How to Open a Business Bank Account
The process of opening a business bank account may vary slightly depending on how your business is organized. In addition, different financial institutions may have varying application requirements. Still, there are certain steps that you’ll need to take regardless of the institution that you’re applying to. In this post, we’ll review the steps you must take to get your business account up and running, whether your business is a sole proprietorship or a corporation.
3 Steps to Take In Order to Open a Business Bank Account
1. Gather Your Paperwork
As with most interactions with a bank, opening a business bank account requires some paperwork. The amount and type of paperwork you need depends on whether your business is organized as a limited liability company, a corporation, a general partnership, a limited liability partnership, or a sole proprietorship.
However, regardless of your organization type, you’ll need a government issued picture ID, your business’s registration documents, and your business license (if you’re required to have one).
If you’re a sole proprietor, those documents are all you need, unless you’re doing business under a name other than your own. In that case, a bank like Wells Fargo would require one of the following:
- Fictitious Name Certificate or Statement
- Certificate of Assumed Name
- Registration of Trade Name
- Business License
In addition, as an example, Wells Fargo lays out their required documentation for other types of business entities as follows:
General Partnerships need to provide a fictitious name statement, a business license, a certificate of assumed name, or a written statement saying there is no partnership agreement.
Limited Partnerships need to provide a certificate of limited partnership or a limited partnership document.
Limited Liability Partnerships need to provide a statement of qualification, a limited partnership document, or a limited liability partnership election
Limited Liability Companies need to provide articles of organization, a certificate of organization, or a certificate of formation.
A Corporation must provide articles of incorporation or a certificate of good standing.
2. Decide Which Accounts You’ll Need
Your business is unique, and so are your banking needs. Due to this, you should take the time to think about the banking services you require. For instance, will you need a merchant account? Or do you need to authorize someone else to use your account? Merchant accounts and multiple signers are just two of many features that may or may not be included with a business bank account.
In addition, depending on how complex your business is, it may be a good idea to meet with an accountant at this point. This can be beneficial if you have to organize payroll, taxes, and income, it may make sense to open separate accounts for each of them. Even if there’s a small fee for opening multiple accounts, it could be worthwhile considering how much simpler your finances will be when tax time rolls around.
3. Shop Around for a Business Bank
It can be tempting to choose a bank that you already use for personal banking. However, while your personal bank may be perfectly fine, you should still shop around. According to Bank of America, small business checking accounts often charge much higher fees than personal checking accounts.
Additionally, depending on what you need to do with your business bank account, another bank may have better service and features. To get outside insight, if you have a colleague who has a business bank account, ask them for their thoughts on your situation. You could also conduct online research after you’ve identified what you’ll be using your business bank account for.
When you’re ready to apply, you may have to go in person to get the process started. However, many banks allow people to submit their applications online.
According to Wallet Hub’s Banking Landscape Report, business bank accounts charge the highest fees of all types of bank accounts. That said, the benefits of a business bank account far outweigh the drawback of those higher fees, if you choose wisely. Therefore, don’t be afraid to make the investment; just be sure to research the business bank accounts that best fit your specific needs.
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