As a business owner, you’ve probably heard this one before, but we’ll say it again: Separating your personal and business finances is essential to managing your company’s money. The money your business earns really shouldn’t go into your personal bank account — that can get disorganized really quickly. Plus, depending on your type of business, classifying your business income as personal income can have tax ramifications.
You can probably see why opening a business bank account is necessary — and the best banks make it super easy! In addition to helping you properly manage your company’s finances, business bank accounts can give your organization’s co-owners easy access to the company’s money. Business accounts also offer tools you typically can’t get with a personal account. This all is why we’ve assembled this handy rundown on how to open a business bank account. You’ll likely find our guide helpful for getting a business credit card too — some of the requirements and application steps are similar.
Doing your research before opening a business bank account
You might be inclined to open a business bank account with a big-name financial institution, but many smaller, local banks (like UBank) offer more personalized service. Comparing and contrasting all the potential business banking offers in your area can help you see this — and that means doing some research. Here’s how we suggest going about this.
Learn about the types of business bank accounts - There are 3 types of business bank accounts:
- Business checking accounts. This is where the cash you use for payments comes from and where your clients’ or customers’ payments go. You can also withdraw cash and access special online finance tools through a business checking account. Plus, you can write checks using this account.
- Business savings accounts. You could theoretically direct incoming payments to — and make outgoing payments from — a business savings account. We totally get this temptation — the money in a business savings account will earn interest, giving you more money. But you can’t write checks from a business savings account, so you’ll likely want both types of accounts.
- Merchant services account. Through these accounts, which are linked to your business checking account, you can accept debit or credit card payments. You’ll also need to sign an agreement with a credit card processing company, which is typically a third party provider that partners with your bank. Here at UBank, we use BancCard processing.
Go in knowing what you need help with
Maybe your cash flow is good but you wish it could be better. Maybe you also aren’t bringing in enough new clients to boost your cash flow. Don’t sweat it — business savings accounts can help. Knowing this — that you need to grow your cash, not just store it — can help you choose the right business banking products and services.
If you’re newly launching your company or haven’t yet started separating your personal and business finances, you’ll need a business checking account. When you need access to a credit line to grow your business and maybe earn some perks on the way, a business credit card might work. It’s all about knowing your financial situation and matching it to the best possible business banking products.
Look at what several business bank accounts offer - No two business bank accounts set the exact same rules. Look at how each of the accounts you’re considering differs in the following areas:
- Minimum deposit and daily balance. You’ll typically need to put in at least a certain initial amount of money to open a business bank account. Similarly, you may need to maintain a certain daily balance to avoid fees. Alternatively, some banks don’t require this but they do waive your fees if you meet this balance.
- Online banking. It’s standard for business bank and credit card accounts to be available through online portals. Bonus points if there’s a mobile app or another form of mobile access too! And, as in the pre-internet era, phone banking should be available too.
- Online tools. Your online portal should include cash flow tools and allow for easy accounting software integrations. Occasionally, you can generate invoices right from your business bank account too, though this is more common within accounting software.
- Transaction and check writing limits. Some business bank accounts may limit the number of transactions you can make or checks you can write per month. In either case, exceeding your limits may cost you a small fee each time.
- Account alerts. Getting notified via email or text when something out of the ordinary appears on your account is key to smart business finance management. These alerts could cover instances including but not limited to large charges, overdrafts, and potential fraud.
- Electronic banking statements. Storing your records electronically can be more organized and allow for more efficient sharing. The best business bank and credit card accounts default to electronic statements instead of snail-mailed paper documents, and UBank is no exception.
- Interest rates. Business savings accounts generate interest on your money — that’s how they grow. And some checking accounts do too! The higher your interest rate, the more money you can expect your account to earn. Conversely, with business credit cards, the higher your interest rates, the more your debts could cost you.
- Rewards and perks. Business credit cards may offer enticing cashback rewards that are more restrictive than you might first think. These rewards might only apply to certain purchases, or the card’s high interest rate might make the card prohibitively expensive despite any rewards. Likewise, a savings account with a high annual yield means less if the minimum balance is out of reach for you.
- ATMs and branches. Consider how easily you can access a bank’s ATMs or physical locations. Ask yourself whether you can walk into a branch and get quick, attentive, friendly customer service when you need it. We recommend relationship banking for your business — it’s how you get customized financial products and services alongside the advice you need.
Remember that at UBank, you don’t have to walk into the appointment knowing exactly what you need! Our relationship bankers are trained on how to tailor UBank’s products to your specific needs. Since you’re the expert on your business, we’ll take the time to learn about your current financial situation and goals for the future, then recommend which products are best suited for your needs.
What documents do you need to open a business bank account?
Figured out which business bank account you want to open? Well done — that’s a huge first step! Here’s a rundown on the information you’ll need to get the ball rolling.
Information required for opening any business bank account No matter your type of business or the type of account you’re opening, you’ll need to provide the below business and personal information. If you co-own your business with other people, they may need to provide this information too.
- Government photo ID. Your driver’s license or passport should work as long as they’re not expired. You might want to bring both — some banks will ask for two forms of ID.
- Physical mailing address. Typically, you’ll need to provide an actual physical mailing address, not a P.O. Box. You may want to bring proof of address, such as a utility bill, to verify this.
- Personal and business phone numbers and email addresses. Your communications will primarily go to your business email account. Your bank may use your personal email address to protect your bank account via two-factor authentication.
- Date of birth. In most cases, you don’t need a birth certificate to validate this. It’ll already be on your government ID, but you’ll likely need to write it down on your application too.
- Tax identification numbers (TINs). There are two of these to provide. For your personal information, there’s your social security number. For your business, there’s your employer identification number (EIN), a federal identifier you can apply for online. Both are required, with one exception: sole proprietors and single-member LLCs can use one of these two identifiers to open a business bank account.
- Business details. These include your industry, date of formation, and business license. Additionally, you must provide an “assumed name” or “doing business as” (DBA) certificate if your business operates under a name other than its registered name. You should also state your business entity type, as this may introduce additional paperwork requirements.
Paperwork required for each type of business entity Based on your type of business entity, you’ll need to provide additional information, as explained below.
- Sole proprietorship: If you operate under a name other than the one on your personal government IDs, an assumed name or DBA certificate is required.
- Limited liability company (LLC): You must present a certificate of formation or your articles of organization. For a multi-member LLC, you must also provide a company agreement or operating agreement.
- Partnership: For a limited liability partnership or limited partnership, you must provide, respectively, a certificate of formation or limited partnership.
- Corporation: You must provide a certificate of formation or your articles of incorporation whether your business is a C corporation, S corporation, or nonprofit. If your corporation is formed outside your bank’s state, you may also need to provide a certificate of authority from the bank’s state. Some banks may require you to submit your corporate bylaws as well.
- Unincorporated association: Your application must include your association’s charter, bylaws, or a similar document that includes meeting minutes.
There may be additional requirements based on your industry. It’s worth asking someone at UBank about this before you come in to set up your account — we’re here to help you!
How to open a business bank account
Now comes the easy part: getting in the door at your bank. Here’s how to do it.
- Schedule an appointment — or just walk in. It’s never a bad idea to call the bank you have in mind (which we hope is UBank), explain what you’re looking for, and schedule an appointment. This way, you can be sure what you’re seeking is available and confirm the required information and documents. At some banks, though, you truly can just walk in and start building a relationship - this is certainly the case at UBank, walk-ins are always welcome. This relationship can help you get the most out of the bank’s products and services.
- Get to know your banker. As you apply for your business bank account, you’ll work closely with someone — an actual person! — at your bank. This person is your go-to resource for anything you need. They’ll explain what the account you’re going for offers during your first meeting and help you apply. You can go to them with questions, thoughts, or concerns at any time. Their job is to support you, guide you, and advocate on your behalf. At UBank, our relationship bankers are trained on building a lifelong relationship with you, so they’re ready and willing to help with whatever your needs are.
- Complete the application. A typical bank account application might be a page or two long. Make sure you’ve filled out every field, and double-check everything for accuracy before you file. Attach all your required documents to your application to keep it organized — and keep the process moving forward. At UBank, our relationship bankers will help you with the application and document gathering process.
- Read the fine print. Congratulations — you’ve been approved to open a business bank account! Now, it’s time to make sure you understand the terms and conditions. Look for monthly fees, transaction limits, and overdraft protection measures. These should all be in line with what you and your banker have discussed.
- Make a deposit. Now, it’s time to make your initial deposit, which should be at least the minimum amount required. It’s often easiest to deposit this as cash, though other payment methods are available — ask your banker, and they’ll gladly explain. Once you’ve made your deposit, your business bank account is all set and ready to go.
Ready to open a UBank business account?
We’d love to open a business bank account for you today! Visit any UBank location to open a business checking account, savings account, or credit card. You can easily avoid monthly service charges when you maintain large enough daily balances. You’ll also get a relationship banker in your court who advocates for your financial needs and gives you tools that streamline your money management. At UBank, we make business personal.