When you're a small business owner, a business checking account is a must. Below, we break down why you need one, how to find it, and the best online business checking account for your business.
Business Checking Accounts: What You Need To Know
A business checking account is a specialized account that allows you to separate your personal and business financial transactions. These accounts typically come with low or no fees, features to help your business grow, and methods to pay your vendors and bills.
Finding a bank for your business is important, so you should know your options first.
Types of Banks
These banks provide a quick online application process and online-based services, such as mobile check deposit, invoicing, payment processing, free features to help your business grow, and more. However, these don't always have physical branch locations.
Many modern online banking platforms are known as neobanks, which are essentially fintech firms without their own bank charters. Instead, they collaborate with traditional banks to secure customer deposits under the Federal Deposit Insurance Corporation (FDIC). For example, Found operates as a neobank by partnering with Piermont Bank to ensure customer deposits are FDIC-insured. Conversely, Axos Bank is an example of a bank that is directly insured by the FDIC, not requiring a partnership to offer insured banking services.
Choosing neobanks can be a sound option as long as they ensure your deposits through partnerships with FDIC-chartered banks, which is a common practice among reputable neobanks. However, understanding the details of your banking provider and the nature of its FDIC insurance coverage is crucial for making informed banking decisions.
Traditional banks are great if you are looking for a physical branch and access to ATMs, along with bundling multiple services and products from one provider (such as savings accounts and credit cards).
Local Banks and Credit Unions
Local banks and credit unions are similar to traditional banks except they only serve a small area, meaning that your ATM and in-person branch access is limited. However, these financial institutions come with personalized service and may assist you in areas specific to your business.
Why You Need A Business Checking Account
You might be wondering why you should have two separate checking accounts (personal and business) when you can just use one, especially since personal checking accounts tend to come with fewer fees and higher APYs.
However, you should know that it's essential to keep your personal and business finances separate. If your business is a legal entity unconnected to you, such as an LLC, you are required by law to keep these separate.
Additionally, as long as you have your personal and business finances separate, your personal assets (along with your shareholders') aren't likely to be seized if your company is in a lawsuit.
There are plenty of other benefits to opening a business account besides protecting your assets, including:
- Keeping your business transactions organized: Tracking your expenses and transactions can help you check your business performance and profitability.
- Make your taxes easier: Keeping your personal and business finances separate makes it simpler to file your taxes accurately to avoid penalties from the IRS and deduct business expenses from your taxes.
- Accepting credit cards as payment: A business checking account allows you to accept credit cards as payment through a credit acceptance or merchant system.
- __Let employees use your business checking account and authorize them to use debit cards.
What You Need To Open A Business Checking Account
You will generally need the following documents to open a business checking account:
- Employee Identification Number (EIN) or (if your business is a sole proprietorship) a Social Security Number
- Personal identification (driver's license or passport)
- A business license from your city or state that has the name of your business and owner
- A certificate of assumed name or DBA (doing business as)
- A partnership agreement, if your business has multiple owners, to show the founding agreement with all the partners listed along with their rights.
- Your state's requirements for organizing documents, also known as articles of incorporation or articles or organization
How To Find The Best Free Online Business Checking Account
Opening a business checking account is one of the first important steps you'll make as a business owner and choosing the right business bank is essential.
Before picking a checking account, there are a few key factors to look for:
- Low or no fees
- Unlimited transactions and/or fees associated with transactions
- Low minimum opening deposit
- Low minimum balance requirements
- High APY
- Access to ATMs and physical branches
- Online services
- Cash deposits, wire transfer, and ACH deposits
You may not be able to find a business checking account that fits all of these criteria, but you should prioritize the factors that are most important to you and compare your options to determine if it's right for you.
The Best Online Business Checking Accounts Of 2024
Since finding the right business checking account can be a challenge, we've put together a list of our top online business checking accounts.
Lili is a great digital bank account for freelancers in need of assistance with business finances.
Lili's app allows you to categorize work expenses, get paid up to two days early, run expense reports, set aside funds for taxes, and more. Other perks include:
- A digital bank account FDIC-insured through Choice Financial Group
- A Visa business debit card
- Integration with digital wallets
- Real-time alerts
- No minimum balance required to open
- No fees for account inactivity, bill pay, card replacement, overdrafts, monthly payments, stop payment fees, etc
- Automatically set aside a percentage of paychecks for future taxes
- Direct deposit
- Cash back rewards on qualifying purchases once you activate Lili Visa SavingsEdge Rewards
- Free withdrawal at 32,000+ ATMs in US and Puerto Rico
BlueVine Capital Inc. is a business financing company based in Redwood City, California, and founded in 2013 by Moti Shatner, Nir Klar, and CEO Eyal Lifshitz.
While there are no physical branches, individuals can speak to customer service easily online or by phone.
BlueVine is accredited by the BBB (Better Business Bureau) with an A+ and (as of January 2023) has 4.3/5 stars on Trustpilot.
BlueVine's business checking account is at the top of our list for quite a few reasons:
- Open an account quickly and easily online
- Free business checking account
- No monthly fees
- 1% APY is earned on balances over $1,000
- Unlimited transactions
- 24/7 online and mobile banking
- Mobile check deposit
- Two checkbooks
- No minimum opening deposit
- No minimum balance requirements
- Transfer funds
- No incoming wire fees, NSF fees, and ACH payment fees
- Schedule one-time and recurring payments
- Free business debit card that gives you access to no-fee ATM withdrawals at 38,000+ MoneyPass ATMs in the US
- Use a mobile app to immediately lock a debit card if it's stolen
- Deposit cash using your BlueVine debit card at any Green Dot location
- FDIC-insured up to $250,000 through The Bancorp Bank
- Quick and easy online application process through Bluevine's website
NorthOne is a digital bank account for small business owners, freelancers, and startups. For $10/month and a minimum deposit of $50, you can access your account through a mobile app with the following:
- Make cash deposits
- Receive unlimited free transactions
- Bookkeeping integrations
- Receive unlimited subaccounts to categorize your funds
- Create rules to set aside funds automatically
- Unlimited free transactions
- Free withdrawal at 300,000+ ATMs in the US
- On-demand customer support through phone or live chat in the mobile app
- Free sign-up and no account maintenance fees
- No credit check
- Unlimited fee-free transactions; no overdraft fees
- Fee-free checking account
- Free ACH transfers
- Business debit card
- Built-in invoicing, bookkeeping tools
- Automated tax planning tools
- Mobile Banking
Azlo is one of the best companies in the online business financing space, especially when it comes to small businesses.
Azlo's business financing service benefits include many of the following:
- Fee-free business checking account
- No opening deposit requirement
- No monthly fees, transaction fees, overdraft fees, replacement fees, or incoming wire transfer fees
- Use a mobile app to deposit checks, make ACH payments, transfer funds between accounts, and send invoices
- Use an Azlo Visa debit card
- Use 55,000+ ATMs nationwide without any fees
- Integrate with Square, Stripe, PayPal, QuickBooks, and more to assist with payment reporting and taxes
- Quick and easy online application (note: your business will need to be verified with business address, tax ID, etc, which may take a few business days)
- Upgrade to Azo Pro for just $10/month and receive additional features such as enhanced and recurring invoicing, reduced transfer fees, and unlimited Azo Envelopes to set aside funds for business expenses, set budget goals, and more
Want to learn more about business financing and how to help your company grow? See our top recommendations for business bank accounts.
What is a business checking account as opposed to a regular checking account?
A personal checking account is used for your personal finances and generally come with low or no fees, while a business checking account is used specifically for business transactions, separating personal and business accounts, and comes with features tailored to help you and your business.
What is needed to open a business checking account?
You don't have to have any revenue to open a business checking account. However, you will need the following:
- Social Security Number or Employer Identification Number
- Business License
- Certificate of Assumed Name or DBA
- Limited Liability Companies
- Organizing Documents
- Partnership Agreement
- Sole Proprietorships
Do I really need to have a business checking account?
You aren't required to have a business checking account if you're a sole proprietor but it is essential you are meticulous in keeping your personal and business transactions separate. Additionally, your personal bank may have conditions that require you to get a separate account for business transactions.
What is the difference between a personal checking account and a business checking account?
A personal checking account is a bank account that is generally designated for personal use and usually has low or no fees. Business checking accounts generally have higher monthly fees and are specifically geared towards business owners with its flexibility, tax simplification, and fees.
Can I use my personal checking account for business?
It may seem like a lot of work to have two checking accounts but you should keep your personal and business finances separate due to tax purposes and legal liabilities; after all, you can lose your personal assets in a lawsuit.
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