When considering how to open an online business checking account, you’ll have to decide if you’ll need a physical branch, choose the best bank, understand the costs, gather the required documentation, complete an application, and deposit funds. You can open an online business checking account without leaving your office.
For business owners who prefer a digital environment, Azlo offers a fee-free business banking solution. Not only will you get the business banking features you need, like the ability to deposit checks online, but they also don’t have the typical bank fees. Plus, the online application can be completed in a matter of minutes.
The six steps it takes to open an online business checking account are:
1. Consider if You’ll Need a Physical Branch
As a business owner, first consider whether you’ll need access to a physical branch to make cash deposits, or if a business checking account with a branchless bank will suffice. A branchless bank is best for businesses that don’t have the need for cash deposits or face-to-face customer service.
Most physical branches offer business checking accounts with an online banking experience. For example, Chase Bank offers a small business checking account with an online banking experience. Plus, Chase Bank also has 5,100 branches and 16,000 ATMs in 28 states nationwide. Their easy-to-use website and great mobile app make it an excellent option if you need both a physical location and an online banking experience.
If you don’t see a need for cash deposits or withdrawals, consider opening an online business checking account with a branchless bank. Most online-only banks provide remote deposit capture technology that allows you to deposit checks right from your phone. Not only is this easy, but it’s fee-free. Conversely, traditional banks typically have a deposit fee. Chase Bank, for example, charges $2.50 per $1,000 of deposited cash.
2. Choose the Best Online Business Checking Account
When you are choosing the best online business checking account, consider its overall costs, branch locations, ATM availability, online banking experience, customer service, and bookkeeping integration. If you don’t need a physical branch, a good place to start is finding a bank that offers the lowest overall costs and a solid online banking experience.
When you open an online business checking account, consider factors such as:
- Cost of the account: Consider the overall account fees you might face with an online business checking account. Online checking accounts carry fees that are far more minimal compared to traditional banks.
- Access to branch locations: Most major banks offer online business checking accounts, giving you access to physical branches. However, these accounts typically have higher overall costs. If you don’t need a physical branch, this factor can be skipped.
- Location of ATMs: If you open an account with a branchless bank, ensure they have ATM partners in your area because you won’t have access to a physical branch. ATMs that are in-network are typically free to use at no additional cost.
- Type of online banking platforms: Make sure your online bank provider offers an excellent online and mobile banking platform and experience. The best online banks provide both a desktop and mobile device portal.
- If remote deposit capture is provided: Some banks offer a remote deposit capture technology where you can deposit checks from your phone without leaving your office. This is especially important if you’re opening an account with a branchless bank.
- Quality of customer service: Make sure you can readily access customer service agents, regardless of whether you can visit a physical branch. Just because you can visit a branch doesn’t mean you can get the help you need in-person.
- Ability to integrate with bookkeeping software: Confirm that your bank can integrate with your bookkeeping software. This is important because it can automatically transfer transaction history, saving your accounts payable team time come tax season.
- If the account is FDIC-insured: It’s important to work with a legitimate financial institution, such as those backed by the Federal Deposit Insurance Corporation (FDIC). This means if the bank goes out of business, your funds will be protected.
Taking these factors into consideration can help ensure the bank you decide to go with will be the best fit for your business. Fortunately, there are free online business bank accounts that check all the boxes. For example, Azlo is a FDIC-insured, fee-free digital bank that offers an online banking platform, excellent customer service, remote deposit capture, and access to 55,000 ATMs.
3. Research What an Online Business Checking Account Costs
Online business checking accounts have fewer fees compared to traditional banks. Online checking accounts usually carry a monthly fee between $0 and $18, which can be waived if you meet a specific criteria. Plus, they also charge up to $45 for wire transfers, up to 50 cents for transactions, and between $2 and $3 for out-of-network ATMs. However, there are free business bank accounts available that are typically online-only.
The fees you can typically expect with an online business checking account are:
- Monthly fee: $0 to- $18 per month, waived if you met specific criteria (e.g., minimum balance)
- Wire transfer: $15 to $45, typically applies to domestic and international incoming and outgoing wire transfers
- Transaction fee: $0.40 to $0.50 per transaction; only charged if the account exceeds approximately 200 monthly transactions
- ATM fee: $2 to $3; applies to out-of-network ATMs
- Cash deposit fee: 2% to 3% per deposit; only charged if you have approximately $7,500 cash deposits per month
If you want to avoid fees at all costs, consider using a free business bank account. Free business bank accounts are able to reduce their fees because they’re usually online-only and therefore don’t have the costs of maintaining a physical branch location. Azlo, for example, doesn’t charge monthly maintenance fees, transactions fees, card replacement fees, overdraft fees, or anything of that sort.
4. Gather the Required Online Business Checking Account Documentation
When you open an online business checking account, you will need to provide the bank with documentation that outlines your business formation. You’ll also need to send documentation that verifies your trade name and any employee identification number (EIN) documents the IRS gave you. Lastly, banks will need to verify your personal information to open an account for you.
The required documents to open an online business checking account are:
Business Formation Documents
Whether your business is filed as a sole proprietorship, general partnership, S corporation (S-corp), C corporation (C-corp), or a limited liability company (LLC), you will be required to provide specific business formation documents. These documents include such things as copies of your partnership agreement as well as documents you filed to form your company (e.g., articles of incorporation).
The documentation you’ll generally need to provide by entity type includes:
- Sole proprietorship: If you have a sole proprietorship, you usually won’t be required to provide any business formation documents. Instead, you may be asked to provide documents to verify that you’re doing business as (DBA) name and your EIN, if you have one.
- General partnership: If your business is under a general partnership, you’ll be required to provide your business identification, organization documents (e.g., business partnership agreement), and other potential documentation.
- Corporation or limited liability company: If your business is classified as an S-corp, C-corp, or LLC, you will be required to provide copies of the documents you filed to form your company, such as your articles of incorporation.
Employee Identification Number (EIN) Verification Documents
If you have an employee identification number (EIN), banks usually ask for a copy of the EIN verification documents the IRS gave you when they issued your unique number. Your EIN is a nine-digit number that serves as identification for your business when you file taxes, get a business loan, or open an online business checking account. An EIN is like a Social Security number (SSN) for your business.
Trade Name Verification Documents
If your business operates under a different name than your legal name, banks will require you to provide documents that verify your trade name. The required documents are usually referred to as a “fictitious business name” certificate or “doing business as” certificate (DBA certificate).
Personal Information Verification Documents
In addition to the above business documents, banks require you to verify your personal information to open a business bank account. To do so, they will ask you to provide a personal ID or other documents to verify your name, your address, or your Social Security number (SSN).
5. Apply for an Online Business Checking Account
To submit an online business checking account application, simply visit the bank’s website. They will typically require you to send in the required account documentation based on your company’s structure. This can usually be done by mail or email. If you’re opening an online business checking account with a traditional bank that has a physical branch, you can also apply in person. You can open an account instantly, but the time to fund varies per bank.
To open an account with Azlo, you can fill out an application online in a matter of minutes. You’ll be required to provide your business formation documents and basic personal information. Once you submit your application, they will review it within one to two business days and let you know their decision.
6. Deposit Funds Into Your Online Business Checking Account
With many banks, especially with traditional banks, there will be a minimum deposit to avoid certain fees, and you’ll want to deposit enough to avoid those. You can deposit funds by writing a personal check from a personal bank account, making an electronic funds transfer between banks accounts, or depositing cash if your online business checking account has a physical branch location.
On a going-forward basis, if your business accepts a lot of checks, most banks now offer a service called remote deposit capture. With remote deposit capture technology, you can deposit your checks without needing to leave your office. Depending on your bank, this might also be referred to as electronic deposit or remote deposit. It’s a great tool, and so it’s important to ask your bank about this to ensure you can make easy deposits moving forward.
Benefits of Opening an Online Business Checking Account
The primary benefit of opening an online business checking account is that it’s one of the best ways to separate your business and personal finances. If you open an online business checking account from an online-only or branchless financial institution, you can expect to have low account fees. Plus, with an online business checking account, you can manage your finances and bank account on-the-go through an online portal or mobile banking app.
The benefits of opening an online business checking account are:
- Separates your business and personal finances: Opening an online business checking account is an excellent way to make certain you don’t commingle your business and personal funds.
- Branchless banks have minimal account fees: If you open an online business checking with a branchless bank, you can expect to have fewer fees compared to a traditional bank. Although there may be no account fees, branchless banks may still charge for additional services and extra transactions.
- Ability to manage your finances on the go: Online business checking accounts generally come with an online and mobile banking experience. From this portal or mobile app, you can log into your account and manage your finances. For example, you can wire funds, transfer funds, or make mobile check deposits if your bank offers them.
Whether you open an online business checking account with a physical branch or a branchless bank, keep in mind that both options are beneficial to business owners. Most online bank accounts allow you to access your finances from your office and make mobile check deposits. However, if your business has the need for regular cash deposits, it’s important to consider the drawbacks of an online business checking account.
Drawbacks of Opening an Online Business Checking Account
The primary drawback of opening an online business checking account is that cash deposits are usually difficult if you choose a branchless bank. Additionally, if you open an online-only business checking account, you won’t have access to branded ATMs. Lastly, it’s important to understand what it will cost to access your funds from an ATM.
The drawbacks of opening an online business checking account are:
- Cash deposits are difficult with branchless banks: Most branchless banks and online-only accounts don’t accept cash deposits by mail. If your business accepts cash, consider opening an online business checking account that is tied to a physical bank for cash deposits, such as Chase Total Business Checking.
- Difficult access to face-to-face customer service: Online business checking accounts typically have less face-to-face customer service, especially if it’s a branchless bank. If you think you’ll need access to in-person customer service, consider opening a business checking account with a traditional bank.
- Absence of branded ATMs. Branchless banks typically don’t have branded ATMs readily available. However, there are some branchless banks that partner with specific ATM companies to provide fee-free ATMs, such as Azlo. Any ATMs outside their network, however, will come with a fee.
If your business needs to visit a physical branch for cash deposits and access a large network of ATMs, an online business checking account from Chase Bank is a good option. With Chase, you can access 16,000 ATMs for free, located in 28 states. New customers can get a $200 bonus when they sign up for an account.
Online Business Checking Account Alternatives
You may also be looking for the best way to save your business funds or you may need additional business bank accounts. If this is the case for you, it’s worth considering other options. Additional business bank accounts include small business checking accounts, business savings accounts, and money market accounts.
The alternatives to an online business checking account are:
Small Business Credit Card
One of the most common things opened with a business checking account is a small business credit card. Business credit cards can help startups and new businesses access necessary financing to get their business off the ground. The best business credit cards for startups allow entrepreneurs to rely on their personal credit and help establish business credit. Similarly, the credit cards for new businesses offer an opportunity to build business credit and interest-free financing.
Business Savings Account
A business savings account serves as a place business owners can store their cash savings and earn money from low interest rates. They’re best for putting money aside for future spending needs, managing your cash reserves, or saving money as an emergency fund. Additionally, you can connect them to your checking account to serve as an overdraft protection tool.
Money Market Account
A money market account is an interest-bearing account that usually pays higher interest rates than a savings account. They are more liquid and safer compared to stocks, bonds, and other investments. They allow easy access to your funds through withdrawals and writing checks, but they limit accounts to six transactions per month before a penalty is charged.
Online Business Checking Account Frequently Asked Questions (FAQs)
We covered a lot of information about opening an online business checking account and the important steps to do so. There are some questions asked more often than others, and we address those here. If you have any other unanswered questions, please feel free to share them in the Fit Small Business forum.
The most frequently asked questions about opening an online business checking account are:
What Is Required to Open an Online Business Checking Account?
To open an online business checking account, you’ll need to provide the Social Security number of the business owner, employer identification number, and business formation documents. Additionally, you may need to provide business licenses and other documents to verify your name, address, and Social Security number.
Can I Open a Business Bank Account Online?
You can open a business bank account online with a number of banks in a matter of minutes. Depending on if you’re a sole proprietorship, a corporation (S-corp or C-corp), or a limited liability company (LLC), you’ll need to provide your business formation documents. These documents include your EIN, trade name, and personal information documents.
Which Banks Have Free Business Checking Accounts?
Some banks offer business checking accounts that have monthly account fees that can be waived if you meet certain criteria. Free business checking accounts either don’t charge monthly fees or they make it easy to waive them by meeting minimum deposit requirements.
Opening an online business checking account is a good decision for business owners who want to separate their personal and business finances or manage their finances remotely. However, before you open an account, you need to consider if you need a physical branch, choose the best bank, know the costs, and gather the required documentation.
If you’re looking for an online-only business checking account, consider Azlo. They offer fee-free, mobile banking for small businesses. They don’t charge overdraft fees, maintenance fees, transactions fees, or card replacement fees. You can apply online in a matter of minutes.