So you’ve started your first business – congrats! No matter how big or small of a business, this is an important step into a new world of business and your business finances. While it may be easy to have your payments and income go directly to your personal pocket, as you gain more clients and business, for current and future purposes you’ll want to start separating the two which is why you should know how to open a business bank account.
Why open a business bank account?
Tracking income and expenses is difficult when you have mixed funds and opening a business banking account will come in handy for not just organizing your business, but for accounting purposes as well. It is more professional to have a separate business account and is extremely important as many business expenses can be written off when tax time comes around.
Steps to open a business bank account
Step 1: Select your bank
The first step to opening a bank account is choosing which bank you want to use. Business banking is different from personal so where you have your personal account may not be the best bank for your business. Research local financial institutions to see if there are any specialties and understand what you are provided as banks offer several different types of account.
Many banks offer business checking accounts for free though there may be some conditions with these accounts such as a minimum balance requirement and a limited number of transactions. Check with your bank’s business account department.
Step 2: Know what information you need
Depending on the type of business you are opening, the documents you need to open a business bank account vary according to the SBA. All businesses need a taxpayer identification number.
Corporations
- Employer Identification Number
- Articles of Incorporation
LLCs
- Social Security number or Employer Identification Number
- Articles of Organization
Sole proprietorships
- Social Security number or Employer Identification Number (EIN)
- Business license or business name filing document
Partnerships
- Employer Identification Number
- Partnership agreement
- Business name filing document
Once you have these documents, you’re good to fill out the application for your business account!
Step 3: Sign up online or in person
Based on COVID regulations of your nearby area, you may be limited to signing up in person but most all banks offer business account banking services online! If you have questions about the process, it may be helpful to chat with someone from the bank over the phone prior or during your registration process. Be sure to double check your information and take your time to verify all the text is correct.
Step 4: Check to make sure everything is working.
You did it! You’ve submitted your application and confirmed the opening of the account. One tip is that once the account is open, trying sending a deposit from a new client or customer into your account or make a small business purchase on your business card to make sure everything is good and working. Some online banking systems allow you to link your personal and business dashboard so you can view everything that’s happening money wise at once in both accounts.
