The requirements to open a business bank account varies depending on several factors, including the type of business you operate, the bank you want to use and type of account you want to open.

Opening a bank account should be on your small business checklist. Whether you’re just starting out or transferring your business account to a new bank, you’ll need to gather some documents, names and licenses to ensure the process goes smoothly.

Let’s walk through the process of how to open a business bank account, noting which documents are required and explaining why you should have one for your company.

What Documents Are Required to Open a Business Bank Account? 

You’ll need to have the following documents on hand:

  • Personal identification (national ID card, passport or driver’s license)
  • Social Security number or employer identification number (EIN)
  • Business licenses
  • Organizing documents
  • Certification of business identity or Doing Business As (DBA) name registration
  • Partnership agreement

Personal Identification 

For most bank applications, you’ll need to present a government-issued picture ID such as a passport or driver’s license.

Social Security Number or EIN

Before opening a business account, you’ll need to prove your business’s identity. In this case, you’ll need an EIN accompanied by documents sent by the Internal Revenue Service (IRS) during the issuance of your business tax ID number. Some banks allow sole proprietors to use a Social Security number for business tax purposes, but you get much more benefit from having a business tax ID number.

You can apply for an EIN online on the IRS website. The process should be quick and straightforward if you have a valid Social Security number and your company is in the U.S. Make sure you preserve the confirmation letter since you’ll need it during the application process.

Business Licenses

Whether you are an individual proprietor or a limited liability company (LLC), banks will typically ask for an updated business license from a state or local government body to prove you’re legally allowed to conduct business in the region. Each state, county or locality has different processes for getting a business license, so check with the respective authorities to determine what your area requires specifically.

Organizing Documents

Organizing documents can differ a bit depending on state and local governments, but they include crucial company details such as the business name, who the owners are, the company address, the management structure and planned business activities. 

Some of the main organizational documents you’ll need include the articles of incorporation to show how the business is structured. For an LLC, corporation, limited partnership or other separate legal entity, these documents are called the articles of association. They should be presented to the bank on the day of opening the business account.

Certification of Business Identity or DBA Registration

If your business operates under a trade name that is different from your own, you will need to provide a business name certificate, also referred to as a DBA filing. The certificate will act as proof of your legal business name.

Partnership Agreement

For any business you set up, you’ll need to file some paperwork with the state government. Businesses with several partners will bring along a partnership agreement. LLCs will need an operating agreement, while corporations will require bylaws. The agreement will include the rights and responsibilities of each partner, key issues the business will encounter and how it will conduct its activities.

Other Business Bank Account Requirements 

The documentation required to set up a business bank account will vary based on a company’s corporate structure. Here are some of the business bank account requirements for different business structures:

Sole Proprietorship

  • Personal identification
  • Social Security number or EIN
  • DBA certificate
  • Business licenses with legal names of the owner

Partnerships

  • EIN
  • Personal identification
  • Organization documents
  • Certification of business identity or DBA filing
  • Business licenses
  • Partnership agreement

Corporations

  • Business identification
  • EIN
  • Articles of incorporation
  • Business licenses
  • Certification of business identity/DBA certificate
  • Corporate bylaws
  • Corporate resolution

LLC

  • EIN
  • Business identification
  • Articles of association 
  • Business license
  • Organizational documents
  • Certification of business identity/DBA certificate

Can I Open a Business Bank Account Online? 

Yes. Depending on your business structure, you will need to choose a bank that fits your needs, provide relevant documents, understand the costs, complete an online application and deposit funds. 

Some online banks provide a variety of options from the business economy to full-analysis business checking. Finding the right bank is probably the most challenging part of the process. It is crucial to do research and learn what each bank has to offer and what works best for your business.

Can I Open a Business Bank Account With Bad Credit? 

There is no denying that a negative credit report will limit your access to business checking account options.

If you have poor personal credit and decide to open a business account, expect some hurdles. The bank will check your credit score before setting up an account. If it’s too low, the bank won’t open an account.

There are two solutions: Either get your bad credit record cleared or work with a bank that will overlook a negative credit report. The second option is the quickest. 

Some banks offer online business checking accounts with no credit score review. Once the account is opened, you can manage it almost entirely online.

A merchant account automates accepting debit- or credit-card info.

Types of Business Bank Accounts 

With the right documents in hand, it’s time to decide what kind of business account you want. Think about how you want to use the account. Need it for daily deposits or accepting payment from clients? Keep in mind you could be earning interest or dividends from little investments. 

Here are three common types of business bank accounts:

  • Savings accounts
  • Checking accounts
  • Merchant accounts

Business Savings Accounts

Most people start by opening a savings account. This account allows you to gradually build up a stockpile of money while earning interest every month. The account may have some restrictions on the number of withdrawals or transfers you can make in a month or year. The most common savings accounts include business certificate of deposit (CD), high-yield savings and money market accounts.

Business Checking Accounts

Checking accounts allows business owners to receive or transfer money, write checks and deposit or withdraw money using a debit card. Typically, there are no minimum account balances required — you only need enough funds in the account to cover your purchases. A basic business checking account may come with introductory offers, low fees and network availability.

Business Merchant Accounts

This kind of account allows companies to automate the process of accepting debit- or credit-card information and send those funds to the merchant’s linked bank account. Typically, when a customer makes a payment with a credit card, the money is first deposited into the merchant account before being transferred to the recipient’s business bank account.

Having a business account makes you appear more professional.

What Are the Benefits of Having a Business Bank Account? 

Here are a few reasons why you should consider having a business account:

Separate Business and Personal Finances 

Separate bank accounts for business and personal finances will help increase your business credit score. Additionally, it’s easier to track your company’s cash flow to help identify areas that need improvement.

Appear More Professional

Having a business account will make you look more professional when dealing with clients:

  • You’ll have checks featuring your company’s name.
  • Customers will have the convenience of paying with their credit cards.
  • Your accountant will have a better time handling bank-related tasks.

Building a Relationship With Your Bank

Setting up a business bank account is a way to build a good relationship with the bank. At some point, you might need to take a loan for your business. An established relationship will help you qualify for financing so you can expand your business.

Consider Opening a Business Bank Account

Opening a business bank account is something every small business owner should consider. Before starting the process, identify which business account best suits your company, gather the necessary documents and determine the costs of opening an account. It’s a crucial step in the evolution of your small business.

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