Do I Need a Business Bank Account?

Key Takeaways

  1. Business bank accounts separate personal and business finances, essential for liability protection in businesses like LLCs.
  2. These accounts offer specialized services such as payroll and bookkeeping, aiding in business operations.
  3. Sole proprietors may not need a business bank account unless their operations are substantial.
  4. When selecting an account, consider fees, features, and customer service to match your business needs.
  5. Despite potential fees, the benefits of business bank accounts, like legitimacy and efficiency, make them valuable for most owners.
Do I Need a Business Bank Account?

If you're contemplating the necessity of a business bank account, it's likely that you indeed require one. Primarily, business bank accounts are essential for segregating personal and business finances and are mandatory for specific business types like Limited Liability Companies (LLCs).

Business bank accounts offer a plethora of benefits including access to payroll services and bookkeeping tools. This guide delves into why these accounts are not just beneficial, but often essential for business operations.

What is a Business Bank Account?

A business bank accounts, while similar to personal accounts in basic functionality such as safeguarding money and providing easy access via checkbooks or debit cards, is tailored to meet the demands of businesses. Unlike personal accounts, which may feature tools like automated savings or bill payments, business accounts often include bookkeeping applications, payroll processing, and other services crucial for business management.

Some banks offer both personal and business bank accounts while others specialize in one or the other.

Benefits and Drawbacks of Business Bank Account

Before you decide if you should open a business account, it’s important to know its pros and cons.


  • Financial Separation: Crucial for businesses, especially LLCs, to maintain liability protection and simplify accounting.
  • Access to Business Services: Many accounts offer essential services such as payroll and merchant services, simplifying business operations.


  • Associated Fees: Business accounts often come with various fees, including monthly maintenance or transaction fees. Exploring fee-free banking options is advisable.
  • Complexity in Financial Management: Managing multiple accounts can be cumbersome, potentially complicating your financial oversight.

Do I Need a Business Bank Account?


While most businesses can benefit from a business bank account, you may not technically need to open one.

In general, a sole proprietor does not need to open a business bank account but does have the option if they want to do so. If you’re just doing a few odd jobs a year or making a small amount of money, a business bank account might be overkill.

More formalized businesses, like LLCs and corporations, should definitely open a business bank account. LLCs lose their liability protection without one.

Who Needs a Business Bank Account?

To decide if you should get a business bank account, ask yourself these questions.

  • Do I operate like a business, or am I just side hustling? If your business is your main work, or you make a lot of income, a business bank account is worth having. If you’re just making some extra cash as a side hustle, you can probably skip it.
  • Do I have more than one business? If you’re running more than one company, each should have its own account.
  • Do I have partners? If more than one person owns a business, it should have its own account.
  • Do I have employees? If you’re employing people, a business bank account is essential for access to payroll systems.
  • Do I want to apply for business financing? Many lenders will want to see bank account records before lending to a company, making a business bank account essential.

Why Do I Need a Business Bank Account?

You should open a business bank for a few reasons.

One is that it lends your business legitimacy. Someone running a company out of their own bank account looks much less serious than one who goes through the effort of making their company a bit more formal.

Business bank accounts also unlock possibilities for your company. You can use them to apply for business financing to expand your company, run payroll when you hire people, or simplify your bookkeeping.

If you ever choose to form an LLC or work with a business partner, having a separate bank account for your company will also be useful. It means you’ve already taken that essential step.

What Do I Need to Open a Business Checking Account?

If you want to open a business checking account, you’ll need to provide the following information.

  • Your Social Security number or Employer Identification Number
  • Your business licenses, if any
  • The date your company was established
  • Where your company was formed and operates
  • Any names your business uses when operating
  • Your company’s financial documents and information
  • A photo ID

The bank will use this information to decide whether to let you open an account. Unless you’ve had major issues with banks in the past, such as unpaid overdraft fees on closed accounts, you’ll have no trouble opening an account.

How To Choose a Business Bank Account

When choosing a business bank account, consider the following factors.

  • Cost. One of the most important things to think about is the cost of the account. Look for a bank account with no monthly fee. At a minimum, choose one with a fee that you can avoid or that offers incredible features that are worth paying for.
  • Features. Every bank is different, and every business is different. Think about the business services and tools that will provide the most benefit to your company. Then, try to find the bank that offers those services and features.
  • Customer service. The last thing that you want to deal with is a bank that’s difficult to get help from. Think about the bank’s reputation for service to make sure you can get help when you need it.

Bottom Line

For most business owners, opening a business bank account is a no-brainer. They offer a lot of benefits, and you can find many fee-free options, so there’s no risk in giving the account a try. Think about what services your business needs, then find a bank that offers them.

Frequently Asked Questions

1. How much money do you need to open a business bank account

Every bank is different, but you can usually open a business bank account with a minimum deposit of $100 or so.

2. Does a business need to have a business bank account

While some businesses, like sole proprietors, don’t strictly need a business bank account, they can still be helpful. More formal businesses, like LLCs, must have separate business bank accounts.

3. Can I use a personal bank account for my business

If you’re a sole proprietor, you could use a personal bank account for your business, but it isn’t a good idea. Specially designed business accounts will offer more useful services.

4. What kind of bank account do you need for a business

Businesses generally get the most benefit from business checking accounts, but some banks offer savings accounts for businesses as well.

5. How do I open a business bank account with a business partner?

Starting a business with a partner can be a rewarding experience. Not only do you have someone to help you manage the business, but you also have someone to share the burden (and profits) with. If you have a business partner, you can open a joint business bank account.

About The Author

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TJ Porter

Freelance Personal Finance Writer

TJ Porter is a Boston-based freelance writer who specializes in bank accounts, credit, and credit cards. He’s written for Bankrate, Credit Karma, MoneyCrashers, DollarSprout and My Bank Tracker, among others. In his spare time, TJ enjoys cooking, soccer, reading, and video games. You can connect with him on his website,

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