To open a business bank account, you usually need your formation documents, an EIN and a valid ID, and the process moves fast if you gather them first.
Why you should open a business bank account early
Mixing business and personal money is one of the most common mistakes new owners make. It makes your bookkeeping harder, your taxes messier and, depending on your structure, can weaken the legal separation between you and the business. A separate account keeps the records clean from day one.
I am not a CPA or an attorney, and this is general information. Rules and bank requirements vary, so confirm the details with your bank and your tax professional.
Documents you need to open a business bank account
Each bank has its own list, so call or check its website first. These are the items that come up most often:
- Your EIN, or your Social Security number if you are a sole proprietor without one
- Government-issued photo ID for each owner or signer
- Formation documents, such as articles of organization or articles of incorporation
- An operating agreement or partnership agreement, if you have one
- A DBA or assumed name certificate, if you operate under a trade name
- Business license or registration, if your location requires it
- An opening deposit, which varies by bank
What to compare before you choose a bank
Do not pick a bank only because it is convenient. Compare these features side by side:
- Monthly fees and how to avoid them
- Minimum balance requirements
- Limits on free transactions and cash deposits
- Online and mobile banking tools, including invoicing or bookkeeping connections
- Whether the bank is FDIC insured, and how the coverage limits apply to you
- How easy it is to add a business line of credit or loan later
- Customer support, including whether you can talk to a person
Banks, credit unions and online options
You are not limited to the big national names. Community banks, credit unions and online banks all offer business accounts, and each has tradeoffs. A local institution may give you a person to call and a better chance of a relationship when you need a loan. An online bank may have lower fees and better software but fewer ways to deposit cash.
Whichever you choose, confirm that deposits are insured, by the FDIC for banks or the NCUA for credit unions, and ask how the limits apply to a business account.
The step-by-step process
The process is usually short once your paperwork is ready.
- Get your EIN and make sure your business is formed or registered
- Collect your documents and ID
- Compare two or three banks or credit unions
- Open the account online or in person, depending on the bank
- Make your opening deposit and order checks or a debit card if you want them
- Set up online access and connect your accounting software
Sole proprietors, LLCs and corporations
The paperwork changes with your structure. A sole proprietor may be able to open an account using a DBA certificate and an ID. An LLC or corporation will usually need formation documents and possibly an operating agreement or a resolution naming who can sign. Call ahead and ask for the exact list, because the same bank may ask for different things in different branches or states.
Mistakes to avoid
A few habits cause most of the trouble:
- Paying personal expenses from the business account, or the reverse
- Skipping a separate account because the business is small
- Ignoring monthly fees until they add up
- Keeping all your cash in one account with no buffer for slow months
- Forgetting to update the bank when your business structure or name changes
Next steps after you open the account
Once the account is open, send business income into it, pay business costs from it and reconcile it each month. If you will need funding, a bank that already knows your account history may be easier to work with. Our guide on how to finance a business opportunity covers loans, and our guide on how to get an EIN covers the number you will need first. For protection beyond the bank, see our overview of business insurance basics.
Related reading on how to open a business bank account
- LLC vs. Sole Proprietorship: Setting Up Your Business Opportunity Correctly
- Business Insurance Basics for New Owners: What Coverage You Need
- How to Finance a Business Opportunity: SBA Loans & More
- FDIC deposit insurance
- IRS: get an employer identification number
- Fed Small Business from the Federal Reserve
- U.S. Chamber of Commerce small business resources
