldn’t be any reason why they would reject you.
Is It Safe And Secure?
Novo Bank keeps all of its deposits with Middlesex Federal Savings, a bank that has been around for over 130 years. Middlesex is FDIC insured up to $250,000 so in the event that either Novo or Middlesex failed, your cash would be protected.
How Does Novo Bank Make Money?
Although Novo Bank doesn’t charge you any fees, they’re not operating a charity. Novo Banks makes money in a variety of ways that do not include account fees. Two of these methods include interchange fees and affiliate marketing.
Interchange Fees
Whenever you pay for something on a debit or credit card, the merchant pays a small fee to process that charge. Novo Bank receives a portion of that fee for issuing the card and facilitating the transaction.
Affiliate Marketing
Affiliate marketing is the process of referring people to a product or service and getting paid when they go through your link. Novo makes money with affiliate marketing through their perks.
When users use Novo Perks, Novo receives a commission from the company for bringing them a new customer. This is at no cost to you and is one of the main ways that companies market themselves online.
Novo Bank Account: Final Thoughts
As far as business bank accounts go, Novo is definitely one of the best options out there. With no fees at all and no cost to maintain the account, it’s clearly a better choice than most of the big banks out there.
Additionally, the features Novo offers are extremely useful to entrepreneurs looking to streamline their finances.
Keep in mind that if you’re looking for a bank that you are able to go to in person, Novo is not the place to go for that. Novo is focused on keeping things as simple for you as possible and going into a bank branch does not play into that.
Personally, I have been a Novo user for quite some time and plan to continue to use their services. It gets the job done for me and has been a very welcome change from the big bank I used to bank with.
But in the end, the decision comes down to you and what you are looking for.
