You’ve started a small business. You’ve opened up that taco truck, started selling your art through an Etsy Store, or embarked into the world as an independent trucker. It’s a dream come true! But there are some startup costs every small business owner should expect to incur, and your venture into the world of entrepreneurship also comes with all sorts of new questions. For example, what is ACH payment, and how does it work? How do you go about opening a small business bank account?

One other common question is whether you need a business bank account at all. This guide will explain when you need to get a business banking account, if you need a separate bank account when you’re self-employed, and more. 

Should I Open a Business Bank Account?

The short answer is: yes, probably. If you run a business then having a business bank account is crucial for keeping your business and personal expenses separate. This makes everything much easier to track when doing bookkeeping — especially come tax season — while also protecting your liability if something goes wrong.

Opening up a separate bank account also helps you seem credible to customers. For instance, if they were signing a check to your company they’d make it out to the name of your business, rather than to your name personally. That perception matters.In addition to all this, having a bank account for your business also helps you determine whether your business is actually making money. Features like Envelopes, with a NorthOne Business Banking account also help you understand how much of each payment your company goes to expenses and how much goes to profit.   

Other Frequently Asked Questions: 

Do I Need a Business Bank Account if I’m Self-Employed? 

Legally speaking, you don’t need to have a bank account for your business if you’re self-employed. But for all of the aforementioned reasons having a bank account for your business is going to save you a lot of time and money in the long run. 

Do I Need a Business Bank Account for an LLC?

LLC stands for limited liability company. If you’re an LLC the business is a separate legal entity, unlike a person who is self-employed. When this is the case you’re required to have a bank account for your business. 

Do I Need a Business Bank Account if my Business is Incorporated? 

Yes, if your business is incorporated, you need a new bank account for your business. 

What You Need to Open a Business Bank Account

To open up a business banking account there are several different things that you’ll need. It varies slightly depending on how you register/define your business.

Sole Proprietorship Bank Account Needs

If you’re opening up a sole proprietorship — a business that is owned by a single person — you don’t technically need a separate bank account. But it you are going to open one then you’ll need the following information:

  • SSN
  • Personal identification 
  • A certificate with name and date of birth
  • Business license
  • Monthly credit card revenue if opening a merchant account

If you are forming a business with other people, it is important you open a separate bank account so business and personal finances are separate and all owners have access to this account. A partnership is when a business is owned by two or more people.

Partnership Bank Account Needs

If you want to open up a bank account as a partnership, this is what you’ll need from each person involved:

  • Personal identification
  • Business license
  • A certificate with name and date of birth
  • Organizing document that has been filed with the state
  • Partnership agreement
  • Monthly credit card revenue if opening a merchant account 

You also need an EIN to open a business account for your partnership. If you want to protect your personal assets in the case of your business being sued, the easiest way to do this is by registering your business as a Limited Liability Corporation. An LLC is like having the best of both worlds by combining the pass-through taxation of a sole proprietorship — or partnership — and the asset protection of a corporation.

LLC Bank Account Needs

If you’re opening a bank account as a Limited Liability Corporation (LLC), you’ll need many of the same items to open a bank account. On top of needing an EIN to open an LLC business account here’s what else you’ll want to compile:

  • Personal Identification
  • A certificate with name and date of birth
  • Business license
  • LLC agreement (name of business and partners)
  • Articles of organization
  • Monthly credit card revenue if opening a merchant account

Another option for running a business is run as a corporation. A corporation is a legal entity that is separate and distinct from its owners. The shareholders of a corporation are not personally liable for the company’s debt.

The difference between a regular corporation and a limited liability corporation is as an owner of a regular corporation you can’t ‘pass through’ your business taxes. You will have to file two sets of taxes, one for the business and one for your personal finances.

Corporation Bank Account Needs

If you want to open a bank account for a corporation you’ll need the following: 

  • Employer Identification Number (EIN)
  • Personal identification 
  • A Certificate with name and date of birth
  • Business license
  • Corporate bylaws
  • Articles of incorporation
  • Monthly credit card revenue if opening a merchant account

How to Choose the Right Business Bank Account 

When opening up a bank account for your business there are some features you’ll want to make the most out of your experience. These are some features you should expect from your new account. 

  • Integration: your bank account should be able to sync with both your payment systems and whatever apps you’re using for bookkeeping. NorthOne can deposit money from popular services like Stripe, PayPal, Shopify, Uber, Lyft, and more. Our accounts also sync with major apps like Quickbooks, Freshbooks, and Wave. 
  • Mobile Connection: The NorthOne apps allows you to access your bank anywhere you’ve got internet connection and deposit checks through your phone. Plus it’s never closed. 
  • Reasonable Fees: You don’t want to be paying more than you have to for your bank account. At $10 dollars a month, NorthOne offers you a premium experience with dozens of helpful features for a reasonable rate. 

You can get started opening up your business banking account here.

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank, N.A., Member FDIC (“Bank”).  Bank is not responsible for the accuracy of any content provided by the author(s) or contributor(s).