When you start a business, there are a million things you have to do before you can open your doors. Sometimes, you can do a few of these things simultaneously. Other times, you have to do them in a specific order. Opening a business bank account is one of those things you’ll have to do in a specific order.
Banks want to see business formation documents before they’ll let you open a business bank account. So, you’ll first have to decide on a business entity, file the necessary business formation documents, and get the documents approved before you can open that bank account.
In this blog entry, we’ll go over, step-by-step, how to open a business bank account.
What Documents Do You Need to Open a Business Bank Account?
Depending on if you’re going to run your business as a sole proprietorship, a partnership, an LLC, or a corporation, you’ll need different documents to open a business bank account. Different banks might also need additional documents, so be sure to check with the bank too.
Generally, you’ll need the following documents to open a business bank account.
Documents a Sole Proprietor Needs to Open a Bank Account
Sole proprietors need the following to open a business bank account:
- Your social security number
- Your employer identification number (EIN) if you have one
- Assumed Name Certificate if operating under a trade name.
Documents a Partnership Needs to Open a Bank Account
General partnerships need the following to open a business bank account:
- The partnership’s EIN
- Government issued IDs for all general partners
- Partnership agreement (if any) or bank provided Partnership Statement
- Assumed Name Certificate if operating under a trade name
Limited partnerships need the following to open a business bank account:
- The partnership’s EIN
- Partnership Agreement
- Any other document filed with the state to form the limited partnership
- Government issued IDs for all general partners
- General partner’s formation documents if the general partner is not a natural person
- Assumed Name Certificate if operating under a trade name
Documents an LLC Needs to Open a Bank Account
An LLC needs the following to open a business bank account:
- The LLC’s certificate of formation
- The LLC’s EIN
- Government issued ID of the person(s) who can sign the account
- Assumed Name Certificate if operating under a trade name
- Banking resolution (the bank can usually provide one)
Documents a Corporation Needs to Open a Bank Account
A corporation needs the following to open a business bank account:
- The corporation’s articles of incorporation
- The corporation’s EIN
- Government issued ID of the person(s) who can sign on the account
- Assumed Name Certificate if operating under a trade name
- Banking resolution (the bank can usually provide one)
Compare Business Bank Account Offerings from National and Local Banks
Once you have the documents ready, you can shop around for the bank you’ll use. Your goal is to find the bank with the lowest fees and the most free services that you’ll likely use in your day-to-day operations.
Banks come in all sizes. Some are international, some are national, and some are regional or even local. In the US, banks are regulated by both the federal government and the state governments. While the federal regulations are uniform, state regulations are not. This is why even the largest banks don’t always operate in every state.
When you visit a big bank’s website, they often ask for your location first. Based on your location, they show you the services, rates, and fees for your state. This fragmentation makes it extremely difficult to write the definitive article on the best bank account for small businesses.
Not only that, inevitably, local or regional banks would be left out of the comparison because the writer of the article wouldn’t know about them.
This is why, instead of writing a Best Of article, we’re focusing on a checklist of the banking services all the best business bank accounts should have. We’ll also explain why these services are important to a small business. Using this checklist, you can easily compare the banks in your area and find the one that’s best for you.
Here’s the checklist article:
Of course, even with a list of must-haves and nice-to-haves, you’ll still need some numbers as a baseline to make comparisons. So, we used our checklist and gathered checking account information from the five biggest US banks. Here’s the comparison:
At least a couple of these banks are likely to operate near you. Even if they do not, you can still use their offerings to comparison shop for banks that do operate near you.
Once you decide on a bank, contact them to open your business bank accounts. It might take a few days for the accounts to be fully opened.
After You Open the Business Bank Account, Fund it the Right Way
Once you open your business bank account, you’ll need to move your startup money into the account. If the money comes from your own savings, don’t forget that you can borrow that money from yourself.
Just be sure to paper the loan the right way, to guard against corporate veil piercing.
With a Bank Account in Your Business’s Name, You Can Now Officially Operate as Your Business
Once you’ve opened your business bank account, you can pay and get paid under your business’s name. It’ll start to feel like you’re running a real business. Congrats!
Of course, you probably still have a lot more to do before you can actually open your doors for business. At this stage, you’re probably not yet ready to hire employees. But we bet you can probably use the help of a freelancer or two. So, let’s take a look at how to work with freelancers or contractors and where to find them.
Questions? Comments?
