If you are looking for ways to open a business bank account along with requirements, we have good news for you. Opening a business bank account is convenient and it is considered a very important step in your expedition as a business owner.
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That is why, in today’s article, we will talk about how can you open a business bank account, the different types, the mandatory requirements, what to search for, and their advantages to a small business owner.
Read on to learn how to open a business bank account in 5 easy steps.
How to Open a Business Bank Account?
When you attempt to open a business bank account, you will be surprised to learn that it is an easy procedure and takes a couple of minutes.
Note: It is crucial to be prepared and get all the details you require.
Here are the steps to open a business bank account:
Step 1: Acquire all the Needed Information and Documentation
You will require some information and documentation to begin, comprising the following:
- Social Security Number
- Employer Identification Number (EIN)
- Driver’s License
- Business License
Step 2: Select the Services You Require
Now you need to select the kind of services that will be extremely beneficial for your business. You need to decide on things like:
- Would you like to go to a physical branch location and then collaborate with a teller?
- Will you be required to handle cash or send checks?
- Do you like the ease of online banking?
Recognizing what you require from your business bank account will assist you in determining the type of account that is best for you.
Step 3: Determine Your Banking Opportunities
Now, Determine what type of bank account is the ideal option for your business. It can include:
- Online Checking Account
- Traditional Checking Account
- Cash Management Account (CMA)
Narrowing down the kind of account you are searching for will assist you in locating the right service provider.
Step 4: Determine Your options
You will need to take a look at the reviews of the customers and shop around to locate the ideal match for you and your requirements. After doing extensive research, you no longer need to sign up for a bank that charges unexpected fees or does not have satisfactory customer service.
Step 5: Select a Service Provider
It is crucial to select the right bank for your particular business. Begin by reaching out to specific lenders or financial institutions, you are aware of and want. In case you have a personal account with goodwill, then they may most likely offer you a nice deal on a specific business account.
Financial Service providers, credit unions, and online banking providers usually provide the same protections and services as traditional banks. Hence, make sure you do not exclude them. Not to mention, you need to keep certain things in mind:
- Convenience: Search for financial institutions that have physical locations in your vicinity, mobile banking options, and many ATMs. If you select an online-only option, ensure you can connect with any help whenever you require it.
- Special Offers: Several banks provide exciting introductory offers, rewards for new accounts, and cash bonuses.
- Protection: You must feel confident that the funds of your business are in the right hands. Search for banks that provide insurance and fund protection.
Lastly, ensure that your new account combines easily with your accounting software to simplify your bookkeeping and manage your expenses.
If you need additional information, keep reading this article to know more about the requirements, different kinds of business bank accounts along their advantages.
What are the Requirements of a Business Account?
Regardless of the type, opening a bank account needs extra personal details, and there is no exemption for a business bank account. Here are the things that any business entity will require:
- Your legal business name as it is displayed on the documents filed with the IRS or your state. In case you are the only proprietor, you must have an imaginary business name certificate or pursue a DBA certificate.
- The actual business address. It must be the same address that is utilized to license your particular business. In case you are a sole proprietor or lack a different business address, you should invest in an alternate address or a PO box.
- Your particular driver’s license. Your bank is likely to copy.
- Your basic contact details, comprising your website, company phone number, and email address.
- Your EIN (Employer Identification Number) in case you are a corporation or an LLC. The bank will utilize this tax ID to make sure your business is genuine.
- Your Social Security Number, particularly if you have a sole proprietorship business.
- Your Identification Proof, like a passport or other type of photo identification.
In case your business is a registered corporation or an LLC, the bank may also ask for copies of the documents given below:
- Articles of Organization, in case Your Business is an LLC.
- The License of Your Business.
- An operating agreement or a partnership agreement in case your business is a partnership one.
- Articles of incorporation, in case your business is a corporation.
If your documents are ready and all set up can simplify the application procedure and enable the account to open quickly.
What are the Different Business Bank Account Types?
When it is about opening a business account, you need to consider some of the options. Here are the main kinds of business bank accounts:
- Interest-bearing Checking Accounts
- Business Checking Accounts
- Business Savings Accounts
Make sure you do proper research and select the account that makes sense for your line of business. Take a closer look at the top three common kinds of business accounts.
1. Business Checking Accounts
For a majority of small businesses, a business checking account is an ideal place to begin. Once you begin making sales and start spending funds on business costs, you must then open a business checking account.
In the simple sense, a business checking account enables you to complete all the primary financial tasks you are required to operate for your business like:
- Receiving or transferring money electronically.
- Doing withdrawals or performing deposits with the help of a business debit card.
- Writing checks and depositing them
- Separating your personal and business checking accounts.
Several banks also provide mobile apps. Such apps enable you to see your balance and also conduct transfers, pay the bills, create automatic bill pay, and track the cash flow from any place.
QuickBooks Checking is a type of online business bank account that is completely free to open. Not to mention, it does not charge any monthly balance and does not need any minimum balances. You get immediate access to a QuickBooks debit card, to enable you to use your money in the right manner. QuickBooks Checking can be used without any subscription to QuickBooks Online via QuickBooks Money, which is a type of money tool that enables you to get payment and handle your business finances efficiently in one platform.
2. Business Interest-Checking Accounts
One more option to take into consideration is a business interest checking account. Usually, interest-bearing accounts have the normal features of a usual checking account, but:
- Some banks provide free small business checking accounts for small and new businesses. In case you are low on funds, a free account may put your business right on track.
- They enable you to earn a specific Annual Percentage Yield on your particular balance.
- Free accounts are always available with strict restrictions on transactions and deposits.
You need to ponder what the purpose of your business checking account is prior to making any decision depending on the price. If you do not, then you will not be able to make the most of your business checking account.
3. Business Savings Accounts
Once your particular business checking account is functioning and running properly, a business savings account is considered an intelligent second step. You need to access a savings account together with your checking account in order to separate your working capital from your savings.
Here are Some Advantages of Business Savings Accounts:
- A majority of business owners accept that they lack adequate cash as a reserve in order to stay in the business for long in the absence of any revenue or meet an unwanted cost.
- A business savings account enables you to save a part of your earned revenue and reap interest on the particular funds that you have kept aside.
- A savings account can assist you in easing your financial hardship. In case of any emergency, you will not be empty-handed.
Search for a high-yielding savings account that offers high-interest rates but charges low fees. A few of the Savings Accounts need a minimum deposit to open, at the same time some require monthly balance requirements. Not to mention, some savings accounts need a monthly maintenance fee which your particular bank may waive if all the other requirements are met. You must not forget that the main purpose is to save money and avoid unnecessary banking fees.
Note: You need to save additional cash with your QuickBooks Checking account in your QuickBooks Money. Arrange your finances with budgeting envelopes that earn interest to enable you to meet your goals quickly.
4. Business Cash Management Accounts
When it comes to handling your business finances, banks are not your only single option. There are several financial institutions and cash management services to select from.
- Online Only: Cash Management Accounts are online accounts that offer services identical to savings, checking and investment accounts.
- Alternate Banking: Cash Management Accounts are the one-stop substitute for traditional bank accounts.
- High Interest Offered: Cash Management Accounts provide high interest rates for all savings accounts. Not to mention, they also include low account fees compared to traditional banks and other lines of business credit.
Business owners searching to streamline their finance management can take advantage of Cash Management Accounts. With a Cash Management Account, it is easy to do all your business transactions from one particular account. You will not need to use different accounts for distinct functions.
However, Cash Management Accounts have their drawbacks too. Since Cash Management Accounts are completely online, you will not get to experience direct and in-person customer service or have the opportunity to go to a physical branch. Cash Management Accounts may also provide lower interest rates on savings accounts, as compared to credit unions or banks.
What are the Business Bank Account Features to Search for?
Once you look for options, search for a business checking account that has an appealing introductory offer along with lower fees.
A few of the checking account and services expenses include:
• Transaction Fees- Several banks issue minimum fees in case you go over any monthly transaction allocation. Usually, the transaction allotment is huge and complex to exceed.
• ATM Fees- A majority of the banks enable you to extract from in-network ATMs minus any fees, however, many will include a flat fee for withdrawing the funds from a different bank’s ATM.
• Maintenance Expense- Banks may ignore maintenance fees in case you are able to address the minimum balance requirement for every month. Many banks make this kind of requirement easy to address for all small businesses.
• Early termination expenses- In case your account is closed early for some reason or the other, this kind of closing for your business or shifting financial institutions, it is quite likely that your bank will levy a certain charge.
• Deposit Expense- Certain banks have restrictions on the amount that can be deposited every day, week, or even month.
While taking into consideration a business checking account, ensure that you comprehend the cost, necessities, along restrictions. In case you think you have a huge number of checking account transactions every month, search for an account that has a high transaction limit.
In case you are thinking of withdrawing cash from any ATM quite often, ensure that you the in-network ATMs in your vicinity to keep away from unwanted fees.
Usually, business checking accounts guarantee minimal fees and additional convenience. However, there are certain drawbacks. A majority of them do not permit cash deposits. Hence, it may be a perfect fit for certain businesses that operate cash transactions. Not to mention, the account is online, hence, a physical branch will not be available.
Note: If you prefer face-to-face banking, online accounts may not be the right fit for you.
What are the Benefits of a Business Bank Account?
A business bank account makes it smooth to monitor business expenses. Not to mention, it can assist you in taking complete advantage of tax deductions plus the credits present to small startups or business owners.
It is an easy, reasonable-priced investment that brings with it a box full of protections and advantages for businesses. In between them, it distinguishes between a personal bank account and a business account, securing your personal identification.
Here is a brief overview of some of the key benefits of a business bank account.
Monitor Income and Expenditure more Competently
Distinguishing your business accounts and personal accounts enables you to monitor expenses, track spending, and prepare a more realistic budget for your particular line of business. Ignore sudden overspending and write off your purchases for your business seamlessly.
Endorse Enhanced Bookkeeping
Accounting is seamless when the spending trail is clear and definite. A distinct business bank account maintains your finances and accounts organized, hence, it is convenient to extract financial reports, create taxes, and issue precise financial statements.
Protects Your Funds
A business bank account separates your business funds from your personal finances. As a result, it safeguards your personal liability. In case your business fails to pay the debts, for instance, your personal assets will not be at stake.
On the other hand, in case you have an unwanted personal financial crisis, it will not impact the credit score of your business.
Offsets Costs with Advantages
Even though certain banks levy a monthly charge to access their bank accounts, you must weigh all the advantages and disadvantages before thinking of opting out. Several times, the capability to safeguard your personal assets plus the features added are completely worth the fee paid per month.
Not to mention, you will also be able to ignore paying the fee if a certain amount is deposited every month.
When it is the perfect time for your business, it is possible to open a business credit card linked to your business bank account. A business line of credit is a safe, low-interest small business loan.
Comprises Features and Tools
Several banks now provide a plethora of tools and features to help you with your business finances. Some of these features comprises online payments, online check cashing, along with interest accrual.
Proper money management is crucial for any small business. QuickBooks has the remedy to several of your important petty business needs, like easily integrating your accounting software with your business bank account when you access QuickBooks Online.
In case you’re a corporation or an LLC, it is highly recommended that you have a business bank account. In case you’re a sole proprietor, it is not need to have a separate account, however, you can open one to assist your business and personal expenditures and keep them separate plus manage your funds more efficiently.
Generally speaking, you must open a business bank account the moment you begin managing business transactions. But prior to that, you must ensure that you select the perfect account type for your line of business. Complete your research to locate the perfect financial institution for you and acquire all the needed documentation to make banking easy for you.
In case you are looking for a business bank account, you should consider QuickBooks Checking. In general, QuickBooks Checking is a type of business checking account that is completely free to open and has no monthly fees or requirement of any minimum balances.
It is possible to get a QuickBooks Checking account even when you lack a QuickBooks subscription when you access QuickBooks Money. QuickBooks Money is a free money tool that enables you to get paid and handle finances all in one stage.
Furthermore, QuickBooks Checking accounts are FDIC insures for USD 250000 and provide quick deposits at zero extra costs, valuable business finances insights, smooth credit card payment integration, and also a free debit card.
We hope that by now all your doubts concerning how to open a business bank account and requirements are all clear. Still, for any kind of queries and questions, connect with us.
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+1-800-596-0806 or chat with experts.
Frequently Asked Questions
When you open a business bank account, it is comparatively an easy process. But there are always some commonly asked questions that often users ask.
How Much is Needed to Open a Business Bank Account?
It depends on the particular institution you select. Most of the banks are very helpful about the amount needed to begin with. You generally need to possess somewhere between USD 10-20.
What Data is needed to Open a Business Bank Account?
Here is the list of the things you require to open a business bank account:
- Driver’s License
- Basic Contact information
- Social Security Number
- Business Address
- Legal Business Name
- Employee Identification Number
Is it Possible to Open a Business Bank Account Online?
It completely depends on the provider. Even though some institutions permit you to open an in-person application, a majority of the institutions prefer online submissions of applications.