How to Open a Business Bank Account in 5 Easy Steps

If you have your own business, you need to operate a company bank account to make sure your personal money, and the cash flow and profits of your business are kept separate.

This makes accounting easier, and helps to make sure that you’re filing your taxes correctly.

You’ll also often find that a small business account comes with different features compared to your personal account — including perks which make it easier to run your company smoothly.

This article will cover all you need to know about how to open a business bank account, including how much does it cost to open a business account, why you should set up a business account and more.

An online alternative to traditional banks will also be highlighted. With Wise Business money management is made easier both domestically and internationally.

Learn more about Wise business

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Table of Contents
What do you need to open a business account? The 5 easy steps to opening a business bank account Wise Business - your alternative to a traditional bank account Why you should open a business bank account Tips for opening a business bank account

What do you need to open a business account?

Opening a business account will require you to submit certain documents so the bank can verify your business. Some of these documents are:

• Employer Identification Number (EIN)
• State-issued identification
• Business formation documents
• Ownership agreements
• Business license
• Certificate of Assumed Name
• Monthly credit card revenue

Read more about what documents you need to open a business account and what documents you need if you’re an LLC owner on the link.

The 5 easy steps to opening a bank account

Getting your own business bank account isn’t too complicated.

You’ll need to invest some time in finding the right bank and account product for your needs, but the application process is usually straightforward.

Here’s what you need to do.

1.Choose the right bank for your business

Many business owners and entrepreneurs open a business bank account with the same bank they use for their own personal finances. 

In some cases, banks will offer favorable terms for customers who hold both their personal and business accounts with them, so it’s not a bad idea to check the terms on offer from your current bank.

However, you’ll find a huge range of different banks out there offering business accounts — as well as some modern alternatives, like the multi-currency account from Wise Business.

Different banks have different benefits — and of course, different disadvantages — so it’s a good idea to think about what services you really need. 

For example, calling into a local bank branch to carry out business transactions may feel familiar, and seem like an obvious choice. But you’ll often pay more for over the counter services, and you’ll be limited by the opening hours of the branch, too. 

Thinking through the way you’ll need to manage your business funds can help you choose the right bank for your company.¹

If an online business account is what your business needs, read more about - How to open a business bank account online

2. Choose the right account type for your business needs

Once you have narrowed down your choice of banks, you’ll need to look more carefully at the products available for small businesses. 

There are often tiered account products on offer — ranging from a simpler account with lower fees, but a limited range of features, through to more complex options, which cost more but also come with a suite of perks for business owners.

Have a think at this stage, about how you intend to use your business account. Some key questions to consider include:

• What is your daily average balance likely to be? 

• How many transactions are you planning on carrying out per month, and of what type?

• Will you manage your money in cash, or will you mainly be making electronic payments and deposits?

• Do you need to integrate your small business bank account with your existing accounting software?

• Will you be making more complex transactions like batch payments, or international wire transfers on a regular basis?

Working out the way you’ll use your account will help you find business account products which can meet your needs, and ensure you’re not paying for services you never use.

3. Check the business bank account's fees

It’s helpful to know that the account products, and the features and fees available can vary depending on the state you live in.

Once you have a few favorite accounts, take a closer look at the fees you’ll need to pay — and make sure the information you have is valid in your state.

• You can expect to find a monthly maintenance fee, which may include a fixed number of free transactions per month.

• The maintenance fee might be waived if you fulfil other conditions, such as holding a minimum balance in the account over the statement period.

• Make sure you look at the small print, including the cost per transaction if you exceed the monthly free figure, and which transaction types are excluded.

• There may also be other limits you need to look at. For example, some accounts offer a fixed value of cash deposits per month for free, but start to charge above this amount. If you’re expecting to be depositing your profits in cash into your account via a bank branch, this could make a big difference to the account’s costs.

4. Get the documents needed to open a bank account

The exact documents you need will vary depending on the bank you choose, the account type, and even the state you live in.

In some cases it’s possible to open your 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.

✅ Useful to know
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.

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 your account up and running. With traditional banks, this is more likely to be the case if you’re a sole proprietor, or already hold a personal account with the same bank.

However, most company owners will need to visit their local bank branch in person to open their account, and make an opening deposit.

If you’d rather get your account set up online, there are alternatives, including the Wise Business account. Details of this smart new account, next.

Wise Business — your alternative to a traditional bank account

If you can’t find the right type of small business bank account for your needs — or if you’re looking for a cheap and flexible way to manage your money across different currencies — it’s worth comparing the features and fees of the Wise Business account.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. This new type of account can be opened and operated online, and comes with a range of perks designed to make life easier for business owners and entrepreneurs. Check out these great benefits:

• Make batch payments and automate workflow with the Wise API, to save hours on admin time

• Integrate with your existing accounting solutions, including world-leading small business accounting software from QuickBooks

• Manage your payments in over 40 currencies in your multi-currency account

• Get local bank details in 9 currencies - making invoicing faster and allowing your international customers to pay you in their own currency

• Send payments to 160 countries with ease - all from one account

Why you should open a business bank account

Getting yourself a business banking account will offer a range of benefits, and can make running your company much easier.

In effect, if you run an LLC, partnership or any other type of business apart from a sole proprietorship, having a business bank account is mandatory.

But even as a sole proprietor, a small business checking account can make it easier to run your business and manage your personal finances, not to mention making tax season simpler, and presenting a more professional image to your clients.¹

Not sure whether it’s worthwhile? Here are some common reasons for opening a small business account, which are well worth considering:

• Customers can pay your company account directly by wire, credit card or cheque — far more professional than using a personal account

• A business bank account keeps your personal and business funds separate, making accounting simple, and limiting personal liability

• Business bank accounts often have features and perks you won’t be able to access with a personal account

• If you have employees, you’ll be able to give them company debit cards, credit cards or cheque books, and allow your staff to do day to day banking tasks on your behalf

• Many business bank accounts come with an option of arranging credit, so you can invest in your business when you need to

The US Small Business Administration recommends you get a company bank account as soon as you need to spend or accept money on behalf of your business.¹

Did you know?
Depending on the bank you choose, you may need to have your EIN — employer identification number — from the IRS before you can get your small business account up and running. If you don’t yet have an EIN, and think you might need one, you can complete a simple test online via the IRS website to check whether it’s time to get your own EIN, and get your application started.²

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To help you decide on an account, compare business checking accounts or check out our comparison of the best free business checking accounts if you don't want to pay an upfront fee.

Tips for opening a business bank account

Nearly ready to get started? Here are a few final tips and tricks to make sure everything goes smoothly.

When choosing an account, don’t forget to check the costs of transactions if you exceed those included in your monthly package. As your business grows, the number of transactions will, too Make sure your account is fully operational by transferring out, and depositing a small amount, before you start invoicing using your new business bank account If you’re opening a business account with bad credit, it’s worth talking to a range of banks to see which accounts match your needs. Many banks have small business advisors who can run through your options with you Have the name on your checks match the name your business is legally registered under — not the DBA name if this is different Check out the costs and features of Wise Business, to see if you can get quick and secure payment services for your business, for less

Finding the right business account for your specific needs can seem a little daunting.

There are many different options out there, with different packages and costs to consider.

Investing an hour or two in research can pay off, and ensure you get an account which meets your business needs and saves you time and money in the long run.

Sources:

1. SBA - Open a business bank account
2. IRS - Do you need an EIN?

All sources checked 15 December 2023