How to Open a Business Bank Account

For business owners, the benefits of having a separate account for your company far outweigh simply being able to write checks from an account with the business’s name on them.

What you need and tips to help you get started

You need to break them now with your new business venture and start treating your personal finances from your business finances. Successfully opening a business bank account requires you to have the proper documentation, select the right type of account, and be aware of ongoing fees and compliance requirements. This guide is a step-by-step outline of what you need to do, while providing tips that will make the process more efficient and allow you to manage business banking with confidence.

Why a separate account matters

Maintaining a separate account for business activity maintains the integrity of your personal assets, makes bookkeeping easier and shows a more professional image to clients and suppliers. A business checking account typically is used for your day-to-day transactions, such as paying bills, making deposits and meeting payroll, while other types of accounts it offers can be for saving or merchant services. A separate account eliminates accounting errors and helps cut down on time spent at tax time.

Common business banking requirements

All lenders require what is known as a core set of documents and details before approving an application. Typical documents include a government-issued photo ID for business owners, the employer identification number or tax ID, your business formation paper: articles of organization (LLC) or incorporation (INC), and any applicable local licenses or permits. If your business is a partnership or has more than one owner, you will need to be prepared to give the bank a partnership agreement or operating agreement clearly identifying who may sign checks.

Step-by-step application process

Begin by collection your documents: owner I.D.s, tax IDs and formation documents. Next, determine which kind of account you’ll want — a business checking account that you use for the daily running of your small business is most likely to be the right choice. Reach out to the bank or credit union for their specific list of requirements and if you need an appointment. You will be prompted information about contact, ownership and signers but need to be added here as well. A couple of banks may require a deposit in order to open up the account.

Choosing the right account

Meanwhile, your consideration should be: Monthly services charges and transaction limits as well as rules for cash deposits or online access in all the options you are looking to choose from. Consider check deposit fees and branch availability if you expect to deal with a lot of cash. For companies that plan to process payroll or have regular electronic transactions, look at an account that comes with unlimited transactions or generous limits. Also seek out things that are easy to integrate directly into the accounting workflow, so reconciliations can be done faster and with fewer errors.”

Tips for smooth approval

Make sure all documents are full and clear copies\' none of this midnight faded shit to slowdown the process. Ensure the full business name on documents of formation is the same as that used on applications and invoices. If you are doing business under an assumed name or trade name, bring the assumed-name filing or DBA paperwork. All necessary signers must be present or authorized signers to avoid additional verification. If you or a partner aren’t local, ask in advance about options to verify identity.

Fees and how to manage the account

Know the minimum balance requirements, monthly maintenance fees and fee waiver thresholds. Some accounts will waive fees if you keep a certain balance or make monthly deposits. Keep an eye on the number of transactions you process so you can steer clear of per-item fees and reconcile your monthly statement regularly to catch any errors as soon as possible. Try adding regular account activity reviews to your calendar to catch any fees you don’t need and chances to upgrade into a less expensive plan.

Security and compliance considerations

Guard your business by establishing dual authorization for big transfers, using strong passwords for online access and turning on alerts to flag possible compromise. Maintain copies of all account agreements and monitored access logs. Tax reporting and anti-fraud controls, for instance, increasingly demand accurate record-keeping and clear information about owners and signers. Organisation also helps to eliminates the potential for holds or account restrictions during an audit or review.

Common pitfalls to avoid

Commingling of personal and business transactions is a huge no-no which can lead to accounting nightmare, and importantly exposure personally! It's also a reason your account can become frozen if you didn't update signers with ownership changes, or you fail to submit required licenses. Also, for the wrong entity name or an oh-so-little bit of incomplete paperwork when opening an account can create a delay. Take care of these early on by verifying details and maintaining up to date documentation.

Useful things to check off before you press submit

What you’ll need: Gather owner IDs and tax ID; print formation documents and any assumed name filings No single signatory? Print the record of ownership and authorized signer Work estimate Average monthly transaction volume Estimate initial deposit and ongoing monthly balance Compare fee schedule with typical account activity Compare online features Carry a list of questions to ask the branch representative, about minimum balances, transaction limits and options for having fees waived.

Final thoughts

Setting up a business account is simple but crucial in helping maintain financial health and meeting the rules. Know what you need, pick the right business checking account, follow these tips and get your business bank account open fast. Thoughtful planning from the beginning will help you save time and limit surprises as your company expands.