What Do You Need to Open a Business Bank Account?

SHORT ANSWER: You need personal and business documentation, funding and the right bank when you’re ready to open a business bank account.

Opening a business bank account can be a critical step in separating personal finances from business finances. It can make qualifying for a loan, applying for a credit card, paying employees and suppliers and tracking business expenses easier. A business account in good standing can also help build a strong business credit history. Learn how to open a business bank account and build your business this year. 

Why Open a Business Bank Account?

The benefits of opening business bank accounts range from separating personal expenses from business expenses to building business credit. Here's why you should consider opening a business bank account.

• Separate personal and business finances: Separating your business and personal finances can make it easier to manage your money and avoid any confusion or complications. When you have a dedicated business bank account, you can see where your money is coming from and where it's going, making it easier to make informed financial decisions for your business. 
• Business credit cards: Once you have a business bank account, you can pay off business credit card statements easily, especially if the credit card comes from the same bank. A business credit card helps build business credit and provides a form of financing. These credit cards can also offer rewards and perks like cashback on business purchases. You can also earn points and other rewards as additional perks for yourself or employees. Find which banks pay you to open an account. 
• Access additional benefits: A bank account can also help business owners build a positive long-term relationship with their banks. For instance, your bank may be more likely to offer you favorable terms on a business loan or a line of credit if you have a strong financial history with that bank. Many banks also offer their business account holders discounts on services like payroll processing or merchant services. 

What Do I Need to Open a Business Bank Account?

The requirements to open a business bank account are similar for most banks, although it's worth confirming requirements with your bank. 

• Personal identification: The bank will need your personal identification details, including a driver's license, passport or state-issued ID card. The documents are used to verify your identity and protect against fraud.
• Employer Identification Number: An employer identification number (EIN) is a unique nine-digit number a business can apply for from the Internal Revenue Service. An EIN is used to identify the business for tax purposes and is similar to a Social Security number used for an individual.
• Business documents: The documents needed vary depending on your business type and the bank you choose. Banks typically require identification documents like a driver’s license and proof of your business, such as articles of 
• incorporation or a business license. You will also need to provide your business tax identification number and proof of business address or ownership. 
• Business details: You may be required to provide details about your business, such as your business name, address, contact information, type of business and any registration details.

Types of Business Bank Accounts

There are more than 15 types of business bank accounts. The most popular include: 

• Business checking account: Like a personal checking account, a business checking account comes with checks and a debit card to easily access business funds. Some banks will require a minimum balance or monthly fees, while others have no minimums. 
• Business savings account: Business savings accounts can be a safe way to store business assets or save for future investments. Consider a high-yield business savings account, and be sure to check fees and interest rates. The account typically has higher interest rates than a checking account, but there may be limitations on the number of transactions you can make each month. 
• Business credit card account: A business credit card offers premium benefits designed specifically for businesses. You could qualify for a larger credit line for regular company expenses or add authorized users for employees. Be sure to pay on time each month to build a positive business credit history. Find the best business credit cards for startups. 
• Merchant services account: These bank accounts allow businesses to accept and process electronic payment card transactions. The merchant account is partnered or linked with a merchant-acquiring bank that facilitates all communications in electronic payment transactions.

How to Open a Business Bank Account in 5 Steps

Opening a business bank account is simple. Here are the steps to take. 

Choose a bank 

The first step in opening a business bank account is choosing a bank. Work with a bank that offers the services and features you need for your business. Research the options and requirements at different banks before deciding where to open a business account. Besides making deposits and withdrawals, a business bank account can also provide access to other services such as the ability to accept and make electronic payments and access to credit and loans. 

For example, if you need a lot of in-person support, the bank should have a branch near you for easier access. Businesses that prefer managing their accounts online should choose a bank with a strong digital banking platform. Also, consider the fees and interest rates the bank offers as well as the customer service and overall reputation of the bank. A good starting point is a local bank where you're already a customer, but it's worth comparing business offerings at other banks. 

Gather your documents

The documents needed may vary depending on the bank and the type of account you are opening, but some common documentation you need may include:

• Government-issued ID
• Proof of personal address
• Proof of business address
• Employer Identification Number (EIN)
• Business operating agreement and formation documents

Decide on accounts needed 

The specific account you need depends on your circumstances and the needs of your business. Businesses commonly start with a checking and savings account. 

Business checking account: A business checking account is a basic account that allows you to deposit, withdraw and transfer funds. It typically comes with a checkbook and a debit card and may also offer online and mobile banking services. A checking account can be a good option if you need to make regular transactions and want easy access to your funds.

Business advantage checking: This is a more advanced account that offers additional features and benefits, such as higher interest rates, higher transaction limits and access to specialized services like merchant services and business loans. You may consider this account if you have a larger business or need more advanced banking services.

Business savings account: With a savings account, you can earn more interest on the deposited funds. A business savings account typically has higher interest rates than a checking account, but there may be limitations on the number of transactions you can make each month. 

You may also opt to open a merchant services account to collect online payments and apply for business credit cards. 

Open your business bank account

Once you provide the above information, the bank will review your application and, if approved, open a business banking account for you. This could happen the same day or typically within a week, although the specific business banking account requirements may vary depending on the bank and the type of business you have. 

Some banks or types of accounts require a minimum deposit. You may be asked to have a certain amount of money to deposit in the account or may have industry-specific requirements. 

Deposit funds

Business owners can make deposits in person at the bank, via an ATM, or electronically through online or mobile banking, Zelle or Automated Clearing House (ACH) transfer. You can also transfer funds from another bank account or credit card into your business bank account. This can be a convenient way to deposit cash, especially if you don't have easy access to a branch or ATM.

What to Consider When Opening a Business Bank Account

Before opening a business bank account, carefully research total fees, including monthly fees and additional fees, as well as access. 

Consider business information, including:

• Branch access: Do you do all your banking online, or do you need to go to a branch for loan applications, deposits and more?
• Transaction limits: Some banks have low transaction limits, which can limit the way you do business. 
• Perks or available bonuses: You might get access to rewards, cashback, higher interest rates, opening bonuses after a transfer or other rewards. 
• Customer service: Does the bank have a strong reputation for providing excellent customer service to help you open an account?
• Bank reputation: Does the bank have a strong reputation for stability and good customer service? Does it offer the services or accounts you need?

Which Bank is Best to Open a Small-Business Account?

Numerous banks offer excellent services for businesses of all sizes, from major banks to online banks. Airwallex is an excellent starting point for businesses of all sizes. Airwallex can help businesses of all sizes simplify their global payments and financial operations, unlock new opportunities and grow without limits. To date, over 100,000 companies globally trust Airwallex’s software and application programming interfaces (APIs) to protect their businesses.  

Other excellent banks for small businesses include Chase, Wells Fargo, Axos Bank, PNC Bank, Capital One, Navy Federal Credit Union and Grasshopper for its high-yield business checking account. 

Opening a Business Bank Account

Opening a business bank account is an essential step to check off your list. Gathering the necessary documents and applying in person or online should only take a short time. Before applying, carefully research bank offerings to choose the options that best fit your needs. Remember that there's no reason to limit yourself. You can diversify business bank accounts to suit your needs — choosing checking and savings accounts, plus a business credit card or other options.