A business bank account creates a wedge between your personal and business finances. This separation can protect your investments during legal actions and help you save for your personal retirement goals while growing your company. You can also capitalize on more tax deductions with a business bank account. Want to get in on the action? We will share everything you need to know about opening a bank account for your business.
Things to Consider Before Opening a Business Bank Account
Many banks will happily work with you to create a business account, but not all of them have your best interests in mind. With some searching, you can find high-quality financial entities that will provide the right business bank account for your needs. You should consider these factors when reviewing bank accounts.
Application Process
Banks will request some documentation during the application process, such as personal and business IDs. However, most companies have standard application processes that only take a few minutes.
Monthly Maintenance Fees
Some banks charge monthly maintenance fees to keep your business bank account open. Some financial institutions will waive these fees if you have enough funds in your balance. You should look for banks and other financial entities that have minimal maintenance fees or ones that you can easily get around.
Minimum Balance Requirements
Some banks have minimum balance requirements you must adhere to if you want to avoid maintenance fees. Some minimum balance requirements can feel restrictive. You should consider how much money you can afford to keep in your bank account that you don’t need to put into your business.
Transfers, Wires, and Checks Charges
Small costs can add up, especially for transactions you frequently perform. Check with the bank to see how much you’ll have to pay for each of these financial activities. Some banks may offer free or discounted options for these charges.
ATM Fees
If you frequently use ATMs to withdraw cash, it’s important to know how much you’ll have to pay each time. Some banks have enormous ATM networks that allow you to save on withdrawals. Check if your local ATM is part of your bank’s network, as you will have to pay additional fees if you use an out-of-network ATM to withdraw cash.
Business Cards
Some financial institutions let you create a business credit card alongside your business bank account. Business credit cards have better rewards programs than most personal credit cards, and they let you build your credit on every purchase. See what rewards you can get from a business credit card and the interest rate on the line of credit. You should also check if the card has annual fees, as it will then become one more expense for you to manage.
Customer Service
As you use your bank account, you’ll have questions and need help with issues as they come up. An excellent customer service team can put you at ease and resolve problems quickly. In addition, a great team lets you return to your business sooner instead of having to endure numerous phone calls without a solution in sight.
Perks and Rewards
Some business bank accounts have perks and rewards that incentivize you to spend. You’ll have to make investments in your business anyway, and you might as well get paid for something you already planned on doing. Some financial institutions go over the top with their perks and rewards, making them more captivating for small business owners. Some banks also offer more rewards for specific spending categories. If you spend most of your money in a single category, it may be worth exploring rewards programs that focus on those categories.
Mobile App and Online Banking
Your bank’s mobile app lets you access finances on the go and can become vital for some transactions. A clunky online banking experience will make banking more cumbersome. You should only use a bank that offers a dashboard that’s easy to navigate. It shouldn’t take long to make transfers, pay credit card debt, and do the other basics.
Financial Tools to Help Your Business
Banks are more than places to store your money. Financial institutions have been competing to provide clients with superior financial tools that make money management easier. Some of these tools track spending, reveal insights that can grow your business, strengthen your credit score, and provide other advantages. You should bank with a financial institution with features that can build your wealth. Money storage isn’t enough anymore.
What is Typically Required to Open a Business Bank Account?
Thinking about opening a business bank account to keep your company finances separate from your personal bank account? You’ll need a few documents and some funds to open your account. Banks will ask for the following details if you apply for a business bank account.
Identifications: Personal and EIN
You will have to provide identification documents for yourself and your business. For example, you will need your personal social security number, personal state or federal ID, and EIN for your business to open a bank account.
Your Business Information
Banks will want more information on your company before giving you a business bank account. They will need the following details to create your account:
- Your company’s address and phone number
- Your business name
- The names that go on the bank account
- Legal business documentation (i.e., LLC documents, federal tax ID number, etc.)
Initial Deposit Amount
Some banks require an initial deposit to fund your account. Avoiding this minimum deposit can stall the application process or result in an overdraft fee.
How to Open a Business Bank Account
Once you have the necessary documents, it’s time to open your business bank account. These simple steps will help you get your account up and running.
1. Understand the Requirements
Review the requirements before applying for a bank account. You should look over the minimum balance requirement, monthly maintenance fees, annual charges, and other details before getting started.
2. Decide Which Type of Business Bank Account You Need
You’ve committed to creating a business bank account, but which one should you choose? Small business owners can create multiple types of bank accounts for their companies. You can choose from the following options:
- Business checking account: These funds are easier to spend. Most business owners use this account to make payments.
- Merchant account: This account connects with your checking account and allows you to receive credit and debit card payments from your customers.
- Business savings account: Stash your money away in an account with a high-interest rate. These accounts usually help with paying taxes or making a big investment in the future.
3. Choose Where to Open Your Account
When choosing where to open your business bank account, you should consider all factors, such as fees, security, customer service, and convenience, among others. For example, some banks offer free checking accounts, while others charge monthly maintenance fees for each transaction. The best way to find out what banks offer these features is to visit their websites and compare them side-by-side. The bottom line is that you should choose a bank that helps your business grow and gives you the best banking experience.
