Business Account Types and Application Requirements
The first step in managing your finances is to register a business bank account as soon as you decide to begin spending or taking money as a company. A checking account, a savings account, and a merchant account are typical kinds of business accounts. The latter enables you to accept debit and credit card payments from clients.
Although creating a business account requires a few steps, the application procedure is often simple, and you may create an account in a matter of minutes (although it could take a few business days to obtain debit and credit cards as well as checks). You may apply and submit your paperwork online at several significant banking institutions, such Bank of America. You may hasten the process and create a business bank account as soon as you need one by selecting a bank that accepts online applications.
Learn more about the many kinds of business accounts, the advantages of business banking, and how to create a business bank account.
Main Points
Checking, savings, and merchant accounts are some examples of company bank accounts.
A business bank account may provide you buying power, reduce your risk of liability, increase your cash flow, enable client debit and credit transactions, and provide tax advantages.
You can quickly create a business account online with several banks.
Selecting an account type, submitting the required papers and information, and making a deposit are all steps in opening a business account.
Different Business Bank Account Types
Organizational Checking Accounts
Small business checking accounts are perfect for companies that need the ability to issue checks, make debit card withdrawals, and receive or send money online.
Electronic, wire, check, and ATM deposits are all acceptable methods of funding a company checking account. To make reports and transactions simple to monitor, checking accounts may also interface with well-known business tools and accounting software. Additionally, some banks provide Positive Pay, a cash-management device that deters check fraud.
Savings accounts for businesses
If you want to earn income, save for large expenditures like equipment, establish an emergency fund, or all three, business savings accounts are the way to go. Depending on your account balance, many banks often offer high-yield savings accounts with competitive interest rates and little to no monthly fees. There may be different minimum opening deposit requirements.
Accounts for Merchant Services
You will want a business merchant account if you intend to let consumers pay using debit and credit cards. When a consumer uses a credit card to make a purchase, the funds are immediately transferred from your merchant account to your company account. The fees for merchant accounts vary, so be careful to acquaint yourself with them before you join up.
A Business Bank Account’s Advantages
Small business bank accounts may assist you in keeping your personal and professional funds distinct, organizing your company documents, providing you with limited liability protection, and enhancing the professionalism and credibility of your company. For instance, merchant accounts enable your clients to pay for products and services with a credit or debit card and may provide purchase protection for clients, assuring the security of their private data.
Additional advantages of having a company bank account include the following:
Tax returns that are correct may be filed using information from your business account since business and personal activities are kept separate.
Higher interest: Compared to a checking account, a business savings account allows you to receive interest on the account balance. Over time, this may support maximizing your cash flow.
A corporate credit card account may provide your company the purchasing power and credit history it needs to make bigger purchases.
Be ready: If your company bank account has a credit line, you may utilize it to buy new equipment or cover unexpected expenses.
Deductions for business costs: You are able to deduct business expenses from your company’s tax return, and doing so is made simpler by the availability of a business account statement that may be used as evidence of expenditures.
Do All Businesses Need a Bank Account?
Although it is not legally compulsory for sole proprietors, independent contractors, and limited liability organizations to create a business bank account, doing so might be advantageous during tax season. It may be simpler to locate deductions and file taxes if you have a separate company account that allows you to distinguish between capital expenses, rent charges, insurance costs, and any interest on business loans.
For organizations that wish to establish their credit history or apply for a line of credit, business accounts are also essential.
How to Open a Bank Account for a Business
Decide where you wish to bank first. Some company owners choose to register a business account at the same financial institution where they already have personal accounts. Keep account restrictions and associated costs in mind as you contrast various banks and financial organizations.
To prove your business when opening a business bank account, you must present certified documentation. A business license and the registration of your trade name may be necessary if you are a sole proprietor, for example, while partnerships may be required to submit partnership agreements or a statement of qualification depending on the type of partnership.
The basic criteria for creating an account are shown below.
Visit a branch or the bank’s website.
The website of the financial institution is the best place to start if you want to create a business bank account. Online account opening has the benefit of being accessible at any time and from any location. You may go to the bank’s branch during business hours to do this if you want to do it in person.
Determine Your Account
Choose the appropriate bank account type by comparing the many options. If you want greater financial freedom, use a typical business checking account. If you want to save up company earnings for the future, select a business savings account.
Answers to Frequently Asked Questions
How can a foreigner get a bank account in the United States?
Even though it is feasible to create a bank account in the United States as a non-resident or foreigner, the procedure is not straightforward since most banks demand that you have a U.S. address and a Social Security number (or an Individual Taxpayer Identification Number if you are a resident or nonresident alien). Before applying, it is essential to check with your preferred bank about the criteria as they may vary from state to state. Your company must be registered in the US and have an EIN in order to create a business bank account while you are a nonresident.
How long does it take a business account to open?
You may create a business account online in a few minutes while the bank may take several business days to examine your documents and send out the relevant checks and cards.
What much of cash is required to start a business account?
There may be different requirements for opening a business bank account. Wells Fargo, for example, needs a $25 minimum deposit, while other banks may not need any deposit to start—though some limitations like sustaining a daily minimum balance may apply.
