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5 Steps to Open a Business Bank Account

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Last editedNov 20212 min read

Are your personal and business finances kept separate? It’s a requirement if you own a company that’s a separate legal entity, and a recommendation for sole traders. There are plentiful reasons to open a business bank account, from keeping better track of funds for bank reconciliation to creating an IRS-ready paper trail. But what do you need to open a bank account, and how does it work? Here’s how to open a business bank account, in five easy steps.

Step 1: Choose an account type

Before setting up a business bank account, you’ll need to choose the right type and structure. To begin with, you have banks and credit unions to choose from in the US. There are also online accounts as well as traditional.

Traditional business checking accounts offer the ability to make deposits, take out withdrawals, write checks, make electronic funds transfers, and use a debit card. You may be charged fees for ATM use, deposits, maintenance, and transactions.

Online business checking accounts are often more flexible and are a good choice for start-ups or remote workers that don’t need to handle physical cash very often. They often come with lower monthly fees, and some are even fee-free provided you maintain a minimum balance.

Business savings accounts allow your company to keep your money in a secure location and earn interest over time. Be sure to compare balance requirements, annual percentage yields, and account fees carefully.

Step 2: Choose a bank

After deciding whether you want a checking or savings account, the next step in setting up a business bank account is choosing the bank itself. Here are just a few features to take into consideration as you compare your options:

  • Bank fees

  • Minimum balance requirements

  • Cash management

  • Automatic reconciliation

  • Mobile check deposits

  • Line of credit

  • Convenient ATM network

  • Accounting software integration

If you already have a personal checking account, it’s often easiest to open business accounts with the same bank. Banks often offer more favorable products to existing customers, and you’ll receive a more personalized service.

Step 3: Gather your documents

What do you need to open a bank account in terms of paperwork? This will depend on your business structure. All businesses need to provide some basic information:

  1. Taxpayer identification number (SSN or EIN)

  2. Personal ID (such as driver’s license or passport)

Additional documents depend on the structure.

Sole proprietorships:

  • Business name filing document

  • Business license

Partnerships:

  • Business license

  • Business name filing document

  • Partnership agreement

Corporations:

  • Articles of Incorporation

  • Corporate resolution or charter

  • Business license if required

  • Tax exemption documents for nonprofits

LLCs:

  • Articles of Organization

  • Business license if required

Step 4: Open an account online or in person

You now know how to open a business bank account, in terms of account types and required documentation. The next step is to visit your bank of choice, either online or in-person, to get everything set up. For most companies, this will be a matter of preference. However, there are certain industries that are required to set up accounts in person such as:

  • Government

  • Gambling

  • Precious metals

  • Telemarketing

In both cases, you’ll simply show your documents and walk through a registration process. You might be prompted to verify some information for security purposes, either over the phone, online, or in-person.

Step 5: Make your first deposit

It’s now time to put that new bank account to use. Many business accounts require a minimum balance to avoid additional maintenance fees, so you must deposit funds within the first month. There are many ways to make a deposit, whether it’s via bank transfer, cash deposit, or writing a check from your personal account. Most banks now offer mobile or remote deposit, which allows you to easily deposit eChecks via your mobile banking app.

The final step when you open a business bank account is to keep an eye on the details once you’ve received your first statement. Verify your business name, contact details, and deposit amounts to ensure everything is working as it should.

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Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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