How to Open a Business Bank Account (Online) in 2023

It’s essential to open a business bank account once you’ve set up your company and are ready to accept payments or spend on expenses. In addition to helping you organize your finances, they keep you legally compliant and protected. 

In this guide, we detail exactly what documents you need to open a business account. We also provide tips on how to choose the best business bank account for you.

Requirements to Open a Business Bank Account

Opening a business bank account is easy as long as you have the right documents. The application process can even take just a few minutes if you open an account online.

Keep in mind that some banks may require additional documents, so check with your chosen bank beforehand to ensure you have everything you need:

1. Personal Identification

Banks typically require a government-issued photo ID, such as a driver’s license or passport, along with your personal mailing address, contact information, date of birth, and Social Security number. If your business has multiple owners with at least 25% ownership, you'll also need to provide their personal details and identification.

2. Employer Identification Number

If your business has an employer identification number (EIN), you'll need to provide that, along with any corresponding documents from the IRS. Sole proprietors and single-member LLCs may be able to use their Social Security number instead.

3. Business Details

You'll need to provide your business name and address, as well as your trade name or DBA (doing business as) name if applicable. You'll also need to list your business entity type (such as sole proprietorship, partnership, LLC or corporation), and disclose the industry you’re in and the type of business you operate.

4. Organizing Documents and Agreements

The documents you need to provide depend on your business's entity type. For example, sole proprietorships typically need a business name registration certificate and business license, while LLCs may require articles of organization. Corporations may need articles of incorporation, corporate bylaws, and a business license, while partnerships may require a partnership agreement, business name registration certificate, state certificate of partnership, and business license.

5. Opening Deposit

Some banks require an opening deposit, which can range from $5 to $1,000, while others allow you to open an account with no minimum deposit.

How to Open a Business Bank Account

Online banks, also commonly known as neobanks, are becoming some of the most popular bank accounts for business owners in 2024. Their application processes are 100% digital and can often be opened in a matter of minutes.

Here is a comprehensive list of steps to follow to open a business bank account:

Why Should I Open a Business Bank Account For My Small Business?

Having a business bank account is not just essential, but also offers many benefits such as protection, professionalism, preparedness, purchasing power, and access to company funds for teams.

Business bank accounts are legally required for LLCs, partnerships, and corporations. Even for sole proprietors who can use personal accounts instead, we recommend online business bank accounts because they will provide you with many advantages. Here are the top reasons:

1. Protect Your Personal Funds

Using your personal bank account for business activities can lead to serious legal repercussions for you and your business. Most importantly, your personal funds may not be protected. Having a business bank account keeps your personal assets separate from company assets, providing limited personal liability protection in case of company bankruptcy. Additionally, merchant services offer purchase protection for your customers and ensure that their personal information is secure.

2. Comply With Taxes

Organizing and tracking your business expenditures is easier with a business bank account. You will be able to clearly show the IRS the separation of your personal bank account from your business account. You will also be able to show the eligible purchases that you have written off for business tax deductions.

3. Professionalism

Customers and suppliers prefer doing business with a company that has a business bank account. You'll be able to accept credit card payments, write checks, and transfer money with a business bank account, providing a more professional image. Additionally, authorizing employees to handle day-to-day banking tasks on behalf of the business is more secure and efficient.

4. Access and Build Credit

Most business bank accounts offer perks that don't come with a standard personal bank account, including a line of credit for emergencies or for purchasing new equipment. Establishing a credit history for your business with a business credit card will also improve your applications for bank loans in the future.

5. Give Teams Access to Company Funds

When you are working with a team, a business bank account is essential for keeping track of budgets and expenses. Business bank accounts for LLCs will allow you to give your team access to business funds, plus you will be able to manage their budgets and set limits on their credit cards.

What Factors Should I Consider Before Choosing a Business Bank Account?

Before choosing a business bank account, consider factors such as account fees, account management tools, and the kinds of accounts the bank offers.

What Kinds of Business Bank Accounts Can I Open?

To operate your business effectively, you'll generally have three types of accounts to consider:

• Business checking account: Serves as the primary operating account for your business. This account allows you to accept deposits, make payments, and access digital tools provided by your bank. Some banks are now calling it a "business operating account" as fewer people use paper checks.
• Merchant account: Linked to your checking account and enables you to accept credit and debit card payments from your customers.
• Business savings account: Pays interest on the balance and allows you to set aside money for taxes or large purchases.

What to Consider

In addition, it is important to compare rates, fees, and account features across different banks to ensure you find the best deal with the lowest fees and most beneficial options for your business. Here are important factors to take into account:

• Fees: Monthly account maintenance fees, Minimum balance requirements, Included fee-free transactions, Cost of Merchant Services, Incidental fees (stop payment, insufficient funds, overdrafts), Transaction fees, Early termination fees, and Minimum account balance fees.
• Access: Branch and ATM Access, ATM access (withdrawals and deposits), Wiring, transfer and payment capabilities.
• Interest Rates: Interest rates for savings and checking, Interest rates for lines of credit.
• Account Management: Account Management Tools, Accounting Software Integration, Online and mobile banking, Additional features such as bill pay, invoicing or integrations with other business tools.
• Customer Service: Customer service, such as how easy it is to get help and whether you can meet with someone in person if you need to.
• Rewards and Perks: Rewards and Perks, such as membership point programs to businesses, and introductory offers.