This article is part of a larger series on Business Banking.
The process of opening a business bank account is easy and can be completed in as little as a few minutes. The steps in this guide will help you through it, from gathering the required documents to depositing funds into the account. Before beginning the application process, knowing what documents will be needed to open an account is important. The specific documents required will vary depending on how your business is organized.
To assist you further, we included a free downloadable checklist that will show you the documents needed to open a business bank account based on how your business is organized. Some documents will be required of all signers, regardless of what type of business you operate.
Step 1: Gather Required Documents
Before opening a business bank account, it’s important to ensure you have all the required documents needed. Each bank will have slightly different requirements, but the list here should cover almost everything you need.
Regardless of how your business is organized, certain business and personal documents are required across all business types.
General Business Bank Account Requirements
Specific Account Requirements Based on Organization Type
Step 2: Select the Right Bank Account
There are many choices for the best banks for small businesses. Some offer traditional, brick-and-mortar bank locations, while others are entirely online. Once you choose a bank, you need to select an account type that will work for your business. Some banks offer promotional bonuses when you sign up for a new account.
Here are several types of accounts to consider when opening an account:
- Free business bank account: Several banks will waive fees or provide fee-free accounts. Keep in mind that while these accounts may be largely free, some fees may be charged for some business services. The bank should disclose those before opening an account. Bluevine is a great option for a free business checking account.
- Traditional business checking account: Provided by a traditional bank like Bank of America, these are checking accounts that offer a wide variety of business services. Many of these banks offer physical locations if needed, and even though they do, they also offer the option to conduct all business online.
- Online business checking account: Financial technology (fintech) companies provide online business checking accounts, many of which come with limited fees and unique features. These banks are online only, which isn’t ideal for businesses that handle cash regularly. Novo is a great choice for businesses that want online-only banking but need fast access to funds and same-day automated clearing house (ACH) payments.
- Business savings accounts: Several business banks offer savings, money market, and certificate of deposit (CD) accounts that draw interest, allowing your reserve funds to grow. Live Oak Bank is our choice for the best business savings account.
You may want to consider opening a business bank account along with additional business products at the same financial provider for a more streamlined and efficient way to manage your business. For example, combining your business bank account with your business credit card and credit card processing provider may give you access to discounts and allow for easier product and service integration.
Step 3: Find the Best Bank
When choosing the best bank for your new account, consider the following factors:
- Existing banking relationship: If you have an existing banking relationship with a provider, it may be convenient to open your business accounts with the same one. You may get discounts on banking services and even rate discounts on lending products. Plus, as you build your business credit, the existing relationship could help you obtain loans to help your business grow.
- Physical branches or online only: Does your business need to visit a branch location regularly, or can you conduct all of your business online? This is something to consider before choosing a bank. For example, if your business makes regular cash deposits, a bank with a branch will make that process easier with likely fewer fees.
- Location and business-type eligibility: Just because a bank branch has online banking and a great website doesn’t mean you’ll be eligible to get an account there. Some branches require you to operate in certain states to open an account with them. Banks also have a list of prohibited business types, such as gambling, that will be ineligible for an account.
- Mobile app and online access: Almost every bank offers a mobile banking product, but not each one has a good app or online interface. If having mobile access and conducting online transactions will be a regular part of your business, you need to choose a provider that has a great app and mobile banking platform.
- Potential fees: Even free business checking accounts often have some fees associated with the account. Consider your normal monthly transactions and calculate the estimated fees you may have to pay with each bank before choosing a provider.
- Convenience: If you need to visit branch locations or ATMs regularly, be sure they’re conveniently located near your business.
- Support for your business growth: You want a bank that can scale its services to match the growth of your business. Whether you need other types of deposit accounts, lending products, or merchant services, make sure the bank is ready to serve your future needs.
In some situations, you may need to find a bank that doesn’t use ChexSystems based on several factors. About 20% of financial institutions, mostly online banks and financial technology companies (fintechs), don’t use ChexSystems as part of the account application and opening process.
Step 4: Learn the Possible Account Costs
While some account fees can be waived if you meet certain criteria, others are charged if you exceed a threshold of free monthly transactions or cash deposits. Before choosing a bank account, get a disclosure of all the fees the bank charges on its checking products.
Here are examples of some of the fees that banks charge. Click the tab for the type of account and its typical fees, along with other fees charged with most accounts.
Step 5: Open Your Account Online or In Person
Once you have chosen the bank and account type and you have all your paperwork ready, it’s time to open your business bank account. Some banks require you to visit a branch to open your account, though others will allow you to complete the entire process online.
If you choose a bank that requires a branch visit, make sure that there’s a branch near your business and that you know who the bank requires to sign for the account. If there are multiple business partners, they may also have to sign to open the account. Additionally, if you have any employees that you want to have signing powers on the account, they’ll likely need to stop by a branch location as well.
Step 6: Deposit Your Funds
The final step is depositing funds into the account. Some accounts require you to make an opening deposit, while others won’t. You can deposit cash or checks or make an electronic transfer into the account. Electronic transfers can be done by ACH or wire transfer.
Most accounts allow you to deposit checks on the app through mobile deposit capture. If your business plans to deposit many checks regularly, you may consider a check scanner for faster deposit. Your bank should be able to assist you through merchant services on products that best meet your business needs.
Benefits of Opening a Business Bank Account
There are many benefits to opening a business bank account. The most important benefits include
- It keeps your business and personal finances separate
- It helps you build your business credit
- It lets you assess your business performance more easily
- It lends credibility to your business
- It helps simplify tax season
- It helps you build a banking relationship
- It allows you to accept credit card payments
If you have an existing business checking account at another bank that you don’t plan on using anymore, you may want to close that when you open your new account so that it doesn’t become a dormant account. Check out our guide on how to close a business checking account to guide you through the process.
Frequently Asked Questions (FAQs)
How do I choose a bank for my small business?
When looking for the best bank for your small business, it’s important to assess what services your business will need and find a bank that best meets those needs. For example, if your business needs to make regular cash deposits, choosing a bank with physical locations is essential to make that process easier and less expensive.
Which bank is best for startup businesses?
Chase is the best bank for startups, thanks to scalable banking services that can grow as your business grows. It also offers excellent industry-leading credit cards and lending products, along with payment services, cash flow management, and merchant services through J.P. Morgan.
What is required to open a business bank account?
To open a business bank account, follow these six steps:
- Gather personal and business identification documents the bank will require.
- Select the right bank account for your business needs.
- Choose the best bank for your small business.
- Learn about the potential costs of your new bank account.
- Open the account in person or online.
- Deposit funds into your new account.
Opening a new business bank account can be a very easy process with a little preparation work beforehand. If you gather any documents you need and do a little research into potential banks and account types, opening a business bank account will be easy and relatively fast. You can use your new account as soon as the same day. Assess what you need from your business bank and choose the bank and account that best meets your business needs.