Setting up a business can be a lengthy process filled with challenges and tough decisions. A business bank account is required for the majority of businesses, whether it\u2019s a small business, a sole proprietorship, or a large corporation. However, before opening an account, there are some factors you should consider to ensure that you\u2019ve picked the best option.<\/p>\n\n\n\n
We\u2019ll go over the benefits of having a business account, how to open a business bank account with the proper documentation, as well as how to pick the account and bank that will be tailored to your needs.<\/p>\n\n\n\n
A business bank account can facilitate your business ventures and is a requirement for some types of enterprises. Even if you\u2019re a sole proprietor, having an account for your business offers a number of advantages that a personal bank account simply can\u2019t provide.<\/p>\n\n\n\n
Having separate accounts allows you to keep better track of your company\u2019s financial records and income. Additionally, using a single account for your business and personal assets puts your personal savings at greater risk in case legal proceedings are initiated against your company. Therefore, it\u2019s a wise decision to protect your personal savings by having an independent small business bank account.<\/p>\n\n\n\n
Accepting and processing credit or debit card transactions is not possible with a personal bank account. Sticking with personal accounts may limit your clients’ payment options, as they will only be able to pay with checks or cash, which could be inconvenient for some. <\/p>\n\n\n\n
You probably won’t be the only one who needs to use the company’s funds. When you open a business banking account, you can give your employees access to it, allowing them to execute numerous financial transactions on the company’s behalf. After all, using your personal bank accounts with your business partners and colleagues is inconvenient.<\/p>\n\n\n\n
Developing a business relationship with your bank ensures that you\u2019ll receive personalized assistance in achieving your company objectives. You can obtain valuable financial guidance, and getting a line of credit or a loan will be a lot easier. Clients may also feel more comfortable making payments to a company rather than to you personally.<\/p>\n\n\n\n
Traditional and online banks provide a similar range of banking accounts, however, their specific services and rates may differ. The advantage of a traditional bank is that there are more products to choose from, and the customer service is better, while an online bank is more convenient for clients who prefer to do everything remotely. Your business might need more than one type of bank account, so let\u2019s check out some of the most common options for opening business accounts.<\/p>\n\n\n\n
If your company doesn’t plan on spending the money immediately and would rather invest it in the future, a business savings account is the way to go. Over time, money in a savings account earns interest, however, those funds might be more difficult to access. <\/p>\n\n\n\n
Checking accounts are designed primarily for receiving and making payments. In this case, finding the right checking account for your small business<\/a> is crucial. You also have the option of opening an online checking account if your business doesn\u2019t plan on dealing with cash transactions.<\/p>\n\n\n\n Merchant accounts are ideal if your business plans on accepting debit and credit card payments. They are a secure way for you to accept electronic payments. For this type of account, you must partner with a merchant acquiring bank, which acts as an intermediary when it comes to processing credit and debit card payments.<\/p>\n\n\n\n Ensure you have all of the relevant documentation ready before deciding where to open your bank account. The documents you’ll need will vary depending on the legal form of your business, and we’ll go over some of the most common ones.<\/p>\n\n\n\n Every signer on a business bank account must submit their Social Security number and an ID document, such as a passport or driver’s license, regardless of the business type. This step is the same as opening a personal bank account.<\/p>\n\n\n\n Nowadays, the majority of banking institutions need business clients to supply their EIN to open a business savings or checking account. In order to apply for an EIN<\/a> (if you don\u2019t have one), you need to fill out an application form on the IRS website with a valid SSN. In some cases, sole proprietors are allowed to open a small business account using only their SSN.<\/p>\n\n\n\n These documents should contain essential information about your business, like the name of the person in charge of financial management, the company\u2019s structure, and how it will operate. For a corporation, articles of incorporation are necessary, whereas for an LLC<\/a>, articles of organization are required.<\/p>\n\n\n\n Before you can open a bank account for your business, the bank will request documentation that your company has all the necessary licenses to operate. Of course, the procedures for obtaining a business license differ by location, so it\u2019s advisable to do some research before submitting your documents.<\/p>\n\n\n\n Businesses that need to process credit and debit card payments and transactions usually opt for merchant accounts. Accordingly, they need to provide the bank with their credit card revenue on a monthly basis. <\/p>\n\n\n\nBusiness Merchant Account<\/h3>\n\n\n\n
What Do You Need To Open a Business Bank Account?<\/h2>\n\n\n\n
Your Personal ID<\/h3>\n\n\n\n
Social Security Number or Employer Identification Number <\/h3>\n\n\n\n
Your Company\u2019s Formation Documents<\/h3>\n\n\n\n
Business Licenses<\/h3>\n\n\n\n
Monthly Credit Card Income<\/h3>\n\n\n\n
Choose the Right Banks for Business Accounts and Apply<\/h2>\n\n\n\n