Updated July 15, 2020

How to Open a Business Bank Account

Read more about Bank
This article contains references to products from our partners. We may receive compensation if you apply or shop through links in our content. You help support CreditDonkey by reading our website and using our links. (read more)

Opening a business bank account is easy. You can even do it online. Find out how long it'll take and the requirements.

© CreditDonkey

Small business owners often manage business and personal finances in one checking account.

But that's a big mistake.

It increases your personal liability. Imagine what would happen if you were audited by the IRS. You'll be glad you took 5 minutes now to learn what you need to open a business bank account properly.

We'll cover everything you need to get started. Plus, how to avoid unnecessary fees.

5 Steps to Opening a Business Bank Account:

  1. Choose your account type: Savings, checking, free, online, traditional.
  2. Choose your bank: Look at fees, benefits, balance requirements, interest, customer service.
  3. Collect required documents: EIN or SSN, business formation documents, ownership agreements, business license (at minimum).
  4. Open the account: Have physical documents if opening the account in person; submit documents digitally for online banks.
  5. Make your first deposit: Check for cash deposit fees, minimum amount requirements, and more.

1. Choose the Right Business Account Type

© CreditDonkey

Like with personal bank accounts, each type of business account serves a different purpose. Most business owners like checking accounts because they need the ability to write checks to vendors or service providers.

    Chase

    Chase Total Business Checking®

    • Get $300 as a new Chase business checking customer, when you open a Chase Total Business Checking® account with qualifying activities
    • Access to 16,000 ATMs and nearly 4,900 Chase branches
    • Chase has business specialists at your local branch to help with your business needs
    • Account Alerts are a great way to stay on top of your account's activity and enhance security
    • Unlimited electronic deposits at no charge, including Chase QuickDeposit℠, ACH and ATM

Some may want to take advantage of higher interest rates offered by savings accounts. Others prefer the benefits of merchant accounts if they are accepting credit card or debit card sales.

Read on to see which account type would be best for your business.

Business Checking Account
With a business checking account, business owners can write checks under the business name. They can use debit cards to withdrawal and deposit cash and checks, as well as transfer funds electronically to different accounts and recipients.

These services are often essential to basic day-to-day operations, so many business owners prioritize checking accounts when they determine how to open a business bank account.

Online Business Bank Accounts
Not all business checking accounts provide the same exact services or have the same requirements. For example, most online checking accounts will not accept cash deposits. On the other hand, online business bank accounts do tend to offer lower fees.

Determine your needs and preferences for business checking account. If the restrictions of an online bank won't hinder your business operations, consider opening an online bank for your business.

Free Business Checking Account
Free business checking accounts, such as many online checking accounts, are more affordable because they don't charge monthly service fees.

Keep in mind that "free" business checking accounts may still have certain fees for overdrafts or too many withdrawals or transfers, so be sure to read the fine print.

Important note about monthly service fees
While many banks do charge monthly service fees, many will waive the fee if the account holder meets certain conditions. These can include maintaining a minimum balance amount or making regular deposits.

Business Savings Account
Business savings accounts are designed for funds that do not need to be as easily accessible. Instead, they serve more as safe place to park extra money or reserve cash.

Business savings accounts often provide higher interest rates, so business owners can see better returns on their deposits.

Merchant Bank Account
Merchant bank accounts can be very valuable to certain types of businesses, like retailers, for example. They allow the business to accept credit card or debit card payments from customers. With a merchant account, you must also have a business checking account.

A business can accept funds into its merchant account throughout the day, then have those funds transferred to its business checking account. That way, the business can operate more efficiently and provide a convenience to customers.

What can you do with a business bank account?
  • Write and deposit checks
  • Build interest on your funds
  • Accept payments from customers
  • Transfer money
  • Protect your funds

2. Choose Your Bank

© CreditDonkey

Many business owners are tempted to use the same bank for their business bank account as they do for their personal account.

In some cases, this can offer the advantage of efficiency because all your accounts would be in one place.

For others, having both personal and business accounts with the same bank could be leaving benefits on the table elsewhere. The ideal bank for you depends on how your business operates and what it needs for its financial operations, and that may not necessarily be what your personal bank offers.

These are the main factors to consider when choosing a bank for your business:

  1. Fees
    Many banks charge a monthly service fee, which can vary depending on the bank and type of account. Be sure to also inquire about any minimum balance fees, cash deposit fees, ATM fees, wire transfer fees, and transaction fees.

    In some cases, you may find a business bank account with no monthly service fee, or a bank that will waive the fee under certain conditions.

  2. Services Offered
    Business owners can benefit significantly from services like cash flow visibility reports, which many personal banks might not provide. Find out if the banks you're considering have these tools.

    Think long term and consider if you'll need other financial services like small business loans or lines of credit, and check if the bank provides them.

  3. Benefits
    Learn about the bank's extra benefits, such as whether they provide user-friendly account management online and reliable customer support. Consider whether you'll have a wide network of branches that can provide in-person services if you need it, or enough convenient ATMs.

  4. Balance Requirements
    Some banks have minimum balance requirements, meaning you must always have a certain amount of money in your account. If you plan to have a large enough balance to get monthly service fees waived, a bank's balance requirements should be less of a concern.

    However, if your business has a tighter cash flow, it would be wise to research minimum balance fees.

  5. Interest
    Many business bank accounts provide interest on the funds. This is primarily true with savings accounts, but some banks also offer interest on checking accounts that meet minimum balance requirements. If building interest is important to you, compare rates from several different banks—it can pay to shop around.

3. Collect Required Documents

© CreditDonkey

Once you've settled on a bank, it's time to gather the paperwork you'll need to actually establish the account.

Each bank may have different requirements, but generally the documents you'll need depend on the type of business structure you have.

What documents are required to open a business bank account?
  1. Employer identification number (EIN) or Social Security number (SSN).
  2. Business formation documents (articles of incorporation, etc.)
  3. Ownership agreements
  4. Business license

If you're a sole proprietorship, you will need:

  • Employer identification number/Social Security number
  • A business name filing document or a business license

If you're a partnership, you will need:

  • Partnership agreement
  • Employer identification number

If you're an LLC, you will need:

  • Articles of organization
  • Employer identification number/Social Security number

If you're a corporation, you will need:

  • Articles of incorporation
  • Employer identification number

How do I open a small business bank account?
The process of opening a small business bank account is very similar to opening an account for a larger business. But small business bank accounts usually require less paperwork.

To open a small business bank account, you'll need to provide an employer identification number or Social Security number along with the business name filing documents.

4. Open Your Account

© CreditDonkey

How to Open a Business in Person
Before you open a business bank account in person, make sure you have physical copies of your documents. You should also have a check ready to make a deposit to open the account.

Then, make an appointment with the bank. At that time, you'll work with a professional to open the account. The process may take a bit longer than opening an account online, but you will be able to address all your concerns and questions with the bank employee.

Keep in mind that banks may require you to open a business bank account in person if you are in a certain industry or area of business, such as telemarketing, gambling, government, or precious metals.

How to Open a Business Account Online
When opening a business account online, you can submit your forms digitally. That means that if you only have hard copies of your documents, you'll need to scan them so that you can submit them online.

With opening a business bank account online, you won't get the benefit of face-to-face customer service, but the process is often much faster.

Is it free to open a business bank account?
Generally, there is no fee just to open a business bank account, but the bank may require an opening deposit.

In some cases, banks will offer a cash bonus for opening a bank account if certain terms are met. Be sure to ask your bank about any current promotions they have for business banks accounts.

5. Make Your First Deposit

© CreditDonkey

You'll make your first deposit into a business bank account much like you would make a deposit into a personal account—through cash, a check deposit (e.g., from your personal account), or a transfer of funds.

Be aware of any fees your bank may charge for a particular type of deposit, like a cash deposit fee. Also learn what deposit methods you bank allows, and whether you can deposit remotely, online, or must do so in person.

Finally, make sure the funds in your business bank account meet any minimum deposit requirements. Otherwise, you could incur a fee there as well.

A common source of cash flow issues for small businesses is outstanding receivables, particularly owed by larger customers they've offered trade credit to in the form of net 30 day (or longer) payment terms. To smooth out cash flow while they wait for payments, such merchants can either turn to a business line of credit, or they could get paid right away through outsourced net terms solutions like Fundbox Net Terms.

Dan Biewener, Sr. Strategist at Fundbox

The Best Business Bank Accounts

The "best" business bank accounts vary from business to business, depending on the services the business needs and its financial situation.

Still, some banks may offer more business-friendly terms than others. Here are some banks to consider when you're determining how to open a business checking account:

    Chase

    Chase Total Business Checking®

    • Get $300 as a new Chase business checking customer, when you open a Chase Total Business Checking® account with qualifying activities
    • Access to 16,000 ATMs and nearly 4,900 Chase branches
    • Chase has business specialists at your local branch to help with your business needs
    • Account Alerts are a great way to stay on top of your account's activity and enhance security
    • Unlimited electronic deposits at no charge, including Chase QuickDeposit℠, ACH and ATM

Bottom Line

Most business owners open a business bank account for good reason—to keep their personal and company finances separate. Staying organized with separate accounts can help you manage your accounting more efficiently and make sure you file your taxes accurately, among other advantages.

Fortunately, with a little planning, learning how to open a business bank account is easy. And you have several choices in both business account types and banks to consider when figuring out which business bank account can best meet your needs.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

More from CreditDonkey:


Best Bank for Small Business


Business Account Promotions


Free Business Checking


Best Student Checking Accounts

A student checking account allows you to manage your money with fewer fees and requirements. Find the best student checking accounts offered by the top banks.
more Bank

Leave a comment about How to Open a Business Bank Account?

Name
Email (won't be published)


Chase Checking Account Bonus

Chase is currently offering cash bonuses for opening a new checking account. See the current checking account bonus promotions before they expire.

About CreditDonkey®
CreditDonkey is a bank comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.