Having a business bank account provides an official, easy-to-read set of financial records for your company. It also preserves the legal separation between your personal assets and those of your business.
And from a tax standpoint, having all your business transactions cataloged in one place simplifies your quarterly estimated taxes.
Getting Started
A business bank account is a separate account for your company’s finances. It allows you to keep personal and business expenses separate, which can be useful at tax time. It also helps you appear more professional to customers and vendors.
Once you decide what type of business account works best for your needs, comparison shop for fees and features. Look for banks that offer a minimum opening deposit, low or no maintenance fees and a variety of ways to access funds, such as mobile deposits, ACH transfers and prepaid cards. You may also want to choose an account that integrates with accounting software or other business tools you use.
Once you’ve found a bank, apply online or in person. Make sure you have all the required documents, such as your business licenses and articles of incorporation. You may also be asked for personal identification, such as your Social Security number or Driver’s License. Once you’re approved, start depositing money and using your new business account.
Choosing a Bank
There are many different types of business accounts and financial institutions out there. The best one for your business will depend on a variety of factors, such as fees and service limits. Before you choose a bank, read the fine print and make sure they provide all the services your business needs.
For example, if you do a lot of cash transactions, look for banks with high amounts of fee-free transaction and cash deposit limits. Similarly, consider whether a particular institution has an ATM network that is convenient for your business.
Once you’ve chosen a bank, head to the branch or online to begin the process of opening your business account. Be prepared to provide the necessary information and documents, as well as proof of your business entity. Keeping all of your business banking with the same institution can make it easier to manage and track your company’s finances. It can also make applying for a loan more straightforward, since the bank knows your history and how you’ve managed your business.
Opening a Checking Account
The easiest way to start a business bank account is to apply online or visit a branch. Bring your personal and business information and documents to expedite the process.
The exact documentation required varies from bank to bank. The minimum deposit and fees vary as well. Many banks promote introductory offers to attract new customers, including bonus cash or lower fees.
Having a business bank account can improve the appearance of your company by allowing you to pay for things like lunches with clients and supplies for employees using sources of funds that are clearly branded as your business, rather than a personal account or credit card. It can also inspire confidence in customers and suppliers who see that you take your business seriously.
You’ll generally need to present proof of identity for both you and your business, such as a government-issued ID, Social Security number and a business license or DBA (doing business as). If you are a limited liability partnership or corporation, you may need additional documents based on the type of structure you have chosen.
Opening a Savings Account
In addition to the basic business banking account, consider opening a savings account for funds you don’t plan on spending in the near future. These accounts earn interest and also make bookkeeping more manageable.
When selecting a business savings provider, pay attention to the fees charged. While some online options are fee-free, others may impose limits on how much can be transferred each day or month. Additionally, some offer only wire transfers and don’t allow cash deposits.
You’ll also want to look for an account that offers FDIC insurance, which provides protection for your business’s assets in case the bank fails. Additionally, you can find high-yield savings accounts that provide more passive income through interest earnings than a traditional bank account. You can find these accounts through fintech companies that partner with banks to offer the account options. These providers are usually regulated and insured by the Federal Deposit Insurance Corporation. Some even offer additional business products and services, such as merchant service accounts.