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Opening a business account is a crucial step to making your business official. You may have noticed high fees and low-interest rates if you have been in business for a while. You might be rethinking your options.
It’s more complicated than opening a personal account, but not too much. You’ll learn everything you need to.
How to open a business bank account
Your business can benefit from the correct bank account. How to open a business bank account
Gather all your documents. Most bank applications require the same documents, which will be discussed below. You can speed up the application process by assembling and organizing these documents in advance.
Think about your needs. Not all small business banks have the same features. You won’t have to worry about a merchant account if you don’t accept credit cards regularly.
Think about your needs: What is most important to YOU? Are you more interested in earning a high-interest rate on your account or not paying any fees? This will guide you in your search.
Compare banks: Make a list and note the essential details for you. For example, minimum balance requirements, integration with accounting software you use, business credit cards or loans you may apply for in the future, etc.
Research your top choice more in detail: Obtain a complete list of fees and policies applicable to the business account. Please read through it and take notes as necessary. You will better understand what you may face in the future.
Open a business account with a bank: Depending on your bank, you can apply online, by phone, or in person. You will need to submit the documents you collected earlier, and depending on the bank, you may also need to provide additional details.
Open the account and make an initial deposit: If you are approved for a new account, transfer funds from your business to it.
Close an old business account: If your business previously used another bank account, contact the bank and close the account. You won’t be charged for any additional fees or fall victim to fraud.
You can accept payments from customers without divulging your personal account number. Tax time is also accelerated.
What you need to open a business bank account
You’re probably familiar with the process of opening a personal account. Opening a business account’s a little more complicated, but you already have the information.
Documents and Business Information
The bank will also want to confirm that your business is legitimate. The documents the bank may require will depend on whether you are an LLC, sole proprietorship, or another type of business. These requirements could include:
Any other DBA (doing business as) names registered.
Registration of businesses.
Articles of Organization for LLCs are an excellent example of documents used to form a company.
Business Operating Agreements.
Business Ownership Agreements.
You should be aware that only some businesses will have these documents. If yours does, however, you will need them to open a bank account for your company. For example, sole proprietors will need help to provide business formation documents.
Employer Identification Number
An employee ID Number is a business’s equivalent of a Social Security Number. You use it when dealing with the IRS or other business-finance-related matters, like opening a business bank account. You can quickly request a free EIN by applying online.
You don’t need an EIN if you are a sole proprietor. Having an EIN is good, so you keep your Social Security number private when dealing with business issues. 1
Bank Minimum Deposit
Some banks require that you deposit to open a business account. If this is the case, you should check in advance to see if there are any requirements. In that case, ensure you have enough funds for the transfer. Remember that the minimum deposit to waive maintenance fees may differ from the minimum initial deposit.
Business Savings Account
It’s a good idea to have a business saving account, even though it isn’t required. You can use it to store long-term money you don’t need and earn interest. It can be used to save for tax payments or new investments. These accounts work similarly to money market business accounts. It’s worth investigating both to determine which one best suits your needs.
Merchant accounts, or “merchant services accounts,” allow you to accept credit card payments and protect your customers’ data. Look for merchant accounts with low fees if you run a retail store or accept credit cards frequently.
In addition, many business owners use payment processing companies such as PayPal or Square, which are not technically bank accounts, to accomplish the same task. You can compare the two options and decide which is best for your business. You may not require either if your company does not accept credit cards.
What to consider when opening a business bank account
When you are shopping, here are some things to consider:
Access to local branches: If your business deals with cash regularly, you must have access to the nearest branch. This might be fine if you only accept checks or digital payments.
Fees, minimum balances, and fees: Business bank accounts often charge more payments – and higher ones – than personal accounts. You can keep more money by choosing a bank that charges lower fees.
Customer Service: Would you like to have a hands-off bank, or would you rather be able to call for assistance at any time? This is important, for instance, if you have a credit card machine that breaks down during a busy sales period.
Rewards and benefits: Some banks for business offer additional perks and features. It is more common with banks that provide business cards. These often come with cash back or travel rewards.
ATM Access: How many ATMs in the network does your bank have if you will be traveling and need cash? What fees will you be charged if you use an ATM outside the network?