If you’re getting ready to start your own business, you’re likely asking yourself an important question: what do I need to open a business bank account? While the answer varies depending on several factors—especially the structure of the business you’re forming—there are some general requirements regarding documentation and information you need to successfully open a business account. Read on to learn more.
What Do You Need to Open a Business Bank Account?
Wondering what information and documents you need? It depends on the type of business entity, the state you live in, and the state where you established the business. Here’s a general guide to the information you need to open a business bank account:
- Personal ID. Only an officer or owner of a company can open a business bank account. That’s why most banks require one or two forms of personal I.D., such as a driver’s license, state-issued I.D., or passport. You need to prove your connection with the business.
- EIN or SSN. You need to provide your Employer Identification Number (EIN) and all documentation the IRS sent you when it was issued. If you run a sole proprietorship, you can often use your Social Security Number (SSN) in place of an EIN.
- Business License and Permits. A business license proves that your state or local government has authorized you to do business.
- Business Agreement Documents. If you own a business with multiple owners, you’ll need to supply a partnership agreement, bylaws (if you own a corporation), or operating agreement (if you own an LLC).
- Business Creation Documents. You’ll need to supply organizing documents before you can get approved for a business bank account. This information includes the business name, address, owners, registered agent, management structure, and activities the business will engage in.
How to Open a Business Bank Account
There are three types of business bank accounts you can open depending on the needs of your business: a business checking account, a merchant bank account, or a savings account. No matter what type of business you’re running, you’ll need the right documents on hand when opening your account. Here’s a breakdown of documents you’ll need by business type:
- Sole Proprietorship: SSN; personal identification; certificate with name and date of birth; business license; monthly credit card revenue (if opening a merchant account).
- Partnership: EIN; business license; certificate with name and date of birth; organizing document filed with the state; partnership agreement; monthly credit card revenue (if opening a merchant account).
- Limited Liability Corporation (LLC): EIN; personal identification; business license; certificate with name and date of birth; LLC agreement with name of business and partners; articles of organization; monthly credit card revenue (if opening a merchant account).
- Corporation: EIN; personal identification; business license; certificate with name and date of birth; corporate bylaws; articles of incorporation; monthly credit card revenue (if opening a merchant account).
When it comes to actually opening the account, the process is often very straightforward. Just follow the application and provide the correct information, and you’ll find yourself with a legitimate business account in no time. While you can still open an account at the bank the old-fashioned way, you’ll save a lot of time by doing it online.
The Benefits of a Business Bank Account
Wondering whether it’s worth it to open a business bank account? Here are just some of the benefits of a business account you can take advantage of:
- Legitimacy. A business account separates personal and business finances to maintain the corporate veil. It also proves the legitimacy of the business to the IRS and local tax authorities.
- Liability. Alongside legitimacy, separating your business’ finances also safeguards you from liability. Things can quickly get muddled without this separation, which could put your personal assets and finances at risk.
- Accessibility. To access lines of credit and business loans, you’ll need a business bank account that shows a record of your business’ ability to manage its finances. This is especially important as you grow your business.
- Organization. Even in the earliest states of your business venture, it’s important to account for your finances accurately. Having separate, defined bank accounts puts you in a position to get organized and stay organized.
Ultimately, a business bank account allows you to transact as the business. It serves as the foundation of your company’s financial operations.
Frequently Asked Questions
How do you open a business account online?
It’s faster and easier to open a business bank account online, rather than standing in line at a bank. You’ll need the same information described above, and you’ll get all the services you’d get from a traditional bank (often more) without ever having to enter a branch.
What documents do you need for a business bank account?
The documents required to open one vary depending on the account type. Typically, they include some combination of SSN or EIN, personal identification, business license, certificate with name and date of birth, and business documentation.
How do you open a business account at the bank?
If you want to open a business account at the bank, you’ll need to bring all related documentation with you so the bank can process your application. In some cases, banks also require an opening deposit, which can vary from as little as $5 to $1,000.
Ready to Open a Business Bank Account?
A business bank account is much more than a depository for funds—it helps with bookkeeping, showcases a professional image, and so much more. With online banking options and tools like accounting and payroll software, it’s easier than ever to keep track of your business’ finances. Get started today and open your first business bank account with NorthOne!