Opening a business bank account is an important step when starting a new business. By separating your business account from your personal account, you can be better organized and keep track of your finances more easily. Opening an account takes only a few minutes, but it’s important to be prepared and know what kind of account you should get, where you should get it, and what documents you’ll need.
1. Choose the Best Account
Select the best type of account for your needs. Banks, credit unions, and online banks offer similar accounts but different services and fees. A few offer free accounts with no minimum balance, and some offer other ways to waive the monthly fee. Typically, online accounts don’t charge fees and are a better choice for businesses with no cash deposits. Traditional accounts offer a wider variety of banking products and services. You may also want to consider opening a business savings account to separate your working capital from your savings funds.
Free Business Bank Account
Most banks will charge you between $12 to $29 a month to maintain your account, but there are a few that won’t charge a monthly maintenance fee. Some, such as Chase Bank, our choice for the best overall free checking account, will waive the fee if you maintain a minimum balance.
Keep in mind that having a free business checking account doesn’t mean you won’t be assessed any fees at all. For example, you could still be charged for transactions, wire transfers, and overdrafts.
Traditional Small Business Checking Account
A traditional small business checking account is similar to a personal checking account. It includes the ability to make deposits and withdrawals, write checks or make electronic funds transfers, and make purchases and cash withdrawals with a debit card. Typically, there are maintenance fees, transaction fees, ATM fees, and deposit fees. One very convenient option is Bank of America, with branches and ATMs nationwide.
Online Business Checking Account
An online business checking account is a good choice for businesses that don’t need to visit a physical branch or handle daily cash transactions as these accounts typically don’t allow for cash deposits. Also, most online-only accounts are fee-free or allow you to avoid monthly account fees by maintaining a monthly minimum balance.
First Internet Bank, named the best small business checking account for 2021 by Newsweek, has no monthly service fee and only requires $25 to open an account through its website. If you need assistance, First Internet’s relationship bankers are available via phone or email during regular banking business hours.
Business Savings Accounts
A savings account is a stable place to keep your money while it earns interest. Evaluate account terms, including annual percentage yield (APY), account fees, and balance requirements, to find the best business savings account for your needs.
2. Find the Right Bank
Finding the right bank can be a challenge when there are so many options. Here are some factors to consider when choosing where to open a business bank account:
- Existing banking relationship: If you have an existing relationship with a bank, it may be convenient to open a business bank account with the same bank. You can build credit history, get personalized service, work together on business goals, receive recommendations for additional business products, and access small business resources.
- Affordable costs: Consider the fees the bank may charge you, such as fees for monthly maintenance, deposits, transactions, and ATM use. Also, consider if they will reimburse you for out-of-network ATM fees.
- Convenient network: Make sure the location of the branches and the number of ATMs suit your needs.
- Good online/mobile experience: Confirm that your bank offers a good online experience, including online bill pay, electronic funds transfers, and mobile deposits. If your business accepts payments via payment apps, such as Zelle, check to see if there are any additional fees and how long it will take for transactions to post.
- Ease of bookkeeping integration: Ensure that your bank account and bookkeeping software integrate.
- Support for future needs: If you expect you’ll need more than just bank accounts, make sure your bank offers small business loans, lines of credit, and credit cards.
3. Check the Account’s Costs
Most banks typically charge fees. Usually, banks waive them if certain criteria are met, such as maintaining a minimum balance, using bill pay, or keeping within transaction limits. Be sure to find out if the account will charge transaction fees, early termination fees, or minimum account balance fees.
Business checking account fees
- Monthly fee ($0 to $29 per month): Flat fee that’s waived if certain criteria are met, such as maintaining a minimum balance
- Transaction fee (40 to 50 cents per transaction): Fee that’s assessed if the number of transactions exceeds the monthly limit, which typically starts at 100 monthly transactions
- Cash deposit fee (2% to 3% per deposit): Fee that’s charged if cash deposits exceed the monthly allowance, which often starts at $5,000 a month
- ATM fee ($2 to $3 per transaction): Charge for ATM transactions at out-of-network ATMs
- Wire transfer fee ($15 to $45 per transaction): Fee assessed on domestic and international incoming and outgoing wire transfers
Business savings account fees
- Monthly fee ($0 to $15 per month): Flat fee that’s waived if you meet certain criteria, including maintaining a minimum balance or linking your savings account to a checking account
- Monthly balance transfer fee ($5 to $20 per transaction): Per-transaction charge if you exceed six balance transfers per month
- Cash deposit fee (2% to 3% per deposit): Fee that’s charged if cash deposits exceed the monthly allowance, which typically starts at $5,000 per month
- Wire transfer fee ($10 to $45 per transaction): Fee assessed on domestic and international incoming and outgoing wire transfers
4. Gather the Required Documents
The documents you will need to open a business bank account may vary between financial institutions. Typically, you’ll be asked to present your employer identification number (EIN), your business’s formation documents, and any federal or state licenses, which vary from state to state. To help ensure you’ve got all the right documents, we’ve prepared a free downloadable checklist of required documents by corporate structure for your convenience.
Sole Proprietorship Business Bank Account Requirements
- Personal identification: You need your Social Security number as well as two forms of personal ID to open a business bank account. Valid types of identification include a driver’s license, passport, and Social Security card.
- Fictitious business name certificate: You might also need a fictitious business name certificate, also known as a doing-business-as certificate (DBA certificate) if your business operates under a different name than your own.
Partnership Business Bank Account Requirements
- Business identification: To open a business bank account, you need your federal EIN and a copy of your articles of organization.
- Organization documents: These include your business partnership agreement and any other organization documents that you may have prepared when you formed your partnership.
- Other potential documentation: You may also need to provide a signed declaration of unincorporated business and any required business licenses. Business licenses are common with healthcare businesses or restaurants.
S Corporation (S-corp) Business Bank Account Requirements
- Business identification: When opening a business account, you need to show your federal EIN.
- Articles of incorporation and corporate charter: You need to provide your certified articles of incorporation and possibly your corporate charter.
- Corporate resolution: You might also need to provide a corporate resolution signed by all of your officers as well as a signature card signed by the account signers.
- Business licenses: Businesses that need a license, such as restaurants, must also provide their license documentation.
Limited Liability Company (LLC) Business Bank Account Requirements
- Business identification: To open a business bank account, you need your federal EIN as well as a copy of your articles of organization.
- Organizational documents: You need to provide the organizational documents used to form either your S-corp or partnership.
- Other potential documentation: You also may need to provide a signed declaration of unincorporated business and any required business licenses; business licenses are common with healthcare businesses or restaurants.
C Corporation (C-corp) Business Bank Account Requirements
- Business identification: Like an LLC, you need your federal EIN to apply for a business bank account.
- Articles of incorporation: You also need your certified articles of incorporation; you receive your article of incorporation documents as a part of your incorporation process.
- Corporate charter: If your articles of incorporation don’t provide sufficient information regarding who is authorized to sign, you may also need to provide an additional corporate charter that specifies this information.
- Corporate resolution: You might also need to provide a corporate resolution signed by all of your officers as well as a signature card signed by the account signers.
- Business licenses: Businesses that need a license, such as healthcare businesses or restaurants, have to provide their license documentation.
- Additional requirements for nonprofits: If you’re operating as a nonprofit organization, you’ll need to show your 501(c) letter from the IRS or other tax-exempt documentation.
Business Bank Account Requirements for Startups
- Personal or business identification: You must provide either personal identification, like a driver’s license or Social Security card, for a sole proprietorship or EIN for the other business types.
- Organizational documentation: You also need to provide the documentation used to organize your business, such as a fictitious business name certificate, LLC operating agreement, or articles of incorporation.
- Business licenses: If your startup business needs a license, you will also need to provide your license documentation when opening a business account.
5. Open an Account Online or In Person
Most banks provide the option to open a business bank account in person at a branch location or online. Online-only banks will only allow online openings since they have no physical branch locations. Whether you choose to apply online or in person, you need to have the required documents for your specific company structure ready to show or submit on the bank’s website.
You may prefer to visit a branch to receive face-to-face customer service. Online-only accounts typically offer a customer service phone number or live chat.
6. Deposit Your Funds
Once you’ve opened your business account, the last step is to deposit funds. You can do this by writing a check to your business from another account like a personal account, making an electronic funds transfer between bank accounts, or depositing cash. Once that’s done, your account is ready to use.
If your business accepts checks, most banks offer mobile deposit―sometimes called remote deposit or remote deposit capture―which can be done through a mobile banking app on a smartphone. If you anticipate large volumes of checks, inquire about getting a check scanner so that you can scan many checks at a time easily. Your bank may charge you a monthly fee to use the scanner.
Benefits of Opening a Business Bank Account
- Separate your business and personal finances: Keeping your business and personal bank accounts separate can help you manage your cash flow and make it much easier to track the financial health of your business.
- Build a business banking relationship: Building a relationship with your bank or credit union means you can get personalized help to reach your business goals.
- Maintain a clean financial record: A business bank account can help provide a clean and organized financial record when it’s time to do taxes.
- Protect your personal accounts from liability: Limited liability operations—LLCs, C-corps, and S-corps—can protect your liability better with a business bank account rather than a personal account.
Opening a Business Bank Account With Other Business Products
Business owners may want to consider opening a business bank account with additional business products for a more streamlined and efficient way to run their finances. For example, combining your business bank account with your business credit card and merchant processing allows you to see the big picture of both your income and expenditures.
Additional Articles and Resources to Help your Business
- Best Banks for Small Businesses: If you’re not certain which bank to choose, check out our list of the top five banks for small businesses.
- Tips for Separating Business and Personal Finances: Opening a business bank account is just one way to separate your business and personal expenses. To safeguard your personal finances from your business operations, review the nine tips and best practices in this article.
- What is APY?: Knowing the difference between APY and annual percentage rate (APR) and how these affect your bank accounts can help you decide which bank can help your business the most.
Bottom Line
Opening a business bank account is an important step when starting a new business. By separating your business account from your personal account, you can be organized better and keep track of your finances more easily. See if your bank or credit union has any introductory offers and be sure to compare rates for savings and checking accounts with other financial institutions.
