Wondering how to open a business bank account or why you might need one?

Although it’s possible to run a small business using your personal bank account, there are benefits to having a dedicated account for your business.

Keeping your business finances separate from your personal money will make it easier to manage cash flow and track business expenses. Another reason for opening a business checking account is that it will make you seem more professional to your customers in case they want to write you a check or you need to write them one. Lastly, having a business bank account can help you qualify for business financing, which you may need at some point.

With this guide, you will get answers to the most asked questions about how to open a business bank account, such as:

  • How do I choose a bank?
  • What do I need to open a business bank account?
  • Which kinds of business accounts do I need?
  • How do I open a business bank account and make the first deposit?

How do I choose a bank?

Once you have decided to open a business account, it’s time to settle on a bank. Banking will be a major part of your everyday life as a business owner, so choosing a financial institution should not be taken lightly. Here are some factors to consider when looking for a bank that will best meet your needs:

Monthly costs and other fees

Most business checking accounts will charge monthly fees which may factor into your decision. To avoid those fees, consider choosing a bank that offers free checking accounts if you meet specific criteria. When you go with a free account, the trade-off could be fewer features and a strict minimum balance requirement. Monthly checking fees typically range between $0 and $30 a month but keep in mind that these fees are often waived when a minimum balance is met.

In addition to a flat monthly fee, there are often other fees to consider when comparing banks. Here are some common fees to watch out for:

  • Transaction fees
  • Cash deposit fees
  • Out of network ATM fees

Cash incentives

Not only is it possible to avoid monthly fees, but some banks will actually pay you to open an account with them. Banks are competitive these days, so some offer a cash incentive for choosing their bank. If you don’t already have your heart set on a particular financial institution, consider cashing in on one of these attractive promotions.


Sometimes choosing a bank has nothing to do with fees or incentives. For many of us, the most important factor in selecting a bank is convenience — especially when it comes to location. If you choose a bank that is close to where you live or places you frequent, you will avoid having to pay the annoying out-of-network ATM fees. Another convenience factor may be that you already have your personal accounts at a certain bank. In that case, you could eliminate additional errands by keeping all your funds in the same place.

Banking style

Location may not matter if you tend to do everything electronically. Online checking accounts are becoming increasingly popular due to a shift away from dealing in cash. You may also decide to open a savings account, but that’s easy to do when done at the same time as starting up a checking account.

Online business accounts vs. traditional business accounts

Another decision you’ll be faced with is choosing between a traditional account and an online one. Your business needs and banking style will determine whether an online account will work.

One of the potential pitfalls of banking online is the inconvenience surrounding cash deposits. With an online account, you can deposit checks by scanning them with your phone, but there’s no practical way to deposit cash. If all your customer’s payments are collected online, cash deposits probably won’t be necessary anyway.

The great thing about online accounts is that they typically charge little to no fees, making them an attractive option for many small business owners. That said, you know better than anyone how your business completes transactions and whether an online account or traditional account would be more practical.

What do I need to open a business bank account?

If you are considering opening a business bank account, your primary concern might be the paperwork involved.

Be forewarned: There will be some documentation required to open the account, but you likely already have everything you need from when you first set up your business. As you might expect, the required information will depend on the type of business you own, and which bank you end up using. For example, on Bank of America’s website, the documentation requirements vary based on whether your business is a sole proprietorship, corporation, or general partnership. Here’s a list of what is often necessary to open a business checking account at most banks:

  • Social security number (SSN) or employer identification number (EIN)
  • Photo I.D.
  • Business license with your name and business name or business name filing document
  • Partnership agreement (if your business has multiple owners)
  • Organization documents filed with your state
  • Monthly credit card revenue history (if you are opening a merchant account)

Social security number vs. EIN

Regardless of the type of business you have, you’ll need to provide a business tax I.D. number. If you are the sole proprietor of your business, you can use your social security number for that purpose. However, if there is more than one owner, the bank will require an employer identification number (EIN). You can get an EIN from the I.R.S.

Obtaining an EIN from the I.R.S. website is surprisingly easy if you have a social security number and your company is in the United States. In that case, you can apply for the EIN online and receive the number and confirmation letter in as little as 30 minutes.

Photo I.D.s

Most banks will require personal identification to connect you to your business account. You need to be the business owner to open the account. An I.D. that matches the name on your business license and other business documents will prove to your bank that you are the owner. This I.D. could be your driver’s license, state I.D. card, or passport.

Business license or DBA

A business license from your state or local governing body may be required for doing business, but sometimes, a business naming document is all you need. Your bank should accept whichever type of naming document was issued by your state, city, or county. If your company operates under more than one name, a DBA or doing-business-as form may also be required.

Partnership agreement if applicable

Do you have a business partner? Whether your business is a limited partnership or a general partnership, the bank will need something documenting this fact.

Organizational documents

An organizational document varies with the structure of your company. For example, if the business is a corporation, you’ll have something called the articles of incorporation. With a limited liability corporation (LLC), the organizational document is known as the articles of organization. Basically, to open a business account, you’re going to need the same paperwork you obtained when establishing your business. Having all those documents together when you go to open your business accounts will help ensure that everything goes smoothly.

If you take credit cards in person, you may need a merchant account

Do You Need a Merchant Account?

Monthly credit card account revenue average

We’ve been talking about business bank accounts in general, but it’s possible that your business needs more than just the usual checking and savings accounts. You might also need to open something called a merchant account, and for that, you’ll need to provide information about the credit card revenue that comes in each month. The bank probably won’t need a documented history — an estimate usually works — but that monthly figure is something you’ll want to calculate ahead of time.

Why you may need a merchant account

In order for your business to accept credit cards, you can either open a merchant account or use an all-in-one solution such as Square. If you decide to go with a merchant account, you’ll need to open your regular business account first.

Which kinds of business accounts do I need?

Once you’ve selected a bank and have all your paperwork together, you’ll need to decide what types of business accounts you’ll need. There are three common categories of business accounts:

  • Business checking accounts
  • Business savings accounts
  • Merchant accounts

Business savings accounts

Business savings accounts work a lot like your personal savings accounts. While money is continuously going in and out of your personal checking account, you probably keep some money in savings for longer-term storage and to earn interest. Your business accounts are no different. With a brand-new business, you might not need a savings account yet. But keep in mind that as your business grows opening a business savings account is likely to be in your future.

Checking account options

Even though you may be starting with just a checking account, there is still the matter of deciding which checking account to go with. Your bank will likely offer a handful of checking account options to choose from with varying fees and features. This decision goes back to your banking style, which we discussed earlier in the section about selecting a bank.

Merchant accounts

As mentioned above, if you accept credit cards and aren’t using another system like Square, you’ll also need a merchant account. Traditional banks may only offer checking and savings accounts. Some institutions will conveniently provide all three types of accounts, but it’s also possible to use different banks for your various accounts.

How do I open a business bank account and make the first deposit?

The first step to opening a business account might be visiting the bank’s website. Researching a bank’s website ahead of time is the best way to verify exactly what you’ll need before opening an account with that bank. Often you can start applying online with minimal documentation and send them some supporting documents later. It all depends on the bank. If you plan to open the account in person and don’t know what to bring, call the bank or find that information on their website.

How much money is needed to open a business account?

You may be wondering how much money you’ll need to open the account. That depends on the individual bank, but it could be a lot less than you think. Some banks require an initial deposit of $50 to $100, while many have no minimum deposit. If you’ve been putting off opening an account until you have more money, there’s no reason to wait.

Making the first deposit

When making your first deposit, you can present the bank with either cash or a check, but keep in mind that they might put a hold on the check since it’s a new account. In that case, you won’t have access to the funds right away. Sometimes the best way to avoid a check hold is to cash a customer’s check at the bank it was drawn on and then make a cash deposit into your own account.

Final thoughts

In a nutshell, knowing how to open a business bank account involves choosing a bank, gathering the required paperwork, and opening the account either online or in person. Assuming you already have the necessary documentation on hand, it shouldn’t be too difficult. Even if setting up the account ends up being a hassle for whatever reason, it’s something you only have to endure once.