How to Open a Business Bank Account in 6 Steps [+ Checklist]

Cody Cromwell
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Choose the Best Type of Business Bank Account

Did you know that your business bank account not only offers money management tools and convenience, but that you can use an online account to stay connected and stay in touch with your customers, employees – and even yourself? Since it’s so easy to track your business's banking, you’ll have that extra peace of mind, knowing that you’re on top of your money.

The two most common types of business bank account are business checking and business savings.

A business checking account can offer many money management tools to help your business, such as direct deposit, online bill payments, online statements and free access to your account online 24 hours a day.

Most banks also offer free business credit checks, which can be used in order to create your business credit file.

The business savings account is another popular choice for business owners because it offers competitive interest rates, a possibility of business loans and a lower minimum balance than regular savings accounts.

Once you’ve decided on which type of business bank account you need, it’s time to take a closer look at the other factors that can influence your decision.

To help you get started with your business bank account, this post breaks down your options and provides essential tips, with an eye to your business.

Free Business Bank Account

The bad news is you don’t have the time or patience to do everything, what you do have the time for is to you take the shortcuts.

Now, I am going to share with you a business banking checklist you can use to get the low down on what business banking is all about.

How to Open a Business Bank Account in 6 Steps [+ Checklist]

Step 1: Ask for a quote

The first step you need to take is to ask for a rough quote. This means just asking them “what they charge” for the type of account you want.

It’s best to start by speaking to one of their bankers (accountants or other financial experts) before you start contacting banks you’ve never heard of.

Step 2: Review the details

Next you will need to review the details of the different accounts and what they come with. You will need to decide if you need basic accounts or full service accounts.

These can run the gamut from a basic account with no overdrafts to unlimited overdrafts and lots of other banking services.

Full service includes paying bills online, online banking, standing orders and more.

Step 3: Decide on the type of account you need

Traditional Small Business Checking Account

One of the most common ways for a small business to keep its finances in order is to open a Business Checking Account. The advantage to this method is that with a Business Checking account, you’ll get competitive rates on standard checking services and not lose your Business Checking privilege should your business downsize.

Here are the basic steps for opening a Traditional Business Checking Account.

Step 1: Set up your company

You’ll need to set up your business as a corporation, LLC or a sole proprietorship with your local Chamber of Commerce. (Need help establishing your business? Check out the forums at Small Business Accounting Software.)

Step 2: Complete a Business Use Only/Checking Authorization form

If you’re opening a Business Checking Account, you’ll need to complete a Business Use Only/Checking Authorization form. You’ll need to get a signature from your parent or guardian who can’t be a minor and must be a parent or guardian. If this is a partnership, all of the partners must sign.

You can find sample Business Use Only forms at a few different places. Here’s one specific to telling cashing services when you’re opening a checking account. Here’s one for opening a business account with a bank.

Online Business Checking Account

Conducting transactions and processing deposits with an online bank account is convenient and effective if you plan your account beforehand to use for business purposes.

The most convenient and cost-effective way for most businesses to set up a business checking account is to use an online bank through which you can manage your business and personal banking needs concurrently.

Online business checking account fees are generally lower than those of brick-and-mortar businesses, in addition to providing additional features such as the convenience of making deposits and wiring money electronically.

To establish an online business checking account, you must apply for a New Account or Existing Account and provide the necessary documentation as required by your chosen bank.

Here are the 6 steps you should include in your checklist.

Shopping for the Best Online Business Checking Account

My Top 5 ID Savings Account Banks or Checking Account Banks

My all time favorite online business checking accounts.

And here are the most popular All Financial Accounts.

{1}. Selecting, Reviewing, and Signing Off on the All Credit Agreements
{2}. Reviewing and Selecting the Business Features Most Suitable for Your Business
{3}. Preparing the Required Business Documents and Account Information Form
{4}. Setting up your Online Business Checking Account

Business Savings Accounts

The most common type of business bank account is a business savings account. Business savings accounts can be opened by both individuals and businesses.

There are certain criteria that your business needs to meet before you can open a business account. This includes having a U.S. Social Security Number or an employer identification number. Depending on the institution, you may also need a payment history, a certain amount of net deposits, and business credit.

A Business Checking Account

A business checking account can differ from the business savings account. A business checking account is business-specific. It’s designed to provide you with more flexible business checking options and is a great choice for businesses that don’t make frequent deposits.

To open a business checking account, you’ll need the same things as you would for an individual checking account. Some of the advantages of a business checking account include a higher monthly account balance and the ability to purchase a business credit card.

As with a business savings account, your business needs to have an established history of business deposits before you can apply for a business checking account. Depending on the institution, you’ll need to be able to demonstrate a certain amount of business credit and a history of business deposits.

Find the Right Bank to Open a Business Account

One of the most crucial steps of setting up a small business in the United States is getting set up with a business bank account.

While there is no shortage of small business bank accounts, you should consider a few things before you choose which bank to use, whether it’s online or a physical location.

Your business will be putting money in and out of your business bank account. You want the business bank account to be secure, so you should consider the following:

Does the bank offer an app for your smartphone? Is it compatible with all your devices?

Does the bank have a mobile app for your tablets? Again, compatibility is key: Are you going to have the same apps and account for all the devices your business may use?

Does the bank support online transactions? Is the transaction secure?

Can the bank do automated interventions? What is the fee structure like?

Which business account are you considering opening?

Is it a business checking, a money market, or a business savings account?

Check the Business Bank Account’s Costs

There are several costs to opening a business account, from the initial set up fee to monthly fees and overdraft charges. And if you’re planning to work with a financial institution that offers just one or two account types, you’ll also need to take a hard look at their fees. For more information on the different types of business bank accounts, check out our in depth guide here

Business Checking Account Fees

Your monthly average balance is the best way to determine if your account is in good standing and if your business has enough money in it to meet its daily expenses. The monthly average balance does not take into consideration if you’ve overdrawn your account recently.

So if you regularly overdraw your account or you do not think you’ll have enough funds to meet your daily expenses, choose a different account type. If you do overdraw in the future, while it might seem like the account is in a negative balance, you will see a negative balance for only the amount you overdrew in that day. Do not forget to deduct your overdraft fee from the negative balance.

Costs of choosing a checking account. Before you establish a checking account for your business, it might be wise to consider the other fees that come with the account. Whether you choose a standalone checking account, a business checking account or a bank account with a debit card and a business debit card, there are different fees that will be added to your account.

For instance, choosing a standalone account may increase the risk of having unlimited paper statements. Making a mistake in your records will result in a hefty fine or possibly even the closing of your business.

Business Savings Account Fees

To open a Business Savings Account, you will be expected to provide a minimum amount to make the account functional. Banks will have different requirements for minimum deposits.

The basic fee to open a Business Savings Account will be the cost of a basic account. Smaller companies and organizations may be able to open a no-frills savings account for less than the standard account fees.

Bank accounts can charge withdrawal fees, which is the single most common fee charged by banks that have a Business Savings Account. If your expenses for withdrawing and depositing are higher due a small amount, then this can be a fairly reasonable expense.

Some large banks will even offer free business banking services. For example, some of the best banks for small business include Citibank and Chase. If you're looking for businesses in your local area there are also business directories that can help you find these as well as businesses that offer these services.

Gather the Required Documents

Before you open a business bank account, you’ll need to gather the necessary documents. The Online Business Withdrawal System allows you to sort and view your documents in one location, so you don’t have to figure out which documents you should take to each bank.

To open a business bank account, you’ll need to take the following documents with you when you visit the banks:

Minors’ birth certificates of all your dependents.

Business license.

Company registration documents.

Divorce papers.

Invoice copy.

Sole Proprietorship Business Bank Account Requirements

You could potentially open an account with most banks and credit unions for your Sole Proprietorship business so long as you do not actually run the business. If you were to actually open the business and work the business, you would need to meet the minimum requirements set forth by the Office of the Comptroller of Currency (OCC), though there are some exceptions to this rule for “occasional and incidental” business activities.

If you are just starting out as a Sole Proprietor, a good first step is to find a local business app as compared to a Standard Chartered Visa Business Debit Card. We have many articles that can help you with this and you can start with this article as it explains some of the benefits of a business debit card.

Soon after you have your business debit card, you’ll want to open a bank account. You should definitely check that your bank is member of the National Credit Union Administration (NCUA) before opening any bank account with them, though most banks and credit unions are. You’ll also want to find out which bank is a member of the Small Business Administration (SBA), which provides many benefits for small business owners.

Partnership Business Bank Account Requirements

In order for your business to open a business bank account, there are several general requirements to meet, including a partnership agreement, a business license, and a tax identification number (EIN). If you’re a sole proprietor or incorporate as a sole proprietorship, the bank account requirements are the same. If you’ve incorporated, then you’ll need to take additional steps.

Your partnership agreement will help you to set up a business bank account. It can also act as evidence for all of the requirements you need to open a business bank account.

A business license is instated by a state or territory and will remain valid as long as you remain a business owner. This means that you can open a business bank account and start operations in a new location without needing to requalify. You just need to visit the office and present some form of identification to prove the location of your business.

The EIN is an identification number assigned to business owners by the Internal Revenue Service and is used to file taxes. Since you need it to fund the business bank account, you can only use this number once upon accepting it and can’t re-use it if you move your business to a new location.

S Corporation (S-corp) Business Bank Account Requirements

For the purpose of this post, let’s say you’ve got a brick and mortar business that you’re looking to open a business bank account for. This type of business is generally referred to as a S-corp business and needs a business bank account to function. This type of business structure in and of itself is a bit confusing, but we’ll go over the basics here and provide further reading in a later post.

Limited Liability Company (LLC) Business Bank Account Requirements

Before opening your limited liability company (LLC), it’s a good idea to go meet with your bank staff.

Since you will be a passive owner of the LLC, make sure to tell your bank that you are going to form a new LLC for your business. Also, let them know that you will be forming an LLC without liability protection. Tell them you need a business bank account for your LLC.

They are most likely going to require the following information in order to open the LLC:

  • Business registry filed with the state
  • LLC articles
  • LLC operations manual
  • Management committee members
  • LLC business rules
  • LLC organizational documents

If they still need more information, you need to provide them with what they’ve asked for or give them a good reason why you can’t give it to them (like a lack of space).

Remember, all LLCs operating in the U.S. and Canada must keep accurate and current books and records. The LLC bookkeeper is responsible for maintaining records. For this reason, most LLCs with the bank manager and/or officers suggest limiting the number of LLC members to increase security.

Often, banks will have special account requirements to open a business bank account in an LLC.

When opening a business bank account for your LLC, you will also need to provide:

C Corporation (C-corp) Business Bank Account Requirements

Business Bank Account Requirements for Startups

When you start a business, you probably get ready to speed up your business operations, and you need to transfer your savings to external accounts in a short space of time. Suppose further that you could not open a business account since you do not have a business address or a legitimate reason for opening a business account, how could you start with your business?

You can start a business from home or simply from your apartment and continue to run your business nearly the same way you have been running your home company. Most home companies have bank accounts which they use to pay their suppliers and to pay themselves.

There are also many business operators who are solely concerned in their business and they do not have a bank account. For such people, a home company can be a suitable alternative.

But before you move on to the process of how to open a business account from your apartment, it is important to understand the bank account requirements for home companies before you make a move.

Three essential elements which are required for home companies are:

The business needs to be fully incorporated.

Its headquarters needs to be located in the same state where it is getting registered with a business license.

A separate commercial address needs to be provided.

These three elements are especially important for home companies since they have a slightly restricted business activities.

Open a Business Account Online or In Person

(6 Steps)

Step 1: Selecting a Bank

Visit the Biz2Credit website and navigate to the page on Loans and Financing. Scroll to the bottom of the page and select the Business Money Back Credit Card option.

The first page asks for your credit card type. Enter Business (Visa, Master Card, American Express)

The next section informs you that this card can be used in your business, but requires a minimum one month deposit. Click Apply to move to the next step.

If you already have a business account, enter your account number here. However, if you do not yet have an account at this bank, scroll down to the bottom of the page to review important information about the card. Next, click Apply to move to the next step.

The final page is a summary of your application, and displays the total amount you will be financing, the start date, the interest rate, the annual fee, and the amount of your monthly payment. You can click Preview to see exactly how this information will be displayed, or Apply to move to next step.

Step 2: Upload Bundle of Documents

Scroll down the page and click Get started. Click I'm a New Customer at the bottom of this window.

Next, enter your email address and select the Favorite Receipt option.

Deposit Your Funds Into Your Business Account

You can deposit cash into your new business deposit account in a few different ways. One of the most popular methods is to visit your local bank and talk to their teller. Just provide them with the account number your financial institution provided you with and any deposit information they requested.

The following types of funds can be deposited into your new business account:

  • Cash
  • Checks
  • Money orders
  • Credit card payments
  • Prepaid card payments

Ie. electronic funds transfer

Bartering: If you trade services for products or other services, you can deposit the cash value of your trading transaction using your business account.

Benefits of Opening a Business Bank Account

As a business owner, you need to accept the fact that running on a shoestring budget isn’t a sustainable strategy. To create a sustainable business, you’ll need to have several business accounts, including a business bank account.

If you want to compete on an even playing field, you’ll need all the banking services you can get your hands on and an overall understanding of your business finances.

That means you’ll need a business bank account, which includes a business checking account and business credit cards.

You can’t put the same amount of resources into your business as you do your personal accounts. Whether you need to improve cash flow, open a business line of credit, or maintain more than a single personal account if your business is handling cash and credit, you need to establish a business bank account.

So just as a precaution, opening an account for your business is a smart move. However, it’s only smart if you do it right and in the right order.

Fortunately, you can’t afford to ignore this step to save a few bucks a month. Here’s how to open a business bank account in 6 steps.

Determine Type of Business Account You Need

Opening a Business Bank Account With Other Business Products

Many businesses can save money by consolidating their bank accounts and opening one account with multiple business products.

Why Use One Account?

Saving money can be a great reason to consolidate accounts. Opening one account with multiple bank accounts can save you money on account fees, account upkeep, and time.

One account is also more convenient than opening a new account for each bank. It’s easier to move money to the main account than to have several accounts…and move money to them.

And having one account also saves time by having fewer separate transactions.

Additional Articles & Resources to Help Your Business

Part I: Getting Started

You want to open a business bank account and you’re all set for diving into the world of business. Well, this is exciting. But before you get into the details, learn what you need to know about becoming a business owner or what you need to do right now to get off the ground.

Part II: Know Your Business and Money Matters

Businesses are ways to make money. This usually involves taking in money and giving out money, along with tracking spending and making sure you have enough money to run your business. Creating a business entity is only part of the business accounting equation. Learn about how to do your absolute best in this aspect. It’s not only important to be your own boss when it comes to running a business, but you have to also be the boss of your business.

Part III: Your Business Accounts and Deposit Balances

Part IV: Opening Additional Business Accounts

Even a simple business like a garage sale requires several business accounts. Learn about the different types of business accounts and how they are used. There are also several convenience services that will assist you in making managing your business accounts easier.

Part V: Business Account Habits

Bottom Line

Learn about Banking in India

There are two things that can truly change someone's life: the connection to the Internet, and the connection to banking. Many entrepreneurs and freelancers struggle not only with not having an Internet connection or a bank account but also with actually understanding and navigating the banking system. Here is a complete guide to opening a new business bank account and playing by the industry's rules.