What do you need to open a business bank account in the US
Opening a business bank account is an important step to set up a strong foundation for your business. With a dedicated business account, you can easily manage your finances and keep personal funds separate from your company’s funds.
Whether you are a sole proprietor, working in partnership, a Limited Liability Company (LLC), or a corporation you need a business bank account to manage your business finances.
But, choosing a suitable business bank account based on your requirements can be a complicated process. Understand how you can seamlessly open a business bank account and what are the business bank account requirements.
What is a business bank account?
Business bank accounts are specifically designed for business requirements. You can easily file taxes, handle large transactions, and manage payroll with business bank accounts.
Personal bank accounts are meant to handle personal finances—personal credit management, daily use transactions, and personal investments.
Keeping your business and personal banking separate will avoid the mixing of transactions. By opening a business account you can also simplify tax reporting. You can easily identify deductible business expenses and calculate accurate tax liabilities.
A business bank account helps you maintain a clear distinction between personal and business finances based on your requirements. It is essential for accurate accounting and legal protection.
Why do you need a business bank account?
A business bank account helps you maintain and conveniently manage your company finances. It serves many functionalities beyond simple cash flow. By opening a business bank account you can separate and safeguard your assets, and easily manage your invoice and tax deductions.
A business bank account is based on your business requirements. Instead of a personal banking account being used for official expenses, you can have a dedicated account focused on your business expenses.
1. Separation of personal and business finances
By opening a business bank account for your company, you can easily keep your personal and business finances separate, and managing them won’t be a troublesome task.
The business bank account will benefit you by handling all your finances, income, and expenses through a dedicated business account. This will streamline your work to track invoices, generate financial statements, and apply for business loans and grants.
2. Simplified tax preparation
A business bank account makes it easier for you to file your taxes. By opening a business bank account, you can keep your company funds separate from your expenses.
This makes it easier to track your company’s costs. Also, many business bank accounts are integrated with popular business accounting software, making it easy to categorize expenses and identify deductions. This way, you can easily identify and categorize business expenses, saving time and ensuring accuracy during tax preparation.
3. Professionalism and credibility
Using a dedicated business bank account for your business ensures credibility and professionalism. When you open a business bank account, you present an established image to your client and supplier.
Having a business bank account simplifies transactions ensuring that payments and receipts are processed smoothly, further enhancing your business credibility. Clients and partners are more likely to trust a business that operates through a dedicated account. It shows that you’re committed and transparent.
4. Tax preparation
A business bank account helps automate your tax preparation. Managing your tax is much easier if all your business income and expenses flow through your business bank account.
This way you can easily link your business bank account transaction with tax preparation software. With a business bank account, you can easily resolve your tax requirement, since all your business-related expenses and income are in one place and it’s easy to track them.
5. Building business credit
When you open a business bank account, you build a relationship and track record with the bank. This can be beneficial when you are applying for a loan. Lenders will use a business’s credit history to figure out whether or not to give a loan.
Without access to credit, it can be tough for you to make purchases. Maintaining a good relationship and building credit with your bank makes it much easier to obtain a business credit card with a good interest rate.
6. Cash flow management
With a business bank account, you can navigate cash flow management within your organization. Some business banks offer advanced tools to track, analyze and improve cash flow. With these tools, you can easily get real-time visibility into your financial position for thorough insights and informed decision-making.
Business bank accounts also generate reports, including cash flow statements, that show the financial performances of the business over time. These reports help manage cash flow, identify business trends, and track progress toward financial goals.
7. Access to business banking features and services
You can access various business banking features and services by opening a business bank account. You can utilize features such as online banking, mobile apps, and digital payment solutions that make it convenient for you to manage your finances remotely.
Some business accounts also offer merchant services that enable you to accept various forms of payments from customers, boosting sales and customer satisfaction. These features and services help ease your financial operation and save you time and effort.
Streamline finances with Volopay's business account
What do you need to open a business bank account?
To open a business bank account, you need to provide some information about yourself and your business, as well as legal documentation. The paperwork is usually a one-time process, and it is in place to ensure compliance with regulations.
Here is the general list of documents that you require while opening a business bank account.
1. Personal identification
● Valid government-issued photo ID
To open a business account, you are required to have a valid government-issued photo ID. This could be your driver’s license or passport.
● Address
You will require the address that is associated with your business to open a business bank account. This could be your physical storefront, office, or headquarters.
● Personal email and phone number
You need to provide your email and phone number to open a business bank account. This is necessary for two-factor authentication.
● Social security number
A social security number is required for identity verification, ensuring the bank can confirm your identity when opening a business bank account.
2. Business identification
● Business license with the name of the business and the owner's name
While opening a business bank account, you must provide your business license. This document includes the name of the business and the owner’s name, facilitating the formal verification of the business’s legitimacy.
● Employer Identification Number (EIN)
An Employer Identification Number (EIN), or a Federal Employer Identification Number (FEIN) is a unique, IRS-issued nine-digit number that the bank needs to open a business bank account. It confirms your business’s identity for tax purposes.
● Business address and phone number
The business address and phone number are another requirement when opening a business account. This will help the bank reach out to you for any account-related matters, and act as additional verification for business legitimacy.
● Business entity type (sole proprietorship, partnership, LLC, or corporation)
When opening a business bank account, the type of business entity you operate plays a significant role, whether it’s a sole proprietorship, partnership, Limited Liability Company (LLC), or corporation. It informs the bank about the legal structure of your business.
● Industry and type of business you operate
To open a business bank account, you also need to provide information to the bank about the industry and type of business you operate. This context helps the banking institution tailor its services to suit your business needs better, and also helps regulatory compliance for your industry.
3. Business organization documents
● Sole proprietorship
If you are opening a business account as a sole proprietorship, then the documentation requirement is generally minimal. If you operate your business under a name different from your legal name, you will need a DBA (Doing Business As) certificate.
● Partnership
If you are running a business as a partnership, you need to provide the partnership document to open a business bank account. Sometimes, you may also be required to give the partnership’s EIN, which the IRS issues for tax purposes.
● Limited Liability Company (LLC)
In a Limited Liability Company (LLC), you require several key documents to open a business bank account. The primary documents include the Articles of Organization and LLC operating agreements. You also need to provide the IRS-issued EIN.
● Corporation
A corporation has a more complex structure and therefore you will require more detailed documentation to open a business bank account. The most important document is the Article of Incorporation, but you also need to provide more, such as the EIN and a copy of the corporate bylaws.
4. Initial deposit
Once you’ve established your personal and business identities, you may need to make an initial business deposit to open a business bank account.
This deposit can vary widely, depending on the bank’s policies and the type of account you are opening. Making sure you have the funds to make this deposit is part of the preparation process.
How to open a business bank account?
For opening a business bank account, you first need to choose the right provider based on your requirements.
Then, based on the bank's requirements you can prepare the documentation that will be required to open the business account. Go through the details mentioned below and understand how you can seamlessly open a business bank account.
1. Choose the right provider
To open a business bank account, it is necessary to choose the right provider based on the services that you need, i.e. online banking, mobile banking, bill pay, and merchant services.
You can compare business bank accounts’ monthly maintenance fees, pre-transaction fees, and minimum balance requirements. While opening a business bank account you should also consider whether the banks offer products tailored to your business type, like cards and loans.
2. Prepare documentation
While opening a business account you’ll need to provide documents such as your company contact information, personal identification, federal tax ID number (EIN), and your social security number in case you are a sole proprietor.
You might also need to provide your business license, a certificate of assumed name (DBA) if your business advertising name is different from its legal name, and company incorporation documents—keep these documents ready once you know what the account provider needs.
3. Complete the application
Once you are done preparing the documentation, you need to complete the application process to proceed with opening your business bank account.
Many banks offer the convenience of filling out this form online, allowing you to complete the process from the comfort of your home or office. Ensure that you have all the necessary documents and details on hand to streamline the application process. Also, keep an application guide handy if you need help with filling it out.
4. Deposit funds
Now that you’ve completed your application to open a business bank account, the next step is to make the initial deposit to activate your account. This can usually be done via check, cash, or electronic transfer.
The amount of the initial deposit depends on the business bank account, typically ranging from $50 to $1000. Making the initial deposit not only activates your account but also starts your track record with your bank.
5. Get account details
After successfully opening your business bank account and making an initial deposit, the bank will provide you with all the necessary account details. These details are important to manage your business finances and conduct transactions.
You will receive your account number, debit card, online and mobile banking access, business checks, and merchant services. You can start using these based on your business needs.
Easily manage your finances with a business account
How to select the best business account for your needs?
The process of choosing a provider to open a business bank account might be complicated. When choosing a business bank account, you must consider factors that fulfill your business’s requirements. While choosing an appropriate business account you should focus on factors such as accessibility, fees, integration, transaction limit, etc.
1. Monthly account fees
While opening a business bank account, it’s vital to carefully consider the monthly account fees that banks charge. These fees can vary significantly from one financial institution to another.
Monthly fees that the bank charges are for maintaining your business account. These fees can range from a few dollars to several hundred dollars per month, depending on the type of account and the services included.
2. Minimum balance requirements
Before opening a business bank account, it’s important to understand the minimum balance requirement. These requirements ensure that you maintain a certain amount of money in your account at all times.
The amount may vary depending on the bank and account type. Check this requirement and ensure that it is something your business can afford to pay. It’s essential to meet these requirements to avoid paying extra fees.
3. Transaction fees
Considering transaction fees is necessary while opening a business bank account. Assess the transaction fees for making deposits, withdrawing funds, transferring money between accounts, and other services such as wire transfers or ACH payments.
You need to choose a business bank account that offers a balance of cost and convenience. By comparing the transaction fees of different bank accounts, you can select the option that best suits your requirements.
4. Compare account features
When opening a business bank account, you should go through the account features and then compare them to your needs. Business accounts offer a variety of features that can help you to manage your finances more effectively.
You should know your priority and decide—such as, whether you need high transaction limits, access to loans, or multiple users with spend controls. Look at monthly fees, minimum balance requirements, interest rates, and transaction limits
5. Online banking and mobile banking
In this digital era, online banking and mobile banking are necessary to handle your financial operations remotely.
Before opening a business bank account it’s important to consider a bank that provides you with online banking and mobile banking services, along with security features and data protection. Look for features like mobile check deposit and account alerts to stay informed about your account activity in real time.
6. Integration with accounting software
For a seamless operation of your finances, you must be able to link your business bank account with accounting software. This way you can save time on reconciliation, bookkeeping, and making sure your business transaction history is audit-ready.
It also makes tax filing easier. Therefore, consider a bank account offering the feature to integrate your business account with accounting software based on your requirements.
7. Customer service
Effective customer service is key for a customer to have a great experience. Customer services are the support that banks offer to their customers in the case of difficulty. If you are facing any issue related to your bank account, you will want your bank to resolve it on time.
But it would be a huge hassle for you if customer service doesn’t respond in a timely manner. Hence, it’s necessary to consider the business bank account that can effectively and quickly resolve queries.
Why choose Volopay business account for your business?
Volopay is designed based on your business bank requirements. It can simplify finances for your business. With Volopay’s features like business accounts, virtual and physical corporate cards, expense management, and international payments in a single platform you can easily manage your business finances.
1. Streamlined expense management
Volopay offers tools to manage and track expenses efficiently, helping you maintain control over your business finances. These tools are designed based on your business requirements.
You can seamlessly categorize and monitor all your expenditures and get a clear overview of where your money is going. With Volopay expense management, you can automate expense reporting and approval processes, reducing the time and effort required for manual expense management.
2. Smart corporate cards
Volopay offers smart corporate cards, including both virtual and physical cards based on your business account needs. The cards come with customizable spending limits, automated expense reporting, and real-time tracking features so that you can manage your finances better.
You can use these corporate cards for a variety of expenses such as business travel, subscriptions, online vendor orders, and so much more.
3. Seamless software integrations
Volopay offers native integrations that are designed to work smoothly with your existing software, ensuring real-time data sync and reducing manual work.
Volopay integrates with accounting software platforms like Xero, Netsuite, Deskera, MYOB, and QuickBooks that work effortlessly. With these features, you can ensure that all your financial data, from expenses to invoices, flows smoothly between systems without repeated manual input.
4. Hassle-free global transactions
With Volopay, you can seamlessly transfer money globally. You can send money to more than 130 countries with SWIFT & non-SWIFT payment options.
You can easily manage and send money to your vendors and employees anywhere from a single dashboard. Volopay also provides a competitive interchange rate so you can save on every transaction you make, without worrying about hidden fees.
5. Enhanced financial control
Volopay offers financial reports and analytics, giving you better control over your business finances. These tools offer in-depth insights into your business’s financial health, allowing you to monitor cash flow, track spending patterns, and identify areas where you can optimize expenses.
This level of financial visibility and control supports better decision-making, ensuring your business remains financially efficient. It also gives you the option of enhanced spend controls, to make sure policy compliance is enforced company-wide.
6. Reliable customer support
Volopay is committed to providing excellent customer support to assist you with any issues or questions. Whether you need assistance setting up your account, understanding the features, or resolving any technical difficulties, Volopay’s customer support is ready to solve your problem effectively.
Reliable customer support ensures that your business operations run smoothly without disruptions, allowing you to focus on your business.
Volopay's business account for simplified expenses
FAQs
Business bank accounts can have many fees, including monthly maintenance, transactions, ATM, and wire transfer fees. The exact fee structure for your business bank account depends on your specific business provider—make sure you ask them for the full, transparent list before opening an account.
Provided you have all your paperwork in order, you could get approved to open a business bank account on the same day (if going to the bank in person) or in as little as 10 minutes when doing it online.
No, you don't need to have a personal account with a bank to open a business account. You can consider and choose from all your banking options even if you don’t have an existing history with them.
Yes, a non-U.S. citizen can open a business bank account in the U.S. However, you can't open a business account for a foreign entity. This means that before you do anything else, you must officially register your company in the US.
Yes, you can open a business bank account for a startup. This way you can keep your personal and business finances separate from the very beginning, by opening a business bank account.
