Lili review: Low-fee banking for small businesses

Moneywise.com / Moneywise.com

By Eric Rosenberg

🗓️

Updated: August 01, 2023

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Lili is an online bank designed for freelancers and small businesses. It offers no-fee accounts and unique banking features useful for freelancers and other service businesses. If you’re looking for an online bank that helps you manage your money, save and prepare for taxes, understand your expenses and avoid fees, Lili bank may be a good fit.

4.0

4.0

Commissions ands fees4.5

Customer service4

Ease of use4.3

Mobile access4.5

Savings options3.5

Features4

What is Lili?

Lili is an online bank for freelancers and LLCs and S-corps. It offers low-fee accounts with great features to help business owners prepare for tax time and manage their business income.

Lili has no fees for most regular use. Other than out-of-network ATMs, international ATMs and deposited check return fees (all of which you can easily avoid), you may not pay for anything. That’s the pricing we like to see in bank accounts for personal or business use.

Lili features

Lili has a handful of unique features that set it apart from other online banks for entrepreneurs. Here are some important Lili features to know about.

• Expense tracking and reporting: You can’t run a business successfully without profit, and you won’t know your profits without an understanding of income and expenses. Lili tracks expenses for you by category, automatically generates expense reports, then sends notifications whenever money leaves your account so you always know where you stand
• Automated savings buckets: You can choose to turn on savings buckets for tax payments and financial emergencies. Fund these with manual or automatic transfers based on a percentage of your income. If you follow the Profit First accounting method, this will be a familiar and helpful feature.
• Tax savings and preparation: In addition to automatic tax savings, Lili expense reports double as a resource to do your self-employed taxes. This feature is free with a Lili account, and it could take the place of expensive accounting software used by bigger companies.
• Free in-network ATMs: You can use the account’s Visa debit card for purchases or ATM withdrawals. You can withdraw for free from 38,000 MoneyPass ATMs. If you go out of network, you’ll pay $2.50 in the U.S. or $5 outside of the U.S.
• Early payments: You can receive payments from online platforms like Shopify or even Uber and Lyft into your Lili account two days early. If you make money with an online business or in the gig economy, this is a nice perk to take advantage of.

How Lili works

In addition to the unique features above, Lili works like a typical low-fee online bank business checking account. That means you can make deposits, take payments, and withdraw at any time with no limits or fees.

• Online and mobile banking features include mobile check deposits and balance transfers.
• You can freeze and unfreeze your debit card with a click if you think it may be missing.
• The Visa debit card is covered by a $0 fraud liability policy.

Because there are no branches, you can’t get in-person customer service. However, you can deposit up to $9,000 in cash each month at over 90,000 Green Dot locations. Online businesses and businesses that don’t regularly take large cash payments will probably find that Lili does a good job of meeting their needs.

If you are paid by direct deposit, check, or take payments using a payment processing platform, your “cash” management needs should be completely covered.

Lili accounts

Lili offers just one type of checking account. We gave it credit for savings, however, thanks to its linked savings buckets feature.

• Lili account: The core Lili account is an online checking account. There are almost no fees for regular use outside of out-of-network ATMs. You can open a personal account or business account with Lili. It also supports “doing business as” or DBA accounts, which basically lets you operate under a business name and accept payments using that name instead of your personal name.
• Savings buckets: You have the option to open savings buckets. These are part of the same Lili checking account, but allow you to segregate funds specifically for taxes and emergencies.

That’s it! Lili is pretty simple, but it covers the needs of most solo business owners who work as sole proprietors.

However, you are limited on how many transfers and deposits you can make each month. You can make a maximum of $50,000 per month in mobile check deposits and 15 checks per month, but only if you receive or transfer at least $200 per month. You can also only transfer $1,000 per day to a linked external account, which some freelancers with separate business and personal accounts could find limiting.

Lili Pro

Lili Pro is a new product from Lili, with the company calling it “the next generation of banking for small business owners.” With this subscription-based account, you gain access to new features built around business solutions, tax and expense management, and advanced banking.

Here’s a closer look at what you get with a Lili Pro membership:

• Savings account with 2.00% APY: With Lili Pro, you earn 2.00% APY on your savings. So, the more money you put aside, the more you earn. This is very good for a business-focused bank account, although you can find higher rates with various high-yield savings accounts.
• Cashback rewards: Using your Lili Pro Business Visa at participating merchants allows you to earn cashback rewards.
• Fee-free overdraft: With Lili Pro’s BalanceUp feature, you can overdraft up to $200 on your debit card without incurring a fee. Lili will cover the difference and then recover the money from your account the next time you get paid.
• Invoicing: An efficient invoicing system is critical to your long-term success as a entrepreneur. Lili Pro has a built-in invoicing tool for creating, sending, and managing invoices. It also syncs with popular payment processors like PayPal, Cash App, and Venmo.
• Split Categorization: Lili Pro makes it easy to categorize purchases to keep track of personal and business expenses. This makes tax season much less stressful. Not to mention the fact that it can save you a lot of money because you can easily track business expenses that you write-off.

If you’re interested in Lili Pro, the first 30 days are free. This gives you a chance to take the above features for a test drive. After that, you’re charged $9/month. But if Lili helps you write-off more expenses and save money at tax time, this monthly fee is easily worth it. And it can even pre-fill your annual 1040 Schedule C form to help save time.

Lili banking fees

Lili has very few fees. There are so few the entire list fits below:

• ✅ Out-of-network ATM (domestic): $2.50
• ✅ Out-of-network ATM (foreign): $5
• ✅ Debit card replacement: First replacement free, subsequent replacements cost $5 each.
• ✅ Deposited check returned: $25
• ✅ Express mail fee: $20

That’s the whole fee schedule. Everything else says “free.” You can view the details here.

How to sign up for a Lily account

To sign up, you need to complete an application and download the Lili app. You’ll also need to provide personal details like an email address, name, phone number, mailing address, date of birth and Social Security number. Once approved, you will pair your device using a verification code.

Banking services are provided by Choice Financial Group and accounts are insured up to $250,000 by the Federal Deposit Insurance Corp.

Lili’s account is fairly simple and straightforward. One big downside I found was that you can’t send or receive wire transfers. That’s a deal-breaker for some businesses, but not a big deal for others. If ACH payments work for you, you're good to go.

Lili interest rates

One drawback of Lili is that it doesn’t pay interest on deposits for its checking account. Not even the low 0.01% you get with savings accounts at traditional brick-and-mortar banks. Granted, you can earn 2.00% APY if you move money to savings buckets.

That makes Lili a good choice for keeping your business cash available. Longer-term savings should be kept somewhere else that will pay you interest for keeping your funds deposited. Take a look at high-yield savings accounts for the best APYs.

Lili pros and cons

Pros

• Very few fees: Most users can take advantage of all this account has to offer without paying any regular fees. There are no recurring monthly fees and no minimum balance requirements.

• Tax and expense reporting: Expense reports help you understand your cash flow and prepare for tax time.

• Savings buckets: Automatically put money aside for tax time and emergency needs. Transfer additional funds or withdraw at any time.

Cons

• Only for sole proprietors and single-member LLCs: Lili caters to entrepreneurs, so it's not the best mobile banking option for every business or person.

• No interest: There’s no interest rate paid on deposits.

• Low monthly limits on cash deposits: You can only deposit $9,000 per month in cash with a $1,000 daily limit for your Lili account.

• No wire transfers: You can’t send or receive wire transfers with Lili accounts.

Alternatives to Lili

If you're looking for an alternative Lili banking option, there are a few companies you can turn to.

• NorthOne is a bank for freelancers, small businesses, and entrepreneurs. With NorthOne you get unlimited banking without hidden fees or minimum balances for just $10 per month. The service integrates with third-party platforms and with its envelopes you can easily manage your finances into different subaccounts. Plus as an Investor Junkie reader, you can get three months free when you sign up. 
• Novo Bank offers free business checking, including free transfers, free incoming wires, free mailed checks, refunds for all ATM fees, and small business tools integrations such as Quickbooks. You will need $50 to open an account but there's no minimum balance requirement. However, Novo doesn't allow you to send wire transfers or deposit cash.
• LendingClub Bank has a number of products, with a checking account specifically geared towards small businesses. With this account, you can get up to 1% cash back with your LendingClub debit card and get 0.10% APY or more on balances over $2,500.

Final thoughts on Lili

Overall, Lili is a great account for freelancers and small business owners looking for a simple bank to help manage their finances. Those who get lots of checks or wire transfers or deal with lots of cash might find it limiting. But if you’re just starting out, it could be a good fit. Lili is definitely worth considering.

Eric Rosenberg Freelance Contributor

Eric Rosenberg Freelance Contributor

Eric Rosenberg is a finance, travel and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full time.

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