How to Open a Business Bank Account

November 22, 2022 Business Banking
How to Open a Business Bank Account

Every business needs a bank account. Businesses need a place to store cash and access services like check writing and bill payment. It’s also essential that business owners keep their personal and business finances separate.

To open a business bank account, you’ll want to choose the right type of account, consider factors like balance requirements and fees, and find the bank that will most benefit your business.

This guide will cover the basics of how to open a business banking account, why you need one, and how to choose the right one for your company.

Types of Business Bank Account

There are a few different types of business bank accounts. The most common are:

  • Business checking account. These accounts work just like consumer checking accounts, giving companies a place to store cash while retaining easy access to it.
  • Business savings account. These accounts can hold cash for the longer term and earn interest.
  • Cash management account. These accounts combine some of the aspects of checking and savings accounts into one, offering flexibility and the opportunity to earn interest.
  • Merchant services account. These accounts help businesses with essential tasks like accepting credit card payments.

Benefits of Opening a Business Bank Account

There are many benefits to opening a business bank account.

  • Keep personal and business finances separate. Having an independent business bank account makes it much easier to track your business’ income and expenses. It’s also essential for maintaining the legal protection that businesses provide to their owners.
  • Access to valuable services. Business banks can help your business grow by offering loans or lines of credit. They can also offer other services, such as helping you process credit card transactions or pay your vendors.
  • Store cash safely. If you operate a cash-heavy business, a business bank gives you a place to store your cash safely and conveniently.
  • Professionalism. If you’re a small business or sole proprietorship, having clients make out checks to your business instead of to you personally lends an air of professionalism to your work, which can increase repeat business.
  • Multiple account signers. If you own a larger business, you can give multiple people access to the account, which can be harder to do with a personal account.

How to Choose a Business Bank Account

If you’ve decided that you are ready to open a business bank account, it’s important to choose the right one for your company. These are some of the top factors to consider.

  • Minimum balance requirements. Some banks won’t let you open an account, or will charge a fee each month unless you keep a minimum balance in the account, which can restrict your access to cash.
  • Location. You want to work with a bank that is conveniently located for your business, so consider the location of branches and ATMs.
  • Fees. Some business banks charge fees for services like large amounts of cash deposits or writing lots of checks. Look for banks that keep these fees low.
  • Interest. Earning interest is like getting free money for having a bank account. Keep an eye out for banks with high interest rates.
  • Perks and other services. Some business banks offer integrations with accounting or payroll tools that make it easier to keep your business running. You might also find banks that offer business loans or lines of credit. Working with these kinds of banks can make your life a little easier because you won’t have to go elsewhere to find these services.

Top Business Bank Accounts

If you’re looking for the best bank for your business, these are some of the best places to start.

Minimum opening deposit APY Monthly fee Transaction fees Perks Branch access
Novo $50 N/A None None Integrates with popular business tools like Shopify and Quickbooks No physical branches
Chase $0 N/A $15 (avoidable) 20 paper and teller transactions each month $300 sign-up bonus, integrates with other Chase business services Yes
Kabbage $0 1.1% on balances up to $100,000 None None Integration with other Kabbage services, including financial management tools No physical branches
BlueVine $0 1.2% on balances up to $100,000 when you spend $500 per month or receive $2,500 in customer payments per month None None Streamlined website and app No physical branches
Nearside $0 N/A None None Earn 2.2% cash back on purchases, business loans up to $10,000 available No physical branches
NorthOne $50 N/A $10 None Integrates with popular business tools like PayPal, Quickbooks, and Gusto No physical branches

What do you need to open a business banking account?

Requirements to open a business banking account include:

  • An Employer Identification Number
  • Personal identification (you usually can’t open a business bank account with an EIN only)
  • Business documents outlining the structure of your company
  • Ownership agreements
  • Any licenses you need to operate your business
  • Financial statements, such as sales numbers and profit and loss reports if you want a merchant services account

How much do you need to open a business bank account?

The amount of money that you need to open a business bank account varies with the bank that you choose. Some banks will let you open an account with no minimum balance while others require an initial deposit ranging from a few dollars to hundreds of dollars.

Keep in mind that there may be fees if you don’t maintain a minimum balance, so look for those numbers in addition to the minimum opening deposit.

How to open a business banking account online?

Opening a business bank account online is very similar to opening one at a physical bank. You’ll have to provide the same documents, usually via secure file transfer, and fund your account. Most banks let you make your initial deposit by debit card or electronic transfer.

Why would a bank not let me open a business bank account?

A bank might block you from opening a business account if:

  • You have poor personal credit or accounts in collections
  • You or your business have an active tax lien
  • You operate in an industry the bank doesn’t support or a high-risk inventory
  • You have unrealistic sales or expenses, or unrealistic projections in your application

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