This article is part of a larger series on Business Banking.
Setting up a bank account as a sole proprietorship can be accomplished in four easy steps. Find a bank that fits your needs as a sole proprietor, register your business name, gather a few other necessary documents, and then you can open up your account. We break those four steps down in more detail to help you with the process.
Step 1: Register Your Business Name
Banks typically require that you register your business name with your county clerk, secretary of state’s office, or other local government agency. Some states allow you to register your business online, but most states process applications in person.
Registering your business name typically costs no more than $100 but varies based on the state where you live, your industry, and the type of business you want to form. Whether you apply online, in person, or by mail, it can take up to 30 days for approval.
For more information about registering your business and to help determine if a sole proprietorship is appropriate for your business ventures, check out our article, How to Register a Business in 5 Steps.
Step 2: Find the Best Bank Account
Taking some time to research the best bank for your small business in advance will help you not only save some money but it may help you build a good business banking relationship over the long run. The ideal bank will offer a mix of services that help your business, most importantly a small business checking account that will have a low minimum balance and the features that fit your needs.
It’s important to consider these following factors when choosing a business checking account:
- Terms and fees: Business checking accounts often charge fees for account activity, including minimum balance, number of transactions, wire transfers, cash processing, and ATM use. Most banks offer options to waive monthly service fees if you maintain a minimum balance. Digital banks are usually free of many of these fees.
- Account features: Most business accounts come with online and mobile banking, but some have additional business services like invoicing, payment app integration, and business lending. Choose an account that will help support your business activity.
- Bank network: Most traditional banks offer both physical branch locations and an online banking experience. Online-only banks and financial technology (fintech) platforms offer a digital banking experience, with some providing in-network ATMs or third-party ATMs. If your business is cash-heavy, you’ll need convenient access and higher cash deposit limits; a traditional bank would be a better option because ATM usage for cash deposits is limited with digital banks.
Best Business Checking Accounts for Sole Proprietors
- Bluevine: Best of high interest rates
- Chase: Best for sole proprietors in search of a traditional bank
- Axos: Best for sole proprietors with substantial ATM usage
Note: Bluevine is a business fintech platform backed by Federal Deposit Insurance Corp. (FDIC)-insured Coastal Community Bank.
Annual Percentage Yield (APY)
Cash Deposit Fee
Minimum Opening Deposit
1.50% on balances up to $100,000
Cash deposits accepted at Green Dot locations; $4.95/deposit
No fees at MoneyPass ATM locations nationwide
$15; waivable if conditions are met
First 20 free, then 40 cents per transaction
$2.50 per $1,000 after you deposit $5,000 in a billing cycle
$2.50 per transaction at any non-Chase ATM, plus ATM operator fees
None on basic account
Cash deposits accepted at Green Dot locations; $4.95 per deposit
Unlimited United States ATM fee reimbursements
Consider a Business Savings Account: A business savings account is a great interest-earning tool for sole proprietors to set aside money for future expenses and emergencies. The best business savings accounts also offer high APYs that can help you maximize your dollar. You may also have access to financial management tools.
Step 3: Gather the Required Documents
A sole proprietorship requires the least amount of documentation necessary. Almost all banks will require the following to open a sole proprietor business bank account:
- Valid personal identification with a photo such as a driver’s license or passport
- Social Security number
- Doing-business-as certificate (DBA certificate) if your business name is different from your personal name. This may also be referred to as a certificate of fictitious name in your state
Additionally, a bank may ask for the following documents:
- Employer identification number (EIN), which is the same as a business tax identification number (TIN). While generally not required for sole proprietors, it may be necessary in a few situations. This can be obtained online from the IRS
- Your current business license may also be required by the bank
Step 4: Open & Fund Your New Account
Depending on the bank, you may be able to apply online to open your bank account. Some traditional banks allow you to apply online but ask that you visit a branch location to finish the account opening process.
If you’re planning on expanding your business or you think you’ll want to add more products or services to your business account such as a loan or line of credit, applying in person may be a better option than applying online as you can build a relationship with bank personnel, who may be able to offer specialized assistance for your business to address those plans.
Online applications are more convenient and can be done at any time. Note that you’ll need to email or upload your business documentation shortly after you apply to open the checking account. Since digital banks rarely have physical locations, have your personal and business documentation ready when you apply online.
Once your account is open, the quickest way to fund it’s by doing an electronic transfer from another account. If your bank allows deposits via check or cash, you can also make the deposit at a branch or ATM. Some banks have an initial probationary period for the first few months that the account is open where deposited checks may be held a few business days longer than normal for additional verification. When a bank places a hold, you won’t have access to your funds until the hold has expired.
Why Sole Proprietors Should Open a Business Account
Having your business finances separate from your personal finances is a best practice for any business. This will help you keep better track of what expenses are tied to your business and not to your personal use. Additionally, it’ll help your tax preparer or certified public accountant (CPA) when they prepare your tax returns. A business account also gives you the ability to track your expenditures and income and more easily recognize areas of opportunity to grow or reduce expenses.
Opening a business bank account for your sole proprietorship helps keep your business finances organized. With your photo ID and business documentation, you can open an account online or at your local branch. Be sure to choose a bank account that offers the features and fee structure that aligns with your business. Additional information on the different types of bank accounts and their requirements can be found in our article about how to open a business bank account.