What do you need to do to create a business bank account? We have answers for you.
Many independent contractors and sole-proprietors have had banks tell them they are unable to apply for a Paycheck Protection Program loan because they don’t have a business checking account.
While lenders can set their own rules about accepting loan applications for the PPP, some are responding to public pressure to accept applications from new clients.
If you are interested in separating your business and personal assets, consider opening a business bank account. Not only is this required for tax reasons, it’s also good for general legal reasons and overall business management. To get started, one of the first things you’ll want to do is set up a business bank account.
If you haven’t set up such an account before, you’ll be glad to know that the process isn’t much different than opening up a regular checking account. Still, there are certain business-specific steps you’ll need to follow. Let’s take a closer look.
Decide on a bank
The first step is choosing which bank to open your account with. Some banks will let you open a business checking account for free as long as you maintain a certain minimum balance — this amount can differ among banks. It’s best to ask about any account requirements when deciding which bank to use.
You’ll also want to take into account any other features the bank has to offer. For example, some banks will offer a line of credit, deposit reconciliation, or mobile check deposit. Others will have checking accounts that earn interest or cash bonuses.
It’s best to ask about any account requirements when deciding which bank to use.
Don’t forget to ask your local bank, where you have your personal accounts, if they have any special deals or discounts in place for current personal account banking clients. You may be surprised at what they can offer!
Once you choose your bank, it’s time to move onto the paperwork you’ll need to open the business account.
Gather the necessary business documentation
The documentation you’ll need will depend on the structure of your business. At a minimum, you’ll need:
- Your business name filing documents
- Your Social Security number or Employer Identification Number (EIN)
- Partnership agreement (if you’ve formed a partnership)
- Articles of Incorporation (if you’ve formed a corporation)
- Articles of Organization (if you’ve formed an LLC)
Oftentimes, you can open your new business bank account entirely online. However, if your business is in one of the following industries then you’ll need to open the account in person: telemarketing, gambling, precious metals, or one that serves the government. These industries have some specific differences.
If you’d rather handle everything without having to go to the bank, then opening an account online is your best option. However, visiting a local branch in person allows you to get answers to any questions you may encounter along the process.
You’re all set — now double-check
Once you have opened the account, you should ensure everything is in place and correct. If you’ve opened a checking account for your business, make sure that the name on your checks are the actual company’s name. You want to avoid having it read as “your name DBA (doing business as) the company name.”
Also verify that deposits and withdrawals are working properly. You can often check this using your bank’s online banking.
No matter what, opening a business bank account is a big first step for many business owners. Congratulations, and here’s to your success!