Open a business account when you're ready to start accepting or spending money as your business. A business bank account helps you stay legally compliant and protected. It also provides benefits to your customers and employees.
Benefits of business bank accounts
You should open a business bank account when you start accepting or spending money for your business. Joint business accounts include a checking account, savings account, credit card account, and merchant services account. Merchant services accounts allow you to accept your customers' credit and debit card transactions.
You can open a business bank account once you've gotten your federal EIN.
Most business bank accounts offer perks that don't come with a standard personal bank account.
- Protection. Business banking offers limited personal liability protection by keeping your business funds separate from yours. Merchant services also offer purchase protection for your customers and ensure their personal information is secure.
- Professionalism. Customers will be able to pay you with credit cards and make checks out to your business instead of directly to you. Plus, you'll be able to authorize employees to handle day-to-day banking tasks on behalf of the company.
- Preparedness. Business banking usually comes with the option for a line of credit for the company. This can be used in the event of an emergency or if your business needs new equipment.
- Purchasing power. Credit card accounts can help your business make large startup purchases and help establish a credit history for your business.
Find an account with low fees and good benefits.
Some business owners open a business account at the bank they use for their accounts. Rates, fees, and options vary from bank to bank, so you should shop around to find the lowest costs and the best benefits.
Here are things to consider when you're opening a business checking or savings account:
- Introductory offers
- Interest rates for savings and checking
- Interest rates for lines of credit
- Transaction fees
- Early termination fees
- Minimum account balance fees
Here are things to consider when you're opening a merchant services account:
- Discount rate: The percentage charged for every transaction processed
- Transaction fees: The amount charged for every credit card transaction
- Address Verification Service (AVS) fees
- ACH daily batch fees: Fees charged when you settle credit card transactions for that day
- Monthly minimum fees: Fees charged if your business doesn't meet the minimum required transactions
Payment processing companies are an increasingly popular alternative to traditional merchant services accounts. Payment processing companies sometimes provide extra functionality, like accessories that let you use your phone to accept credit card payments. You must consider the fee categories similar to merchant services account fees. If you find a payment processor you like, remember that you'll still need to connect it to a business checking account to receive payments.
Get the documents you need to open a business bank account.
Opening a business bank account is easy once you've picked your bank. Go online or to a local branch to begin the process. Here are some of the most common documents banks ask for when you open a business bank account. Some banks may ask for more.
- Employer Identification Number (EIN) (or a Social Security number if you're a sole proprietorship)
- Your business's formation documents
- Ownership agreements
- Business License
