The best business checking accounts can help you keep track of your business’s day-to-day financial transactions. However, many new business owners hesitate to start because of the perceived complexity. There are required documents, rules, and regulations about using the account.
But setting up a business checking account doesn’t have to be stressful or time-consuming. In this article, we’ll help you determine whether or not you need a business checking account and show you how to open that account when you’re ready.
Table of Contents
- Do I Need a Business Bank Account?
- 1. Determine What Type of Business Checking Account You’ll Need
- 2. Research Banks That Offer Business Accounts
- 3. Gather the Necessary Documentation
- 4. Open the Checking Account
- 5. Fund the Checking Account
- 6. Route All Business Income and Expenses to the New Account
- 7. Notify Necessary Parties of the New Account
- Where to Open a Business Checking Account
- FAQs
- Final Thoughts
Do I Need a Business Bank Account?
If you’re starting a business, you may wonder whether you need a separate business checking account or if you can use your personal account for both business and personal transactions.
The answer depends primarily on the type of business you own. For instance, if you own a sole proprietorship with limited income, limited expenses, and little to no liability risk (working as a part-time freelance writer is an example), you may not need to open a business checking account.
However, if your business is a partnership, C-corp, LLC, or has liability risk, having a separate business checking account is important. In this case, you need to track your income and expenses closely, and having a separate business bank account allows you to do that.
1. Determine What Type of Business Checking Account You’ll Need
You’ll want to start by gathering the following information, to help you choose the right type of account for your business:
- The amount of money you plan to keep in the account
- The number of deposits you’ll make each month
- How you’ll make deposits (in person, online, ACH transfer, wire transfer)
- How you’ll withdraw money when needed (ATM, check writing, online transfer, etc.)
- An estimate of the total number of transactions (deposits, withdrawals, cashed checks, etc.) you expect to make each month
- Whether or not you’ll need payroll services to pay employees or independent contractors
- Whether or not you’ll open a business savings account (highly recommended) and if so, how much money you plan on keeping in that account
Knowing at least roughly estimated answers to these questions will help you to make a list of services you want from your business bank.
2. Research Banks That Offer Business Accounts
Next, you’ll want to research banks that offer business accounts. You could start by checking out our list of the best business checking accounts. Being able to compare the top options in one place can save you a lot of time.
You can also visit the websites of banks you already deal with to see what they have to offer in terms of business bank accounts.
3. Gather the Necessary Documentation
Once you’ve chosen an account, you’ll want to prepare for the account opening by ensuring you have the following documentation:
- Two forms of identification
- Your Social Security number
- Your company’s tax ID number (if applicable)
- Business registration and ownership agreements
- Any partnership or corporation agreements
- Your business license
- Any DBA (doing business as) documents
DBA documents apply if you own a sole proprietorship that is run under a business name. For example, an electrician named John Smith might run his business under “John’s Electric Service.”
If so, John’s state might require him to fill out a DBA form that allows him to transact business as John’s Electric Service.
Bring all of your business information to the account opening, knowing that you may need some or all of it.
4. Open the Checking Account
Once you’ve gathered all the necessary information, you can open a business checking account online or in person.
If you’re opening an account in person at a bank or credit union, your institution’s customer service rep will guide you. If you’re opening an online account, follow the directions provided to you.
5. Fund the Checking Account
Once you’ve opened your account, you’ll need to deposit funds. You can usually fund it with cash, a personal check made out to your business (from you or clients), or via an online transfer, wire transfer, etc. Depending on the financial institution’s policies, you may or may not need to fund the account immediately.
6. Route All Business Income and Expenses to the New Account
Once your account is active, it’s important to route all of your business income and expenses, including business purchases, through your new business checking account. If you’re using a business credit card for company purchases, you would pay the credit card balance with funds from the business account.
7. Notify Necessary Parties of the New Account
You may need to notify other parties that you opened a business bank account. For instance, if you have a bookkeeper or accountant, they’ll want to be notified regarding the new account.
Any auto-withdrawals or deposits you have that pertain to your business will need to be changed to reflect the new account information as well.
Related Post: 10 Best Business Checking Accounts
Where to Open a Business Checking Account
You can open a business checking account in person at any bank or credit union. But more and more business owners are choosing to deal with online banks and fintechs for their business banking. Many online-only banks offer features such as no-fee banking, unlimited transactions, and free ATM withdrawals.
Here’s a closer look at a couple of popular online business checking accounts:
Axos Bank
Axos is an online bank that offers a wide range of personal and business banking products. Its Basic Business Checking Account is ideal for smaller businesses. There are no monthly maintenance fees or minimum balance requirements. You also get unlimited transactions and ATM reimbursements. Deposits made into Axos business accounts are protected with FDIC insurance up to $250,000.
At the time of this writing (Dec 2023), Axos is offering a $400 bonus when you open a business checking account using promo code NEW400.
Novo Business Checking Account
Novo isn’t a bank but a fintech that offers small business banking products through its partnership with Massachusetts-based Middlesex Federal Bank. Novo’s business checking account has no monthly fees and unlimited transactions. You can also get any ATM fees reimbursed up to $7/month.
In addition to no-fee banking, the account allows you to send recurring or one-off invoices directly from your Novo account. Novo also connects to popular payment apps like PayPal, Square, Stripe, Amazon, and Shopify, making it ideal for businesses that sell products. Deposits are covered with FDIC insurance up to $250,000.
Check out our full Novo Business Checking review.
BlueVine Business Checking
You can apply for a BlueVine business checking account online within minutes. You can choose from two plans: Standard or Premier. The standard account comes with no monthly fees and unlimited transactions, and you can earn 2.00% on balances up to $250,000. Incoming wires and ACH transfers are also free.
You can upgrade to BlueVine Premier for $95/month, but the fee can be waived if you maintain an average account balance of $100,000 and spend at least $5000/month with your BlueVine Business Debit Card. Premier boosts the account APY to 4.25%, gets you 50% off standard payment fees, and adds priority customer support. You can also qualify for FDIC insurance on balances up to $3MM. For more information, check out our full review of BlueVine.
Chase Business Complete Banking®
Chase’s Business Complete Banking platform is more than a business checking account, allowing you to accept credit card payments. It has the backing of one of America’s largest financial institutions, giving you access to over 4,700 branches and 15,000 ATMs nationwide.
You can open your Chase Business Complete Checking account online or in person. There are no minimum balance requirements or in-network ATM fees, and you get unlimited electronic transactions. Unlike the other accounts featured above, there is a $15 monthly fee.
However, you can waive the fee by meeting certain conditions, including maintaining a $2,000 minimum monthly account balance or making $2,000 in net purchases with your Chase Ink Business Card. Here’s our full review for more information.
FAQs
The answer to this depends on the type of business you have. Check with your state’s Secretary of State website for more information.
All banks are different, but many online and brick-and-mortar banks offer business checking accounts with no minimum balance requirement.
You can designate who can be a signer on your business checking account. However, you’ll likely want to limit that designation to someone who is an active part of your business, such as a business partner or bookkeeper.
The type of business checking account you’ll want to open depends largely on your business type, how many transactions you make each month, and more.
A customer service rep at the bank you’re opening your account at should be able to help you determine what type of business checking account you should open.
Related Post: Best Bank Accounts for Freelancers and Side Hustlers
Final Thoughts
Opening a business banking account doesn’t have to be as complicated as some make it out to be. By spending some time researching different account options and making sure that you have the necessary documentation up front, you can ensure a smooth account opening process.
When it comes to choosing an account, look closely at online offerings like the ones listed above. You’ll save money with an online-only bank or fintech unless you have to make regular cash transactions in a physical branch. You can also benefit from additional tools, such as invoicing and the ability to accept payments. If you do need branch access, you may want to consider Chase’s Business Complete Checking.
