Opening a business bank account as a sole proprietor is easy and important for your business. It allows you to keep business and personal finances separate, helps you build business credit and reputation, and simplifies your tax preparation. All you need to do is register your business name, gather the necessary documents to start your account, find the best business bank account, and then open and fund your account.
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Self-employed? Meet Found. It’s a new kind of business banking, built to make self-employment easier. Found’s tools help you track expenses and stay on top of taxes easily. No hidden fees, no credit checks, no minimums—just smart banking that saves time. | ||
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*Found is a financial technology (fintech) company, not a bank. Banking services are provided by Piermont Bank, Member FDIC. | ||
Self-employed? Meet Found. It’s a new kind of banking app: One that simplifies bookkeeping, expense tracking, and business taxes. No hidden fees, no minimums—just smart banking that saves time. Sign up for free in minutes with no credit credit check or opening deposit. |
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*Found is a financial technology company, not a bank. Banking services are provided by Piermont Bank, Member FDIC. |
Step 1: Register Your Business Name
Registering your business name with state and local agencies will be needed before opening a business bank account. Depending on your line of business, you may be required to register your business before you can begin operating.
You will need to choose a business name before you begin the registration process. While you can file taxes using your Social Security number because you are a sole proprietor, it is recommended you get an employee identification number (EIN) from your state. Getting an EIN from the IRS is free, and it can be applied for online, by fax, or by mail. If your plan is for your business to grow beyond a sole proprietorship, then you’ll need an EIN eventually.
Step 2: Gather the Required Documents
You’ll need to provide your bank with certain documents to open an account. As a sole proprietor, documents may include:
- Social Security number and/or EIN, if you have one
- Fictitious business name certificate or doing-business-as (DBA) certificate
- Business formation documents
- Organization documents, including your ownership agreements
- Business licenses
- Government-issued photo ID, such as a passport or driver’s license
- Your contact information
- Business revenue and tax information, if available
Step 3: Find the Best Bank Account
There are many choices when it comes to the best sole proprietorship business bank accounts. Once you choose a bank, you will need to select an account type that will work best for your sole proprietorship. While we recommend choosing a business checking account, there are several types of accounts to consider when opening a sole proprietorship bank account.
- Free business bank account: Many banks will waive fees or provide fee-free accounts, which is ideal for a small or startup business.
- Traditional business checking account: Provided by traditional banks like U.S. Bank and Chase, these are checking accounts that offer a wide variety of business services. Many of these banks have physical locations, if needed.
- 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 is not ideal for businesses that handle cash regularly.
- Business savings accounts: Many business banks offer savings, money market, and certificate of deposit (CD) accounts that draw interest, allowing your reserve funds to grow. This is ideal for sole proprietors who have been in business long enough to accumulate financial reserves.
Here is a table that includes the three best options for checking accounts for sole proprietors. (Note: Found is a fintech company, not a bank. Banking services are provided by Piermont Bank, Member FDIC. The Found Mastercard debit card is issued by Piermont Bank pursuant to a license from Mastercard Inc. Found’s core features are free. Found also offers a paid product, Found Plus.)
Account Name | Monthly Fee | Free Monthly Transactions | Annual Percentage Yield (APY) | Free Cash Deposit Limit | |
|---|---|---|---|---|---|
 | Business Checking | None | No limit | N/A | No limit; only accepted at certain retail locations for a fee |
 | Silver Business Checking | None | 125 | N/A | $2,500 per month |
 | Business Complete Banking | $15; waivable | 20 | N/A | $5,000 per month |
Step 4: Open & Fund Your New Account
Once you have chosen a bank and account type, you can open your business bank account. Some providers will allow you to complete the entire process online, while others may require you to visit a branch. If the bank requires you to visit a branch to finish applying for an account, then make sure you choose one with a nearby location.
Some banks will require you to make an opening deposit when you open the account. You can deposit cash or checks or use electronic deposits, such as wire or automated clearing house (ACH) transfers. Most accounts can be opened within one business day, while others might take a couple of days to verify all of the business paperwork before opening.
Why Sole Proprietors Should Open a Business Account
While some sole proprietors might consider using a personal account for their business, it is highly recommended that you open a business bank account to keep your personal and business finances separate.
Here are some benefits of having a business checking account:
- Keeps your business and personal finances separated
- Enables you to build your business credit
- Lets you assess your business performance more easily
- Lends credibility to your business
- Helps simplify tax season
- Allows you to build a banking relationship
- Permits you to accept credit card payments
Also, consider using a tax preparer or finding a certified public accountant (CPA) to assist you with your business finances and ensure that you don’t run into problems with the IRS down the road.
Additional Resources for Sole Proprietorships
There are many challenges unique to running a sole proprietorship. Fit Small Business has several guides to help you navigate those challenges. Here is a list of some of our articles geared explicitly toward sole proprietors:
- What a sole proprietorship is: If you are just starting your business, check out our guide to what a sole proprietorship is. It includes examples of business types that make good sole prop companies.
- Benefits and drawbacks: Unsure if a sole proprietorship is the right choice for your business? Check out our article on sole proprietorship pros and cons.
- Single-member limited liability company (LLC) vs sole proprietorship: If you’re unsure whether your company should be an LLC or a sole proprietorship, see our comparison of single-member LLC vs sole proprietorship.
- Credit card: If you need a credit card for your business, check out our guide to the best sole proprietorship business credit cards
- Payroll: It is essential to know that sole proprietors cannot be employees of their own companies and will never receive a paycheck. Check out our guides to self-employed payroll and paying yourself from your sole proprietorship for more information.
Frequently Asked Questions (FAQs)
Yes, it is recommended that you open a business bank account for your sole proprietorship. It will help you keep your business and personal finances separate, build business credit, lend credibility to your business, and simplify tax preparation. Many banks offer great startup business checking accounts that are either completely fee-free or have waivable monthly fees—ideal for small businesses starting with limited revenue.
Managing your business funds from your personal checking account is strongly discouraged because it can cause tax problems down the road. A business checking account will allow you to identify business income and expenses separately from personal ones. This will make tax preparation easy. On top of that, if your business plans to expand and hire employees, then you’ll need a business bank account.
You will need to create and register a name for your business. You will also need some, if not all, of the following documents to open a business bank account:
- Social Security number and/or EIN, if you have one
- Fictitious business name certificate or DBA certificate
- Business formation documents
- Organization documents, including your ownership agreements
- Business licenses
- Government-issued photo ID, such as a passport or driver’s license
- Your contact information
- Business revenue and tax information, if available
Bottom Line
Setting up a bank account for sole proprietorship is an essential step in legitimizing your business to customers and financial institutions. Any business bringing in revenue, even a small amount, should have a business bank account to keep those funds separate from personal finances. The steps in this guide will help you open a business bank account, which will be a major step for the growth of your company.
