If you own a business — or if you have a part-time gig or side hustle — it’s wise to keep your business expenses separate from your personal expenses with a dedicated business bank account. A separate account can simplify bookkeeping, shield you from liability and provide other benefits you won’t find with a personal bank account.
In our step-by-step guide, we at the MarketWatch Guides team will show you how to open a business bank account.
Key Takeaways
- To open a business bank account, you’ll need your personal contact information, your business name, Employer Identification Number (EIN) or Social Security number (SSN), business formation documents and other relevant information.
- Business bank accounts come with protections not found on personal bank accounts such as limited personal liability protection, security for your clients’ information and increased purchasing power.
- Opening a business bank account can help small-business owners keep their personal and business expenses separate.
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How To Open a Business Bank Account
If you’re just establishing a new business and are ready to open a business bank account, here’s how to get started:
1. Choose a Bank
First, you’ll need to choose a bank. You’ll want to consider a bank’s size and number of locations. If you anticipate going to a bank frequently to make cash deposits or withdrawals, choosing a bank with a convenient location should be near the top of your list.
You should also weigh the type of customer service experience you might find at a larger, national bank vs. a smaller community bank or credit union. For example, if you might need a business line of credit, you might get more personalized service from a smaller bank than a larger institution.
Although some online-only banks offer business bank accounts with lower account fees than brick-and-mortar banks, they may not offer the suite of services you’ll find with a traditional bank. For example, you may not be able to make cash deposits with some online banks, and you may have fewer customer service options. But if you’re just seeking basic business banking services, an online bank could be a good fit.
Also, consider the rates and fees associated with a particular bank. Many banks charge monthly maintenance fees and have minimum deposit and minimum balance requirements. If you’re interested in a business savings account, be sure to find out the interest rate or annual percentage yield (APY) on deposits.
2. Gather the Required Documents
To apply for a business bank account, you’ll typically need to provide certain documentation, which may include:
- Identification: Nearly all financial institutions will require you to show a government-issued personal ID like a driver’s license or passport.
- An SSN if you’re a sole proprietor: You may also be asked for other contact information such as your company address and phone number. If your business does business under another name, known as “doing business as,” or a DBA, you’ll need to provide the documentation.
- Business documentation: You’ll need to provide your business registration certificate and your business license(s).
- Any ownership agreements: If your business is a partnership, like a limited liability partnership, you’ll need a signed and dated partnership agreement or certified evidence of registration.
- Corporate documentation: For corporations, you’ll need to bring your articles of incorporation and corporate bylaws.
3. Meet With a Banker
Many banks offer more than one type of business bank account. Even if you’ve narrowed down the bank you’re interested in, you may want to make an appointment with a bank representative to review the various options. Some bankers may even work with you to waive or reduce any minimum opening deposit requirements as an incentive for opening an account with them.
>> Related: Learn more about opening a business bank account online
Types of Business Bank Accounts
There are three main types of business bank accounts:
Business Checking Accounts
Similar to a personal checking account, a business checking account can function as the hub for your finances. You can use this account to pay expenses, receive deposits and track daily transactions. These accounts typically include checks and a debit card to make purchases and withdrawals.
Business Savings Accounts
Just like a personal savings account, a business savings account offers a place to set aside funds at a higher interest rate than a business checking account. These funds can be used to make large capital expenditures without having to take out a loan or used to pay for unexpected expenses.
Merchant Accounts
A merchant account is required for a business that plans to accept credit cards as a form of payment. With this type of account, an operating agreement is made between you (the merchant), your bank and the credit card processing company.
The agreement spells out the terms and fees for your business to process credit cards, including the annual or monthly fees, plus the transaction fees you’ll pay to the processing company. The merchant account functions as the holding spot for customer funds until the transaction has cleared and can be deposited into your business checking account.
>> Related: Learn more about the best high-yield savings accounts
Benefits of Business Bank Accounts
A business bank account can benefit any type of business, from sole proprietorships to companies with hundreds of employees. A bank account dedicated to your business transactions comes with protections you won’t get from conducting business with your personal bank account.
Having a separate business account can shield your personal assets from any lawsuits against your business. If you mix your personal and business finances in the same account — even if you’ve formed a limited liability company (LLC) for your venture — your personal assets will no longer be protected from lawsuits and you could be held personally liable for any business debts.
Business bank accounts can provide a measure of protection against your personal information since you’ll typically use your company’s tax ID number and not your Social Security number to open an account.
Many types of small businesses — including sole proprietors, independent contractors and gig workers — are required to file taxes quarterly. By having a business account separate from your personal finances, it’s easier to subtract your business expenses from your business income than it would be if your funds were mixed in with your personal finances.
A business bank account can help you establish business credit, which can be beneficial if you need to apply for loans or other types of financing for your business.
Many business bank accounts can also sync with your bookkeeping software to automate your transactions and streamline tasks like payroll, invoicing and other aspects of managing your company’s cash flow.
When it comes to your customers and other parties you conduct business with, a business bank account conveys a level of professionalism that can’t be matched by having someone make a payment to your personal bank account. Having your business name on company checks, credit cards and other financial tools implies to vendors and customers that your company is not a hobby and signals to the IRS that your company is legitimate.
Best Business Bank Accounts
The right business bank account for you will be the one that can satisfy most of your banking needs with fees that fit your budget. The best business bank account will be different for every business owner.
Here are some examples of the top business bank accounts from Capital One and Chase Bank, along with what they offer.
Capital One Business Bank Accounts
Capital One offers a few business checking and savings accounts, all with different features and perks to suit different business needs.
| Capital One Business Account | Monthly Fee | APY* |
|---|---|---|
| Basic Checking | $15 (waivable if meet terms) | N/A |
| Enhanced Checking | $35 (waivable if meet terms) | N/A |
| Business Savings | $3 (waivable if meet terms) | 0.55% on the first $10,000 2.12% on balances from $10,000 to $5 million and the standard rate on account balances above $5 million (12-month APY) |
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Capital One Basic Checking Account
The Basic Checking account doesn’t earn interest. It comes with a $15 monthly service fee, which is waivable if the average daily balance for the previous 30 or 90 days is $2,000 or more. You’ll also get access to more than 70,000 ATMs without fees, and there are no fees for digital transactions such as online bill payments, mobile deposits or automated clearing house (ACH) payments.
Capital One Enhanced Checking Account
The Enhanced Checking account also doesn’t earn any interest, and it has a $35 monthly service fee which can be waived if the average daily balance for the previous 30 or 90 days is $25,000 or more. This account also comes with no fees for:
- Incoming domestic wire transfers
- First five outgoing domestic wire transfers each month
- Mobile deposits
- Online bill payments
- ACH payments
Capital One Business Savings Account
The Capital One business savings account has a $3 monthly service fee, but this fee is waived with a $300 minimum balance. You can make up to six free withdrawals per month.
Capital One also guarantees a promotional interest rate to new business bank account holders for the first six months. The promotional rate will vary depending on the account balance. It’ll expire 183 days after the account is opened, after which the standard rate in effect will apply.
Chase Business Bank Accounts
Chase offers several different types of business checking and savings accounts to open.
| Chase Business Account | Monthly Fee | APY* |
|---|---|---|
| Chase Business Complete Banking | $15 (waivable if meet terms) | N/A |
| Chase Performance Business Checking | $30 (waivable if meet terms) | N/A |
| Chase Platinum Business Checking | $95 (waivable if meet terms) | N/A |
| Chase Business Total Savings | $10 (waivable if meet terms) | 0.01% on all balance tiers |
| Chase Business Premier Savings | $20 (waivable if meet terms) | 0.01% (standard rate) to 0.02% (relationship rate) on all balance tiers |
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Chase Business Complete Banking
The Chase Business Complete Banking account has a $15 monthly service fee, which can be waived if you do one of the following:
- Have a $2,000 minimum daily ending balance
- Have $2,000 in eligible deposits from Chase QuickAccept or Chase Payment Solutions transactions
- Make $2,000 total in purchases on a Chase Ink Business Card
- Maintain a linked, eligible Chase Private Client or J.P. Morgan Classic checking account
- Meet the requirements for Chase Military Banking
This account also offers unlimited debit card and Chase ATM transactions and up to $5,000 in cash deposits without fees per statement cycle.
Chase Performance Business Checking
Chase Performance Business Checking has a $30 monthly service fee, which can be waived if you maintain an average beginning day balance of $35,000 or more across qualifying, linked business deposit accounts.
This account also offers 250 transactions per month at no charge, $20,000 in cash deposits without fees per statement cycle, free incoming wire transfers and two outgoing domestic wire transfers without fees per statement cycle.
Chase Platinum Business Checking
Chase Platinum Business Checking has a $95 monthly fee, which can be waived if you meet one of the following:
- Maintain a $100,000 combined average beginning day balance across qualifying, linked accounts
- Maintain a $50,000 combined average beginning day balance with a linked, eligible Chase Private Client or J.P. Morgan Classic checking account
This account also offers 500 transactions at no charge, $25,000 in cash deposits without fees per statement cycle, free incoming wire transfers and your four most expensive outgoing wire transfers at no charge per statement cycle.
Chase Business Total Savings
Chase Business Total Savings has a $10 monthly service fee, which can be waived if you meet one of the following:
- Maintain an average ledger balance of $1,000 or more in this account each statement period
- Link a Chase Business Complete Banking account
Similar to Chase’s personal savings accounts, this account earns a low APY, but it’s not eligible to earn relationship rates. There’s no charge for the first 15 transactions per month (then 40 cents each) and the first $5,000 in cash deposits each month do not carry any additional fees.
Chase Business Premier Savings
The Chase Business Premier Savings account has a $20 monthly service fee, which can be waived with one of the following:
- Maintain an average ledger balance of $25,000 or more in this account each statement period
- Link an eligible Chase checking account
The first $10,000 in cash deposits per month do not carry any additional fees, and there’s no charge for the first 30 transactions per month (then 40 cents each). This savings account also earns interest, including relationship rates.
>> Related: Learn more about the best savings accounts
Exploring Additional Business Banking Services
Business banking services go beyond checking and savings accounts. Any business that accepts credit cards will require a merchant services account. In most cases, this can be established with the same bank as your business checking account.
Companies seeking access to extra purchasing power can also apply for business loans and lines of credit through their banking institution and many banks also offer payroll solutions. Most larger banks offer their own business credit cards and may include additional incentives for applying for a card through them.
Although one-stop shopping for all your business banking needs may be convenient, you may find better fees and offers by shopping around and using more than one bank for different services. For example, you may choose to get a business checking account from one bank and a business credit card from another bank.
FAQ: How To Open a Business Bank Account
Once you’ve determined what type of business bank account you want and where you want to open an account, call the bank and ask to make an appointment with a client services manager. They will let you know the exact documentation required to set up and establish your account.
At a minimum, you’ll typically need to provide your EIN or SSN, personal identification, business registration certificate and business license. Many banks will also allow you to apply online, which will require making an electronic deposit to open your account as well as providing the required documentation.
Each bank has its own minimum balance requirements for each type of business account. Check with the bank you’re interested in to see its requirements by account type.
One of the biggest benefits of opening a business bank account is that it can simplify tax prep by keeping your business and work expenses separate. This can also help shield your personal accounts from any liabilities incurred by your business.
Other benefits include the ability to streamline bookkeeping functions like accounting and payroll. You may also be able to receive better rates and fees on various services such as loans, credit cards or other deposit accounts.
*Data accurate at time of publication
If you have feedback or questions about this article, please email the MarketWatch Guides team at [email protected].
