If you’re just starting a business or you have been in business for years, having a dedicated business bank account is essential. A bank account is critical for all financial matters such as business expenses, employee paychecks, taxes, and more.
Why do you need a business account?
Opening a separate bank account for business transactions versus personal transactions helps track business growth, business expenses, and business income.
What are the differences between personal bank accounts and business bank accounts?
Personal bank accounts are different from business bank accounts in a handful of ways. Most notably, business bank accounts have lower interest rates with a higher threshold of the minimum balance in the account. To open a business account, there will be documents needed, too.
On the other hand, opening personal bank accounts typically is free and requires very little to open. Generally speaking, they also have no minimum balance requirements.
What type of small business bank account should you start?
There is no right or wrong type of bank account for a small business. Each business is different, meaning their financial needs are also different. What each business owner needs depends on the size of their business and what type of business they run.
Some facets of business bank accounts are related to all business owners though, and when they are picking the bank where they want to open their account, there are things to take into account. Each bank is different, offering different services suitable for different types of businesses.
In the pursuit of opening a small business account, take into account:
What documents will you need to open a small business account?
When you open a business account, you’ll need to have several documents prepared. Different banks and different types of accounts have various requirements, so it’s important to have chosen your bank, obtained your business name, and a taxpayer identification number.
Depending on what type of business you have in terms of organization and structure, there will be corresponding paperwork.
These are the documents that you may need to open an account, based on your business structure.
Social security number or employer identification number
A partnership agreement
Articles of incorporation
Articles of organization
How to open your small business bank account
If you are ready to open a small business bank account, you can follow the steps below. After completing them, your bank account will be open and running smoothly.
Determine the needs of your business based on size and type of business.
Pick the bank you want to open an account with, based on the assessment of your business needs and the offerings of different banks.
Acquire your business license, unless you are creating a business under your own name. You need to file for your business name to make sure there isn’t another business with the same name, which you can do at the county clerk office or state government office.
Make your way to the bank with all the documents you need.
Deposit your funds!
Opening a business bank account is really helpful for all businesses, no matter how big or small. Identify your business needs, how it will be structured, and the type of bank that will offer you the features that fit with your business’ financial goals.