Sole proprietor business bank account: Do you need one & How to open

Getting your business finances in order is very important as a sole proprietor. Keeping your business and personal finances separate is crucial whether you’re just starting out or have an established business.

Not only does the separation help keep your finances organized, but it can also make business processes such as filing taxes, sending international and domestic transfers, and managing invoices easier.

This article will look at some of the best business accounts for sole proprietors, including solutions such as Wise Business.

Are you looking for an account that helps you save while sending and receiving payments?

Learn more about the
Wise Business account >>

Free opening for US business accounts
No minimum balance required and no monthly fees

Table of Contents

Can a sole proprietor open a business bank account? Do you need a business checking account for a sole proprietorship? Keep business and personal accounts separate Account and features for sole proprietor accounts Necessary Documents How to open a business bank account for a sole proprietor Best business accounts for sole proprietorship Wise Business Chase Bank of America Save with the Wise Business account

Can a sole proprietor open a business bank account?

Sole proprietors refer to individuals who start and run their own businesses. Sole proprietors are solely responsible for their business, including its operation, marketing, finance, and more. While sole proprietors may work with other contractors or teams, they are still solely responsible for their business and operations.

That’s why many financial institutions have financial solutions for sole proprietors, such as business bank accounts. Sole proprietors are eligible to open a business bank account, which can be incredibly useful in managing finances efficiently.

Do you need a business checking account for a sole proprietorship?

Sole proprietors can open a business bank account to keep their business and personal finance separate and have a central financial solution to manage everything related to their business finance.

A business checking account is an essential tool for sole proprietors for many reasons, since they are specifically designed to enable sole proprietors to manage their business better. Some reasons sole proprietors may benefit from a business checking account include the following.

Keep business and personal accounts separate

One of the primary reasons why sole proprietors should have a business bank account is to make it easy to keep business and personal finances separate. Having different accounts for business and personal finances ensures that you can track and manage business income and expenses easily without getting confused by personal expenses that may come in.

For sole proprietors looking to get organized and stay on top of business finances, keeping separate accounts for business and personal income and expenses should be one of the first steps in that process.

Learn More: How to change business bank accounts

Account and features for sole proprietor accounts

Business checking accounts for sole proprietors enable individuals to keep on top of their business finances and cash flow, and stay organized when it comes to managing incoming and outgoing business-related payments.

Sole proprietor business checking accounts have specialized features to help individuals manage their business finances as efficiently as possible. For example, sole proprietor business checking accounts may include features such as monitoring incoming revenue, expense tracking, invoice management, and managing payroll for suppliers and other contractors they may work with.

Business checking accounts are also helpful when it comes to filing taxes as a sole proprietor, since all your incoming payments and expenses will be in one place and easier to report.

Compare the Top US Business Accounts >>

Necessary Documents

There are a few different types of documents that might be needed to open a sole proprietor business checking account. Opening a sole proprietor account will require some form of proof of the business and some initial documentation to prove your identity.

Each bank will have different requirements for necessary documents to open a sole proprietor business account, but some of the requirements might be:

• Proof of identity, such as a government-issued ID
• Proof of business address
• Business name, if one
• Proof of business registration will vary for sole proprietors, but typically requires a Social Security number for tax identification and reporting purposes.
• Some banks may also require documentation about when the business was established, as well as the location for tax reporting, depending on the state the business is operating in.

How to open a business bank account for a sole proprietor

The process for opening a business bank account for a sole proprietor will vary based on the bank itself. Some banks may require sole proprietors to come to a bank branch and open an account in person, as documents can be verified in real-time.

Some banks may offer an online-only option to set up a sole proprietor account, with identity and document verification happening over the course of a few days to get the account approved.

Step 1: Select a business account for your company**

Many business owners open a business account with the same provider for managing their personal finances.

One of the main reasons for this is that some providers will offer current users more favorable terms. So it’s not a bad idea to check the terms on offer from your current bank.

But, you’ll find a wide selection of different business accounts out there that might offer various benefits and features that will help your business grow. Some examples are low-cost outgoing and incoming payments across currencies, such as for money earned on Amazon or for paying freelancers.

You will also want to assess your need for in-person services for digital services only, as many traditional banks still have branches that you can go to for the advice you need. While digital business accounts might offer lower costs but no in-person services. In the end, it depends on each business’s needs.

Step 2: Choose the right account type for your business needs

The second step is looking into the available products for small businesses.

Many providers offer tiered account products that range in fees, features, and services offered.

Here are some key question you should ask when choosing a business account:

• What is your daily average balance?
• How many daily transactions will you carry out each month on average? And what kind of transactions will they be?
• Does your business manage its money in cash, or will you mainly be making electronic payments and deposits?
• What kind of integrations do you need to match your internal processes? (Examples include accounting software, cash flow forecasting apps, ecommerce sites, point-of-sale (POS) systems, etc.)
• Will you be making complex transactions like batch payments, international wire transfers, or receiving cross currency transfers on a regular basis?
• Are you in need of additional services, such as debit, credit, or prepaid cards, business loans, and specialized savings accounts?

After assessing what features you will need on your business account, you can then narrow your options to those that include key parts to make your daily business practices easy.

Step 3: Check the business bank account's fees and limits

Once you pick a few possible business accounts, take a look at how they compare in terms of fees, and also check if the various costs differ in your state. Bank of America, for instance, exists across the entire United States but may offer different prices depending on zip code. In the end, it’s important to make sure that you get this part right, as fees can add up over time.

Examples of fees and limits you will find when looking into a business bank account:

• Monthly maintenance fees
• Minimum balance requirement (you get charged if you go below a certain amount)
• International banking fees: foreign transaction fees, currency conversion fees, incoming/outgoing wire fees
• ATM withdrawal fees
• Debit/credit subscription fees
• Limits on currency you can withdraw from an ATM
• Limits on transactions amounts you can send and receive by day, week, and month
• Limits on account users and permissions
• Fees for certain monthly amounts of cash deposits

Make sure you look at the small print. Often, this can a challenge to find on bank websites. At times, you will find specific fees and charges located on the specific account page. One essential document available on a lot of bank websites is called, “The Schedule of Fees,” which offers a complete list of fees for a single account or for all accounts available.

Step 4: Get the documents needed to open a bank account

The necessary documents vary depending on the bank, the account type, and even the state you live in.

In some cases, it’s possible to open an account entirely online, but usually you’ll have to go along to a bank branch to present your documents and get started.

Before you go to your appointment, check the documents required.

Depending on the account eligibility rules, you might also have to provide more details about your business. For example, you may have to show your company meets certain turnover requirements, or has been trading for a specific period.

Step 5: Open the account and deposit your funds

Sometimes it’s possible to open a business checking account online, and make an electronic deposit to get started.

With traditional banks, a sole proprietor or someone holding a personal account with the same bank will find that they simply need to make an electronic payment to get started.

Most company owners will need to visit their local bank branch in person to open their account, and make an opening deposit. Of course, fully digital business accounts can skip this step through an online verification process.

Compare the Top US Business Accounts >>

Best business accounts for sole proprietorship

Many banks offer a sole proprietorship business bank account with a wide range of features. Deciding on which bank account for sole proprietorship is best for you will require careful consideration of your current business finances, growth plans, and what features the bank offers.

For example, some banks may only offer basic business banking services, such as managing incoming and outgoing cash flow, while others may offer more dedicated services. You should also consider where payments are coming from, such as domestic or international, as there might be fees and currency exchange costs to consider as well when deciding on a sole proprietorship bank account.

Another important consideration when looking at business banking for sole proprietors is account fees and other charges that may be incurred. Many banks have a minimum account balance that sole proprietors must maintain to avoid monthly fees, or have additional requirements to waive fees for account holders.

Not all sole proprietors will be able to maintain balances over the course of months, depending on the business. So understanding how fees may impact your business over the short term and long term is a crucial consideration when selecting the right business bank account for you.

Here are some of the best options available for a sole proprietorship business bank account:

Wise Business

Wise Business is specially designed for sole proprietors looking to take control of their business finances and has a suite of features to make business finance management much easier. Wise Business includes tools such as invoice management, batch payments, and more to make sending and receiving payments easier.

Wise Business also integrates with tools such as QuickBooks, Xero, Sage, and Wave for sole proprietors seeking one solution for comprehensive financial management.

Additionally. Wise Business offers tools to streamline sending and receiving international payments. Sole proprietors can hold up to ten currencies in their Wise account, enabling sole proprietors to bank more easily by providing local account details for easy payment management across different countries. Plus, Wise has competitive mid-market rates when converting to different currencies to make currency conversion more cost-effective.

Wise Business does not charge an account fee, but there are charges for using certain Wise Business services, such as a nominal fee for currency conversion.

Fee Type	Wise Business Transparent Fees
Monthly fees	No
Opening balance requirement	No
Opening cost on US account	No (Price in other locales may vary)
Sending money across currencies	From 0.41%
Receive money across currencies	One-time fee to receive in 10 major currencies (USD, EUR, GBP, CAD, AUD, and more) without the currency conversion costs

Chase

The Chase Business Complete Banking℠ solution includes business banking essentials and card acceptance features for sole proprietors and small businesses. The account offers features such as unlimited debit card and ATM transactions, up to $5,000 fee-free cash deposits per statement cycle, and options for Business Savings Accounts.

To open the account, Chase requires two forms of ID, with one being a government-issued ID, tax identification number, and business documentation, which will vary based on the state the account is being opened.

The Chase Business Complete Banking℠ has a monthly fee of $15 associated with the account.¹ However, the fee can be waived if businesses maintain a $2,000 minimum daily balance.²

Bank of America

For sole proprietors and small businesses, Bank of America business checking accounts include the Business Advantage Fundamentals™Banking.³ Features of the bank account include cash flow monitoring, access to solutions such as Zelle for instant payments, and integrations with financial management tools such as QuickBooks. Bank of America also has measures for fraud protection and security for added protection.

Opening the Business Advantage Fundamentals™Banking at Bank of America will require documentation from the sole proprietors. Bank of America will typically need the name and address of the business, and tax ID, such as a social security number for the sole proprietor. They will also require additional documentation about the business. This may include where the business was established and where it currently operates out of.

Bank of America Business Advantage Fundamentals™Banking has a $16 account fee, but it can be waived if the account maintains a $5,000 average monthly balance or businesses spend at least $250 in debit card purchases.⁴ Account fees can also be waived for businesses that are Preferred Rewards members with Bank of America.

Save with the Wise Business account

For sole proprietors looking for a business account that makes financial management easier, Wise Business can offer a lot of value.

The Wise Business account is a simple, easy solution for sole proprietors looking to organize their business finances and has a streamlined financial solution.

Wise Business is one of the more cost-effective business accounts since there are no account fees associated with the account and there are no minimum balances to maintain.

Wise makes it easy to be international, with competitive mid-market rates for currency transfers and additional features such as local bank details, invoicing tools, expense tracking, and much more.

Are you looking for an account that helps you save while sending and receiving payments?

Learn more about the
Wise Business account >>

Free opening for US business accounts
No minimum balance required and no monthly fees

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Sources:

1. Business Checking | Chase for Business | Chase.com
2. Business Checking Account Opening Information | Sole Proprietors | Chase.com
3. Business Checking Accounts for Your Small Business
4. Sole Proprietorship Bank Account & Required Documents