How to open a business bank account

While a business bank account isn’t a requirement for every business owner, keeping your personal and business finances is a good idea. Opening a separate business bank account can make managing things like taxes and book and record keeping much easier.

How to open a business bank account in 3 steps

Opening a business account is similar to opening a personal one, but you’ll need to provide more documentation to apply.

1. Get your documents in order

Just like a personal bank account, you must verify your identity and provide personal information to get a business bank account. You’ll need to provide your valid government-issued ID, residential address, date of birth, Social Security number and citizenship status.

Next, you’ll need to provide information about your business. The exact documents you need vary depending on your business structure and can include:

• Employer Identification Number (EIN)
• Business license
• Articles of Organization
• Articles of Incorporation
• 501(c) Letter (nonprofits)
• Partnership agreement and company ownership percentage (LP or LLP)

2. Choose an account

A business checking account is good for daily expenses. It comes with a debit card, checkwriting privileges, merchant services and other perks to help you manage your money. Online business accounts, like Found, tend to offer other perks, such as more software integrations, invoicing, and automated tools for taxes.

A savings account for businesses is better for storing excess capital. You’ll earn interest on your funds and have a safe place to store your funds.

There are also borderless business accounts, which let you make transactions in multiple currencies. But before opening one, you’ll first want to check if the bank exchanges the currencies you need for your business.

3. Finalize the account

If you’re approved for the account, take some time to set it up.

• Set up online banking. Most business accounts come with a mobile app or online platform for on-the-go management.
• Deposit funds. You may need to make a minimum opening deposit, which is often between $25 to $100, but there are plenty of free business accounts.
• Software integrations. Connect your software to the business account, such as Amazon, Apple Pay, Google Pay, Quickbooks, Slack, Stripe and Wise.
• Checks and debit cards. If you have a business checking account, you can order checks and set your debit card for spending. Most debit cards arrive in seven to 10 business days, but your account may offer virtual debit cards for instant access.
• Add other owners. If you’re not the only business owner, you can add the others as authorized users or joint owners. Some business checking accounts also allow you to order debit cards for employee spending with limits and permissions.

Should I open a business bank account?

Opening a separate business account can offer many benefits, including:

• Liability protection. A business bank account provides personal liability protection by maintaining a clear separation between your business funds and personal finances. Even if your business is an LLC, keeping all your business and personal funds mixed means you’re potentially negating the protection that an LLC provides.
• Opportunities for credit. Many business loan providers require an established business bank account to be approved for business loans, such as a line of credit or credit card.
• Customer peace of mind. If you sell products or offer services, your customers can write checks or send payments to your business account. This can instill professionalism and trust with your customers, because they know their personal payment information isn’t being sent to your personal account.
• Easier bookkeeping. A dedicated business account helps maintain organized financial records. This will make it easier to track your business’ income, expenses and deductions and can simplify the process of preparing and filing taxes.

Bottom line

Having a business bank account can be beneficial for LLCs, sole proprietors, for-profit and nonprofit organizations and even freelancers. Business accounts come with unique perks you won’t get with regular accounts, such as software integrations, invoice tracking and sub accounts for employees.

The number one reason to get a business bank account is personal protection. If your business gets sued, owes debt or owes the government, your personal assets could be at risk if they’re tied up alongside your business. Keeping your business funds separated also makes it easier to track expenses and locate business tax deductions around tax time.

Frequently asked questions

Can I open a business account in another state?

It depends on the bank and your home state. Some banks won’t allow you to open an account if you don’t live in that state. However, plenty of institutions operate nationwide, so you’re not limited to local banks in your area. There are also many online banks that operate across state lines.

Do I need an EIN to open a business bank account?

It depends on your business structure. For example, if you’re a sole proprietor, you aren’t required to get an EIN, so you wouldn’t need to provide one during a business bank account application. Instead, you’ll provide your Social Security number.

But if your business pays employees, operates as a corporation or a partnership, or is an LLC, you’ll need an EIN to pay taxes, so you’ll need to provide it during your business bank account application.