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Home » Business Bank Account » What Do You Need to Open a Business Bank Account?

What Do You Need to Open A Business Bank Account?

Author: Chandra Dhopatkar
Published: 03/13/2024 6:32 p.m. EST
Last Update: 03/14/2024 3:17 p.m. EST
Edited by: Jennifer Bonilla

To open a business bank account you’ll need several necessary documents and pieces of information, including personal identification, business documentation, tax information, and possibly an initial deposit, which vary depending on your business structure and the bank’s specific requirements.

Business bankers helping small business owners open business bank accounts.
Business bankers helping small business owners open business bank accounts.

This guide will help you know exactly what you need to open a business account for your particular situation. You’ll learn how to open an account. How an account can help your business. And, the main types of business bank accounts and related services.

Quick Checklist For Opening a Business Account

To open a business bank account, you’ll generally need the following documents and information:

  1. Identification: Personal identification documents for you and any other business owners. This typically includes a government-issued photo ID, such as a driver’s license or passport.
  2. Business Documentation: The specific business formation documents required can vary depending on the structure of your business (e.g., sole proprietorship, partnership, LLC, corporation). Commonly required documents include:
    • Business license: Proof that you are legally permitted to operate your business in your city or county.
    • Articles of Incorporation or Organization: For corporations or LLCs, these documents establish the business’s existence.
    • Partnership Agreement: If your business is a partnership, this document outlines the terms of the partnership.
    • Doing Business As (DBA): If your business operates under a trade name.
  3. Tax Information: Your business’s Employer Identification Number (EIN) issued by the IRS, or your Social Security Number if you’re a sole proprietor without an EIN.
  4. Business Address and Contact Information: The physical location of your business and a phone number or email where you can be reached.
  5. Initial Deposit: Some banks require a minimum initial deposit to open an account.
  6. Bank-Specific Forms: Some banks may have their own forms that you’ll need to fill out.
  7. Business Plan: While not always required, some banks might request a business plan, especially if you’re starting a new business.

The exact requirements can vary from bank to bank, so it’s a good idea to check with the bank where you intend to open an account to ensure you have all the necessary documentation.

Why You Need to Open a Business Bank Account

Why you need a business bank account: Opening a business bank account is important because it helps separate your personal finances from your business funds.

This is important for keeping track of your business’s money, making tax reporting easier, building business credit, and protecting your personal assets from piercing the corporate veil.

When you open one, you create a clear line between your personal and business finances, which is essential for any successful company.

  • Keep personal and business finances separate: This makes it easier to manage your money and understand how your business is doing.
  • Professionalism: Paying from a business account makes your business look more professional to clients and suppliers.
  • Legal and tax purposes: Having a separate business bank account helps with business tax filings and can provide legal benefits.
  • Building Business Credit: Paying net-30 accounts from your business bank account will help improve your business credit profiles and ensures proper reporting of tradelines. 

You might also be interested in reading our article on Net 30 Credit Cards.

Benefits of Having a Business Account

A business bank account offers more than just a way to manage business funds. It provides important features that can help your business grow and operate more smoothly.

  • Credit history: Helps your business build its own credit history.
  • Merchant services: Allows your business to accept credit and debit card payments.
  • Financial management: Makes it easier to manage cash flow and create financial statements.
  • Accounting software integrations: Accounting software can help you budget easier and manage your businesses finances much easier.
  • Recurring payments: Having a business checking accounts ensures recurring bills get paid on time, avoiding late fees, while avoiding business credit card and debit card processing fees that may otherwise be imposed.

Exceptions: Who Might Not Need to Open a Business Account

While most businesses should have a separate business bank account, there are a few exceptions. If you’re a freelancer or sole proprietor without high business expenses or complicated transactions, you might manage without one. However, it’s generally recommended to have one to keep things clear and simple.

  • Sole proprietors with minimal business transactions.
  • Freelancers who primarily use platforms that handle invoicing and payments. You’ll likely need PayPal, Square, Stripe, or some other e-wallet or payment processor.

Choosing the Right Type of Business Bank Account

The right business bank account depends on your business needs. You should consider how you’ll use the account, what bank offers are available, and the fees associated with the account.

  • Checking account: Best for daily operations and transactions.
  • Savings account: Suitable for setting aside money for future expenses.

Comparing Business Checking vs. Savings Accounts

Business checking accounts are designed for managing everyday money transactions like paying bills and receiving payments. Business savings accounts are for saving money over time and earning interest.

  • Checking accounts: Lower interest, higher transaction limits.
  • Savings accounts: Higher interest, useful for long-term savings, typically have transaction limits.

Explaining Merchant Services for Business Banking

Merchant services allow businesses to accept credit and debit card payments from customers. This service is essential for businesses that operate online or have a physical storefront.

  • Accept a variety of payment types.
  • May include features like online payment processing and mobile card readers.

Documents You Need to Open a Business Bank Account (Detailed)

When setting out to open your business account, preparing the correct documents you’ll need to provide is crucial. Here’s a detailed checklist to ensure you’re fully prepared:

Personal Information

Before you can open a business bank account, banks will require several pieces of personal information to verify your identity and establish a connection between you and the business. You should be ready to provide:

  • Government-issued photo ID: Most banks require one, but some may ask for two.
  • Home mailing address: To verify your residence.
  • Personal phone number and personal email: For contact purposes.
  • Date of birth and Social Security number: Essential for personal identification and security checks.

Essential Business Formation Information & Tax ID

Your business structure (e.g., sole proprietorship, partnership, LLC, or corporation) affects the documents you need to open your account and your business’s tax and legal obligations.

To open a business checking account and effectively keep your business and personal account separate, you’ll need to compile detailed information about your company. This includes:

  • Employer Identification Number (EIN): Required for most businesses, especially if you have employees.
  • Business name and, if applicable, trade name or DBA (Doing Business As) name.
  • Business address and phone number: Even if they’re the same as your personal information, they need to be provided again for the business.
  • Business entity type: Whether it’s a sole proprietorship, partnership, LLC, or corporation.
  • Date your business was formed and the industry and type of business you operate: These help the bank understand the nature and age of your business.

Verifying Your Proof of Business & Address

Banks will require proof that your business is legitimate and a document confirming your business address. This could include business licenses, utility bills, or lease agreements.

  • Official registration or license.
  • Utility bill or lease in the business’s name.

Note: These are also important to have to establishing business credit and applying for business loans. 

Understanding Opening Deposit Requirements

Opening deposit requirements vary by bank and account type. Some accounts can be opened with as little as $25, while others might require more.

  • Check the minimum deposit needed to open your account.
  • Consider whether the bank requires a minimum balance to avoid fees.

Applying for Your Business Checking Account

Applying for a business checking account can typically be done online, by phone, or in person. Have all your documents ready and decide which application method suits you best.

  • Choose the application method.
  • Gather all required documents before applying.

Read our guide How to Apply for a Business Bank Account to learn more information about the actuall process of applying. You’ll get step-by-step instructions plus some valuable advice.

Choosing Between Online vs. In-Person Application

Decide whether to apply for your account online or in person. Online applications can be more convenient, but in-person applications might provide the opportunity for immediate questions and assistance.

  • Online applications are fast and easy.
  • In-person applications allow for personal interaction and immediate assistance.

Anticipating Potential Verification Delays

Be prepared for potential delays during the account verification process. Banks might need time to verify documents, especially for new businesses without an established financial history.

  • Have all your documents in order.
  • Be patient and follow up if necessary.

Picking the Best Bank for Your Small Business

When choosing a bank, consider Small Business Perks such as online banking features, mobile deposit options, and other services that could benefit a small business.

  • Online and mobile banking convenience.
  • Small business loan and credit options.

Evaluating Fees & Minimum Balances

Different banks have different fee structures and minimum balance requirements. Look for an account that keeps costs low and doesn’t require a higher balance than you can maintain.

  • Monthly maintenance fees.
  • Transaction fees and minimum balance requirements.

Assessing Convenience & Banking Services

Consider the bank’s location, hours, and additional services like merchant services and business loans. These can affect how easily you can access your funds and other banking needs.

  • Accessibility and branch locations.
  • Additional services that match your business needs.

Limits on Transactions: What You Need to Know

Some business accounts have limits on the number of transactions you can make each month. Understand these limits to avoid unexpected fees.

  • Check transaction limits and fees.
  • Estimate your monthly transaction needs.

How to Choose the Right Bank with Low Fees

Look for a bank that offers low fees and aligns with your business’s banking needs. Compare different banks’ fee structures and services.

  • Compare fees and services of different banks.
  • Consider your business’s specific needs.

Keeping Your Small Business Banking Organized

To keep your business financially healthy, it’s essential to maintain a separate bank account for your company. This not only makes managing your business funds separate from your personal bank account easier but also simplifies tax filings and financial tracking.

  • Utilize online accounting software: Tools like QuickBooks or Xero can help you reconcile business bank account online statements with your records, making it easier to keep your business accounts clear.
  • Choose the right business deposit account: Having a business deposit account that matches your needs can help manage cash flow effectively. Consider your transaction needs and whether you require a business debit card or a credit card account.
  • Set up alerts and statements: Use business bank account online services to set up alerts for low balances or large transactions. Regularly review your financial statements and bank account statements to catch any discrepancies.
  • Organize expenses: Implement expense tracking tools to categorize business spending, aiding in clearer financial overviews and easier end-of-year filings.
  • Understand your banking services: Familiarize yourself with the services your account offers, like merchant services, business lines of credit, or the ability to apply for a business loan or line. This ensures you are making the most of your business bank account and helps in efficiently managing your small business administration tasks.

By integrating these steps into your routine, you can ensure that your business bank account keeps your company’s finances organized and supports the smooth operation of your business.

Best Practices for Managing Your Business Banking

Managing your business banking efficiently is crucial for the financial health and success of your company. Adopting certain best practices can help ensure that your business’s financial operations run smoothly and securely.

Regularly Monitor Your Accounts

Regular monitoring of your business bank account ensures that you stay on top of your business’s financial status. Checking your balance and recent transactions helps in detecting any unauthorized activity early and keeping track of cash flow.

  • Set up online and mobile banking alerts to stay informed about significant transactions and balance changes.
  • Review your account at least weekly to verify transactions and manage cash flow effectively.

Utilize Online Banking Tools for Budgeting and Tracking

Online banking tools are essential for managing your business finances. They offer convenient access to your accounts, making it easier to monitor spending, track deposits, and transfer funds between accounts.

  • Use budgeting tools provided by your bank to categorize expenses and income, helping you stick to your business budget and financial goals.
  • Employ tracking features to analyze your spending patterns and adjust your budget accordingly.

Keep Business and Personal Finances Separate

Maintaining a clear boundary between your personal and business finances is essential. Not only does it simplify accounting and tax reporting, but it also provides a clear financial picture of your business.

  • Always use your business bank account for all business-related transactions to avoid confusion and maintain professionalism.
  • Avoid using personal funds for business expenses; if necessary, document and reimburse these transactions properly to maintain clear records.

Implement Budgeting and Financial Planning

A sound budget and financial plan are the backbones of effective business banking management. They help you forecast income, plan for expenses, and ensure your business remains profitable.

  • Develop a comprehensive budget that covers all aspects of your business operations. Regularly review and adjust it based on actual performance and changing business needs.
  • Plan for future growth and unexpected expenses by setting aside funds in a separate savings account or establishing a business line of credit.

Make Use of Merchant Services

Merchant services accounts are vital for businesses that accept credit and debit card payments. They enable efficient transaction processing, which can improve cash flow and customer satisfaction.

  • Consider your business’s specific needs when choosing a merchant services provider, including fees, payment types accepted, and integration with your current banking and accounting systems.
  • Regularly review your merchant services account to ensure it meets your business’s evolving needs and maintains competitive rates and fees.

Stay Compliant and Prepared for Tax Time

Staying compliant with tax laws and regulations is a critical aspect of business banking. Proper preparation and record-keeping can make tax time less stressful and help avoid penalties.

  • Ensure your business is registered and you have the necessary permits and licenses for your industry and location.
  • Keep detailed records of all transactions, receipts, and expenses. Use your bank’s tools and services to organize and categorize these records for easier reporting and filing.

By following these best practices for managing your business banking, you can ensure better financial health for your business, reduce stress around financial management, and set a solid foundation for future growth.

Regularly reviewing and adjusting your banking strategies as your business evolves is essential to maintaining effective financial management.

Next Steps to Set Up Your Business Bank Account

Now that you’re armed with the necessary information, it’s time to take action and begin the process of setting up your business bank account. This step is essential not just for organizing your business finances but also for legitimizing and establishing your business in the financial world.

If you want to build business credit, you’ll need an EIN and you’ll need to file for a business bank account.

Gather All Required Documents

Start by collecting all the documents you’ll need. This includes your business formation documents, personal identification, and your Employer Identification Number (EIN). Remember, an account cannot be opened without these crucial pieces of information. They serve as the foundation for your business’s banking needs and prove your legitimacy as a commercial entity.

  • Make a checklist of everything you need to file and gather, ensuring nothing is missed.
  • If you’re considering a business structure or haven’t yet obtained an EIN, now is the time to do so.

Register Your Business

If you haven’t already, take the crucial step to register your business. This formalizes your business in the eyes of the government and the public and is often a prerequisite for opening a bank account. Whether you’re a sole proprietor or leading a burgeoning corporation, this step legitimizes your operation and sets the stage for financial and legal compliance.

  • Ensure your business is properly registered and that you have the documentation to prove it.
  • If you’re considering a business change or just starting, register your business as soon as possible to avoid any delays.

Choose the Right Bank for Your Needs

Selecting the right bank is a critical decision that can impact your business’s future. Consider what’s most important for your company, whether it’s low fees, high transaction limits, or strong small business support. Choosing a bank that aligns with your business needs and growth aspirations is essential.

  • Evaluate different banks based on their small business services and account features.
  • Look for a bank that understands and supports small business needs, and think about how each bank’s offerings align with your company’s financial activities.

Apply for Your Business Bank Account

With your documents in hand and a chosen bank in mind, it’s time to apply for your account. This step is where your business starts to gain financial independence and clarity. An account is a great tool for managing your business finances and ensuring that your company’s money matters are handled professionally.

  • Apply online, by phone, or in person, depending on what your chosen bank offers.
  • Ensure all information is accurate and complete to avoid any delays or issues.

Take Action Now

Don’t wait to take these important steps. Starting a business bank account on behalf of the business is a necessary part of establishing and growing your company. Not only does it help separate personal and business finances, but it also sets you up for future financial management and growth.

  • Double-check that you have all necessary documents and information.
  • Reach out to your chosen bank with any questions or concerns as you apply.

By following these steps and taking action today, you are paving the way for a more organized and prosperous business future. Remember, a well-managed business bank account is a cornerstone of successful business operations. So, gather your documents, choose your bank, and apply for your account today. Let this be the moment you take a significant step forward in managing and growing your business.


What should a business owner consider when choosing their business type for a business bank account?

When choosing a business type for a bank account, a business owner should consider the nature and needs of their business, as well as how they intend to manage their finances. The business type will determine the kind of business bank account required, as different accounts cater to varying needs like transaction frequency, business savings, and access to merchant services. It’s important for a business owner to assess whether they need a business checking account for everyday transactions or a business savings account for earning interest. Additionally, if the business accepts credit card payments, opening a merchant account will be necessary. Deciding on the right type of account based on your business needs is essential for efficient financial management.

How can finding an account with low fees benefit a business owner?

An account with low fees can significantly benefit a business owner by reducing the costs associated with maintaining a business bank account. Lower account fees mean more funds are available for reinvestment into the business, covering business expenses, or growing a business savings account. Additionally, some business bank accounts offer perks like waived fees if certain conditions are met, such as maintaining a minimum balance or limiting the number of transactions. By choosing the right bank for your business that offers an account with low fees, a business owner can keep their business finances in better shape and avoid unnecessary expenditure.

What are the main business bank account requirements a new business owner should know?

The main business bank account requirements typically include providing a business license, proof of the business’s EIN (Employer Identification Number), and documentation verifying the business name and structure (such as LLC documentation). The bank may also need to verify your business and personal identity to comply with financial regulations. It’s important for a new business owner to gather all necessary documents before applying for a business bank account to ensure the process goes smoothly. Requirements to open a bank account can vary from bank to bank, so it’s advisable to check with the specific financial institution beforehand.

Why is it important to separate your personal and business finances?

Separating your personal and business finances is crucial for maintaining clear and accurate financial records, which is essential for monitoring the health of your business, preparing financial statements, and filing taxes. A separate business bank account helps safeguard your personal assets from business liabilities and vice versa. Moreover, it makes it easier to manage your business finances, track business expenses, and prepare for tax season. By using a dedicated business bank account, you can more clearly demonstrate the financial standing and performance of your business.

How can a business owner apply for a business account with low fees online?

A business owner can apply for a business account with low fees online by visiting the bank’s website and following the application process outlined there. This typically involves filling out an online application form with details about the business and the owner, such as the business type, EIN, and business address. The applicant will need to provide necessary documents, such as a business license and proof of business structure. Some banks may require a phone call or in-person visit to complete the process. When applying for an account online, it’s essential to review all account options to ensure you choose one that meets your business needs and offers low fees.

What documents will a business owner need to provide when opening a business bank account?

When opening a business bank account, a business owner will need to provide several key documents, including a valid business license, proof of the EIN, and documents that verify the business name and structure, like LLC articles of incorporation. Additionally, the owner will need to supply personal identification documents to verify their identity. The exact documents required can vary depending on the bank and the type of business, so it’s important to check with the specific bank for their list of requirements. Generally, these documents help verify your business and ensure compliance with banking regulations.

Why do business bank accounts often have different requirements based on your business type and structure?

Business bank accounts often have different requirements based on your business type and structure because different business forms have varying legal and financial implications. For instance, corporations, LLCs, and sole proprietorships are treated differently in terms of liability, tax obligations, and financial management. The bank uses this information to determine the right business bank account for your needs, ensure compliance with legal standards, and provide appropriate services such as loans, business credit cards, or merchant services. Understanding the specific requirements associated with your business structure can help you choose the right business bank account and effectively manage your business finances.


Business Formation:

  • Business Structure: The legal framework under which your business operates (e.g., sole proprietorship, LLC, corporation). This affects your tax obligations and business bank account requirements.
  • Sole Proprietorship: A business owned and operated by one person. It’s the simplest structure but offers no liability protection for the owner’s personal assets.
  • Limited Liability Company (LLC): A business structure that offers personal liability protection for its owners (called members) and more flexibility in tax filing compared to corporations.
  • Corporation: A separate legal entity from its owners (shareholders). Offers the highest level of personal liability protection but comes with more complex regulations.

Tax & Identification:

  • Employer Identification Number (EIN): A federal tax ID number used to identify a business for tax purposes. Required for most business bank accounts except some sole proprietorships.
  • Tax ID: Refers to either the EIN or Social Security Number (SSN) used for tax identification, depending on the business structure.

Banking Services & Accounts:

  • Merchant Services: Allow businesses to accept credit and debit card payments from customers. This service is essential for businesses that operate online or have a physical storefront.
  • Business Checking Account: Designed for managing everyday business transactions like paying bills and receiving payments. Offers higher transaction limits but lower interest rates compared to savings accounts.
  • Business Savings Account: Suitable for setting aside money for future expenses and earning interest. Often has transaction limits to encourage saving.
  • Minimum Balance: The lowest amount of money you need to maintain in your account to avoid fees.
  • Minimum Deposit: The initial amount of money required to open a business bank account.

Additional Terms:

  • Financial Statements: Documents that summarize a business’s financial activities and performance, like income statements and balance sheets.
Chandra Dhopatakar
Chandra Dhopatkar, MBA

Chandra, founder of “Build Business Credit in 30 Days,” specializes in increasing business valuations by helping companies build strong business credit.