The first step in managing your finances is to open a business bank account as soon as you decide to begin spending or accepting money as a business. A checking account, a savings account, and a merchant account are typical types of business accounts. The latter enables you to accept debit and credit card payments from clients.
Opening a business account requires a few steps, but the application procedure is typically simple, and you can open an account in a matter of minutes (although it may take several business days to receive debit and credit cards and checks).
You can apply and submit your paperwork online at several significant banking institutions, such Bank of America. You can hasten the process and open a business bank account as soon as you need one by selecting a bank that accepts online applications.
Read more about the many kinds of business accounts, the advantages of business banking, and how to open a business bank account.
Key take aways
Checking, savings, and merchant accounts are some examples of company bank accounts.
A business bank account can give you purchasing power, reduce your risk of liability, increase your cash flow, enable client debit and credit transactions, and provide tax advantages.
You can quickly open a business account online with several banks.
Selecting an account type, submitting the required papers and information, and making a deposit are all steps in opening a business account.
Types Business Bank Account
Business Checking accounts
For firms that need to write checks, make debit card withdrawals, and receive or send money electronically, small business checking accounts are the best option.
Note
Because there are fewer limitations on how you can manage your money and a variety of ways to withdraw it, business checking accounts may be the most adaptable banking options for businesses.
Electronic, wire, check, and ATM deposits are all acceptable methods of crediting a business checking account. To make reports and transactions simple to monitor, checking accounts can also interface with well-known business tools and accounting software. Moreover, some banks provide Positive Pay, a cash-management device that deters check fraud.
Business Savings Accounts
Business savings accounts are great if you want to generate income, save for large expenditures like equipment, establish an emergency reserve, or both.
High-yield savings accounts are often offered by many institutions at competitive interest rates with little to no monthly fees, depending on your account amount. Other minimum opening deposit requirements may apply.
Accounts for Merchant Services
You will require a business merchant account if you intend to let customers pay using debit and credit cards. When a consumer uses a credit card to make a purchase, the funds are automatically transferred from your merchant account to your business account. The fees for merchant accounts vary, so be careful to familiarize yourself with them before you join up.
The Advantages of Having a Business Bank Account
Small business bank accounts can help you keep your personal and professional finances separate, keep your company documents organized, provide you with limited liability protection, and boost your company's professionalism and reputation.
For instance, merchant accounts let customers use their credit or debit cards to pay for goods and services. These accounts can also provide purchase protection, which keeps customers' private information safe.
Other advantages that company bank accounts can offer are as follows:
Tax returns that are accurate can be filed using information from your business account because business and personal transactions are kept separate.
Greater interest: Compared to a checking account, a business savings account allows you to receive interest on the account balance. Over time, this can support maximizing your cash flow.
Purchasing power: A corporate credit card account can give your company the purchasing power and credit history it needs to make bigger purchases.
Be ready: If your business bank account has a credit line, you can utilize it to buy new equipment or cover unexpected expenses.
Deductions for business expenses: You are able to deduct business expenses from your company's tax return, and doing so is made simpler by the availability of a business account statement that may be used as proof of expenditures.
Do All Businesses Require a Bank Account?
Although it is not legally compulsory for sole proprietors, independent contractors, and limited liability organizations to open a business bank account, doing so might be advantageous during tax season.
It can be simpler to find deductions and file taxes if you have a separate company account that allows you to distinguish between capital expenses, rent charges, insurance costs, and any interest on business loans.
For organizations that want to establish their credit history or apply for a line of credit, business accounts are also essential.
Note
One of the most important ways to establish credit with suppliers and vendors is by opening a business bank account that includes a business credit card. Once you've established your credit score, you may find out if your company has a credit file by contacting a credit reporting service like Experian, and if it does, you can request a credit report.
How to open a Bank Account for a business
Decide where you wish to bank first. Some business owners opt to register a business account at the same financial institution where they already have personal accounts. Keep account restrictions and associated costs in mind as you contrast various banks and financial organizations.
To prove your business while opening a business bank account, you must present official paperwork. A business license and the registration of your trade name may be necessary if you are a sole proprietor, for example, while partnerships may be required to submit partnership agreements or a declaration of qualification depending on the form of partnership.
The general guidelines for creating an account are listed below.
Go to the branch or the bank's website
Visiting the financial institution's website is the simplest way to open a business bank account. Online account opening has the benefit of being accessible anytime, anywhere. Visit the bank location during business hours if you'd prefer to complete this in person.
Account Selection
The best bank account for you will depend on how you compare the various varieties that are offered. If you want to have more control over your money, open a typical business checking account.
If you want to save up your company's income for the future, open a business savings account.
Note
You must first have a business bank account in order to open a merchant account.
Take the time to finalize your business strategy before opening a business bank account because you may require just one account or all three, depending on your business ambitions.
Put Your Information Forward
Establishing a business bank account is easy once you've chosen the type of account you need. Your contribution of specific information, such as: will be required in the process's subsequent phase.
● Your documentation establishing your business
● Your commercial license
● Your company's unique identifier (EIN)
● the social security number you have (if you are a sole proprietorship)
● Partnership agreement (if your business is a partnership)
Put Money Into It
Once you've setup your business account, you'll need to deposit funds. You can accomplish this by depositing cash, writing a check, or using an electronic funds transfer.
Note
Several banks have a remote deposit capture feature (also known as remote deposit), which enables you to deposit checks without ever leaving your house or place of business by taking a picture of the check on your mobile device.
Frequently Asked Questions (FAQs)
How can a foreigner get a bank account in the United States?
Although it is feasible for non-residents or foreigners to open a U.S. bank account, the process is more difficult because most banks demand that you have a U.S. address and Social Security number (or an Individual Taxpayer Identification Number if you are a resident or non-resident alien).
Before applying, it is best to check with your preferred bank about the requirements since they may vary from state to state. Your company must be registered in the US and have an EIN in order to open a business bank account while you are a non-resident.
How much time does it take to open a business account?
You can open a business account online in a few minutes, while the bank may take several business days to examine your documentation and send out the relevant checks and cards.
How much cash is required to open a business account?
There may be different requirements for opening a business bank account. Some banks might not demand any initial deposits, unlike Wells Fargo, while certain conditions, such as maintaining a daily minimum amount, might still be in place.
For instance, Wells Fargo requires a $25 minimum deposit. On a bank's website, pay close attention to the fine print.
