Select a business bank account, collect your documents, submit an application, and fund your new account. Opening a business bank account is essential for small businesses of all sizes to keep personal and professional finances separate.
Business checking accounts help entrepreneurs manage company finances, streamline invoicing, and simplify tax filing. The application process can be quick if you prepare the necessary documents.
>> Join Bluevine Business Checking Account! >>
1. Choose a Business Checking Account
Most businesses should begin with a business checking account. For small businesses, this may suffice. However, as your business grows, your banking needs will likely become more complex, requiring multiple types of accounts, possibly at different banks.
Many free business checking accounts come with no minimum balance requirements. To determine where to open your business account, consider which of the following factors are most important for your business:
- Monthly fees
- Minimum balance requirements
- The number of fee-free transactions included
- ATM access for withdrawals and deposits
- Wiring, transfer, and payment capabilities
- Incidental fees, such as stop payments, insufficient funds, and overdrafts
- Additional features, including bill pay, invoicing, and integration with accounting software or other business tools
Brick-and-mortar banks generally provide a personal touch, extensive ATM networks, and additional financial products like business credit cards and small-business loans. However, they often impose limits on monthly transactions and charge higher fees.
Online business bank accounts tend to offer unlimited transactions and fewer incidental fees, but you won't be able to visit a branch for in-person assistance.
Many of these accounts are offered by neobanks, financial technology companies that partner with banks to ensure your funds are protected by the Federal Deposit Insurance Corp. (FDIC). Regardless of where you choose to bank, ensure your funds are insured up to the FDIC limit of $250,000 per depositor, per institution.
>> Apply for a Bluevine Business Checking Account! >>
2. Gather the Necessary Documents and Apply
Most banks, even traditional brick-and-mortar ones, now allow you to complete an account application online. Some may still require an in-person visit to finalize the process, and you can also start the process in person at these institutions.
Applying in person might take more time, but it could be beneficial if you want to ask a business banker questions along the way. Online applications are typically approved quickly, although you may need to provide additional documentation in some cases.
What you'll need to submit in your application can vary. But expect to provide at least the following:
- Personal and business information, such as your Social Security number and Employer Identification Number (EIN)
- Business formation documents
- Any organizing or partnership agreements
- Other items on this checklist
3. Fund Your Newly Opened Business Account
Most business bank accounts can be opened with no initial deposit, but some business checking accounts require an opening deposit, usually ranging from $25 to $100. Business savings accounts often have higher deposit requirements, ranging from $1,000 to $25,000, depending on the account, though many can still be opened with no initial deposit.
Even if you open an account with no money, you'll need to fund it within a certain timeframe, or the bank might close it due to inactivity.
If you chose a business bank account with a promotional offer, now is the time to review its terms. Many promotions require an immediate deposit and maintaining an average balance for several months.
>> Open Your Bluevine Business Account Today! >>
4. Set up Your Business Checking Account
Once your account is open and funded, it's time to set it up. Start by downloading your bank’s mobile app and logging in to the online banking platform.
Next, connect your new bank account to your business accounting software and any other relevant business tools. Many business bank accounts offer direct integration with popular software and apps like QuickBooks, Xero, FreshBooks, Shopify, and Gusto.
You can also add authorized users and set appropriate permissions, which are essential based on your business structure. For example, if you’re opening a business bank account for an LLC, multiple members might need access. You can also set up recurring payments and account alerts.
Your main business debit card will automatically ship and typically arrive within seven to 10 business days. You can also order checks and request additional employee debit cards if available.
>> Join Bluevine for Innovative Business Banking Solutions! >>
5. Consider Other Types of Business Bank Accounts
Banks offer various other types of business accounts, including business savings accounts and merchant services accounts, each designed for specific purposes and benefits.
Business checking accounts | Business savings accounts | Merchant accounts* | |
Best for: | Everyday use. | Long-term savings. | Accepting debit and credit card payments. |
What to consider when comparing options: |
|
|
|
Only some businesses need these accounts right away. For example, you might use a payment processing company instead of opening a merchant services account.
However, as your business grows, additional accounts might become necessary. These accounts can enhance operational efficiency, such as keeping payroll in its own account or helping you take advantage of higher interest rates.
Using a high-yield savings or business money market account for cash reserves makes sense when saving for emergencies or long-term goals like expansion.
Having accounts at multiple banks can also be beneficial. This way, if one bank experiences an unexpected freeze or failure, you'll still have access to funds stored elsewhere.
Additionally, if your balances exceed your institution’s FDIC coverage, opening an account at a different bank can extend that limit, further protecting your money.
>> Check Out the Best Features of the Bluevine >>
What Is a Business Bank Account?
A business bank account is a transaction account that allows you to make transactions and receive money in your company’s name.
With a business bank account, you can receive client payments, pay employees, save profits, and withdraw cash for daily business expenses. Banks and credit unions design business accounts to meet the specific needs of businesses by including features such as invoicing and payroll services.
Types of Business Bank Accounts
There are several types of business bank accounts, each suitable for particular businesses and needs, including:
- Business checking accounts
- Business savings accounts
- Merchant accounts
- Business certificate of deposit accounts
Business Checking Account
A small business checking account is designed to manage day-to-day cash deposits and withdrawals. These accounts typically come with monthly fees. When you open a business checking account for your company, you'll have access to a variety of deposit and withdrawal options, including
- Wire transfers
- Electronic transfers
- Mobile check deposit
- ATM transactions
- Checks
- Debit card transactions
These various methods make it easy to access funds for daily business expenses and safely transfer earnings to your account. Additionally, some of the best business checking accounts integrate with tools like accounting software to simplify bookkeeping.
>> Apply for a Bluevine Business Checking Account! >>
Business Savings Account
If you have company funds that aren’t needed for regular expenses, it’s wise to place them in a savings account. Business savings accounts are designed to hold funds and earn competitive interest over time.
While business checking accounts allow unlimited withdrawals, savings accounts typically permit only six fee-free withdrawals per month. This limit exists because savings accounts aren’t meant for frequent transactions. Exceeding six withdrawals results in transaction fees for each additional withdrawal.
Banks make money by lending your savings to others at higher interest rates while paying you a lower interest rate. Exceeding transaction limits affects the bank’s profitability, leading to fees and penalties.
Merchant Account
Do you intend to accept credit and debit card payments from your customers? If so, you’ll need a merchant account.
A merchant services account handles and processes credit and debit card transactions. To use this type of account, you must first open a checking account. When customers pay using cards, the funds initially go to the merchant account before being transferred to your business bank account.
Merchant services accounts come with their own set of fees separate from your business bank account, including fees for credit card transactions, address verification fees (AVS), and monthly minimum fees. Assessing whether your small business earnings justify these costs before opening a merchant account is crucial.
Additionally, consider learning about merchant cash advances and how they can benefit your business if you accept credit and debit card payments.
Business Certificate of Deposit Account
A business certificate of deposit (CD) account allows you to save money while earning more interest than a basic savings account.
When you deposit money into a CD account, you agree not to make withdrawals for a specified period. The longer you keep your money in the CD account, the higher the interest you'll earn.
Withdrawing money from a CD account before it matures results in steep penalties. If you anticipate needing access to your savings before the end of the term, it’s better to consider opening a standard savings account instead.
>> Apply for a Bluevine Business Checking Account! >>
What Do I Need to Open a Business Bank Account
Here are the most common requirements for opening a business bank account.
- Employer identification number (EIN) or social security number (SSN)
- Personal identification
- Business licenses
- Certificate of an assumed name
- Organization documents
Employer Identification Number or Social Security Number
The Internal Revenue Service assigns you an Employer Identification Number (EIN) for identification purposes. You’ll apply for an EIN when starting your business.
When opening an account, an Employer Identification Number is required to prove your company’s identity. Some banks allow sole proprietorships to use the owner’s social security number instead of an EIN. Here’s how you can open a business account with EIN only.
Personal Identification
You must submit documents proving your identity, usually a driver’s license or passport. Banks check identification documents to ascertain your identity and connection to the business you’re representing.
Business Licenses
When you start your small business, you must apply for business licenses from your local or state government to show that you’re authorized to operate. Banks will need to see your business licenses to prove the existence and legitimacy of your company. A business license also holds vital identification details, such as the owner’s name and the business name.
Certificate of Assumed Name or DBA
An assumed name is a term that your business trades as but is different from the legal business name.
For instance, let’s say your business’s legal name is XYZ Spa, but you decide to trade as XYZ’s. In this case, XYZ is your assumed business name, and you’ll need to file it with your state. Officially, it’s referred to as a “doing business as” (DBA) name.
If you apply for a DBA, you’ll be required to provide a copy of the filing documents to your bank when opening business bank accounts. Find out more about opening a DBA checking account here.
Organization Documents
Before a bank or credit union allows you to open an account for your business. They’ll need information regarding the following:
- The activities your company participates in
- The managerial structure
- Owners
- Business address
- Registered agents.
When registering your company, various organization documents you’ll file with your state or the local government will include these details. Therefore, you must gather all the necessary documents for your bank account registration.
>> Apply for a Bluevine Business Checking Account! >>
Benefits of Opening a Business Account
Opening a business bank account comes with many benefits, including
- Easier accounting of business funds
- Builds your business’s credit history
- Provides convenient access to company funds
Easier Accounting of Business Funds
As a sole proprietor, you can use your personal accounts for business needs, but this presents several challenges.
Firstly, separating personal and business finances for tax reports becomes more difficult, potentially preventing you from taking advantage of business tax deductions.
Secondly, mixing personal and business finances complicates tracking your company's cash flow, making it harder to assess your business's financial status.
Opening a business bank account exclusively for your company's funds simplifies both accounting and tax reporting, making these tasks much more manageable.
Builds Your Business’s Credit History
Lenders often check your company’s credit score for certain business loans instead of your personal credit. Opening a business account allows you to build your company’s creditworthiness, improving your chances of credit approval in the future. Additionally, some lenders require you to have a business account to access loans or apply for a business credit card.
If you have poor credit but need a loan, having a business checking account enables creditors who offer bad credit business loans to create cash flow projections, which can help in determining whether to approve your request.
Provides Convenient Access to Company Funds
If another person at your company, such as a partner, needs access to business funds, using your personal bank accounts for business purposes becomes inconvenient. A business bank account is a safer and more practical solution.
With a business bank account, you can also apply for business debit cards that authorized staff can use for ATM transactions and purchases. This is far more convenient than having to make withdrawals at a branch whenever cash is needed.
>> Join Bluevine Business Checking Account! >>
Frequently Asked Questions (FAQs) for How to Open a Business Account
What Do You Need To Open a Business Bank Account?
To open a business bank account, you'll need the following:
- Identification
- Social Security number
- Business License
- Organization documents proving ownership and the company's identity
How Much Does It Cost To Open a Business Bank Account?
The cost of opening a business bank account varies based on the type of account and the bank you choose.
Savings accounts usually have no opening cost. Checking accounts typically come with a monthly service fee, but some banks offer free checking accounts initially and only start charging a monthly fee after a certain period.
Can Anyone Start a Business Bank Account?
Anyone can open a business bank account if they have the necessary documents and meet the account opening requirements.
Final Thoughts on How to Open a Business Bank Account
Opening a bank account for your small business is crucial for proper cash management. It also becomes essential when applying for business loans or lines of credit.
Before opening a business bank account, it's important to read reviews and consider your options carefully. To help you, we have reviews of other banks, such as Novo, Bluevine, and Bank of America. Always consider looking for a bank that meets your business’s specific needs.
>> Join Bluevine Business Checking Account! >>