If you’re joining the more than 30 million small business owners in the U.S., you must take several steps to get your business up and running, which can seem overwhelming. One step will be opening any necessary business banking accounts.

A business owner will need to pay bills for the business and receive payments made to the company. Ideally, you’ll have a business checking account and not a personal account that can serve these purposes.

Here is what every small business owner should know about the importance of having business banking accounts and how to open a business bank account.

Why a Business Should Have a Business Banking Account

You might be tempted to start your business using a personal checking account until you get the business up and running and begin bringing in regular revenue. There are no IRS rules or laws that require a business to use a business banking account, but there are some essential reasons for keeping personal and business finances separate.

By using business banking accounts for your business, you can:

  • More easily track the cash flow of your business
  • Protect your personal assets from legal liability of the business
  • Make tax time easier
  • Appear as a credible business
  • Have access to business banking features not available to personal account holders

How to Open a Business Bank Account

Opening a business banking account is more complex than opening a personal account. Here are the steps to get your business account opened as efficiently as possible.

1. Determine Which Types of Bank Accounts Your Business Needs

Depending on the type and size of business you have, you might need a checking account, a savings account, a merchant services account, and a credit card. Here is a brief overview of each account type:

Business checking account: You will keep your business working capital in your business checking account to cover operating costs. Bills will be paid from this account, and payments will be received into this account.

Business savings account: Just as with your personal finances, a business savings account is a place to store funds a business does not need for immediate use. Not only will money earn interest, but many banks will also allow business owners to use a business savings account to cover business checking overdrafts.

Merchant services account: You will need a merchant services account if your business needs to accept credit and debit card transactions without going through a third-party provider such as Paypal.

Business credit card: A business credit card can help you keep business and personal expenses separate and be a good first step to starting a business credit history. Many business credit cards also offer significant rewards.

2. Choose a Bank

Since a business checking account will likely be your primary business account, you should choose a bank with the best options for your business. Then look into the other account types they offer to ensure an overall good fit.

You want to choose a bank that offers an account with the features you will need and fees you can afford. While most business accounts operate in much the same way, different banks will provide very different account features.

Do you need some tips on how to choose a bank? Be sure to consider the following account features before deciding:

  • Service fees
  • Number of monthly transactions allowed daily, weekly, and monthly
  • Bill payment services
  • Online and mobile banking availability
  • Interest rates on checking and linked savings accounts
  • Additional business account services, such as the ability to connect the account to business accounting software

While so much business and banking is conducted online these days, when it comes to business banking, you might want to choose a bank that has a local branch in your area, even if all of your business is done online.

3. Gather All Required Documentation

Making sure you have all the required documentation on hand can make opening a business account go smoothly. So what do you need to open a business banking account? You’ll need to have the following information and documentation available:

  • A government-issued photo ID of the account holder
  • Business information such as business name, address, phone number, and business type
  • Proof of the business Employee Identification Number or owner’s Social Security number depending on the business type
  • Applicable business documentation, such as business license, business name registration, articles of organization, partnership agreement, etc.

4. Apply for the Account

Some banks will allow the opening of business accounts online, and some require a visit to a physical branch. Either way, you will need the same documentation and information to open an account.

If you have an appointment at a physical branch, make sure you bring copies of all necessary documentation with you to the appointment. If you are opening an account online, make sure you’ll have the ability to upload any required documentation.

5. Fund Your Business Account

Some banks will require a minimum deposit to open a business account. Others will allow you to make the first deposit at a later date. You can typically transfer funds from another account, deposit cash, or deposit a check made out to the business to fund the account.

Choose the Best Bank for Your Business

Now that you know how to open a business bank account, take some time to compare the features of different business banking accounts. Ultimately, the best bank for business is the one that has all of the features your business needs.

Finding the right bank might be the most challenging part of opening an account. Contact us to learn more about the many benefits we can offer business banking account holders