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Business Bank Account Checklist: Documents Need

Author : barnesandra3846
Publish Date : 2021-05-27 20:33:19
Business Bank Account Checklist: Documents Need

Find out which documents and licenses you'll need to bring with you when you apply for a business bank account.
To open a business bank account, you will need your articles of incorporation, employer identification number and personal identification documents.
You can set up a business checking and savings account.
A business bank account is necessary to keep your business and personal finances separate.
This article is for small business owners who are interested in opening a business bank account and want to know what they need to get started.
Business bank accounts help you manage your business finances in a professional manner and separate those funds from your personal finances. Opening a business bank account requires more effort than opening a personal account. There are documents to gather, names to be determined and licenses to get in order. Learn why you should have a business bank account and what you need to do to open one.


Benefits of a business bank account
Establishing a separate business bank account is an essential step in running your small business. While you may only have one personal bank account, your business likely needs multiple accounts.

According to the U.S. Small Business Administration, most business bank accounts offer benefits and perks that personal bank accounts do not. Here are four reasons why you need a business bank account.

1. Limited liability protection
Business banking helps limit your personal liability by keeping business funds separate from your personal funds.

"No matter what type of business you own, you should always separate your personal and business finances," said Chas Rampenthal, general counsel at LegalZoom. "The first and most important step toward successfully separating your finances is to have separate bank accounts."

2. Purchase protection for customers
Many banks offer merchant accounts as a business banking option. Merchant services are a business advantage, because they provide purchase protection for your customers and also protect their personal information.

3. Professionalism
A business bank account allows checks to be made out to the business – which is more professional than asking customers to make out checks to your name. Your customers can also pay with credit cards, and employees can handle banking tasks on behalf of the business.

4. Credit options
Some banks provide an option for a line of credit that you can use in an emergency. Many also offer business credit cards that you can use to start building a credit history for your fledgling business.

4 types of business bank accounts to consider
As with personal banking, there are several types of business bank accounts. Depending on your needs, you'll likely need to open more than one account.

Here are the four common types of business bank accounts:

Checking account: A business checking account is a great choice for managing payroll, expenses and other basic financial tasks that keep your business running. 

Savings account: In addition to a checking account, you'll likely need a business savings account to hold your earnings. 

Merchant account: If you plan to accept credit and debit card payments, check with your bank to see if you can set up a merchant account. "Depending on whom you bank with, some banks offer merchant services as well," said Julia Spahiu, founder and CFO of Edi and Sienna Group. "I suggest to all my clients [that they] shop around before settling for one particular account, and renegotiate your rate at least once a year."

Credit card account: You can use a business credit card for emergencies or miscellaneous items for your business. The chief benefit of a credit card for the owners of startups or if one has bad credit is that it can help build or improve your business credit score.

Things to consider when choosing a bank for your business account
Business owners have many banking options, and every bank offers something a little different. Take your time perusing the various options until you find the right bank for your business.

"Always shop around," said Mike Swigunski, founder and CEO of Global Career. "Banks are as keen to gain new customers as they are to retain current ones, so use this to your advantage to get better deals."

Here's what to consider (and ask about) as you evaluate different banks:

Every bank has different fee structures and features. Business accounts typically have higher fees and minimum balance requirements than personal accounts.

Sign-up bonuses
Tracy Odell, vice president of content at FinanceBuzz, recommends asking whether the bank offers any bonuses.

"Sometimes banks offer bonuses for opening a business account with them," she said. "For example, a bank might offer $300 if you open an account and maintain a certain minimum balance. These offers can be a great way to earn a little extra revenue, but keep in mind that these bonuses are taxable. Don't be surprised if you get a 1099 for the bonus next tax season."

Account maintenance requirements
Often, business bank accounts have requirements that you must meet; if you don't, you can be charged fees. For instance, it's common for banks to require you to maintain a certain balance – but this minimum amount varies from bank to bank – and it may be a daily minimum or a monthly minimum. If you have multiple accounts, the bank may count all of your accounts toward a combined minimum amount, or they may look at each account separately. 

In lieu of maintaining a certain minimum balance, some banks, with their business checking accounts, won't charge you the fee if you spend a certain minimum on a debit or credit card tied to your account, or if you use one of the bank's other services.

Carefully consider which account features are must-haves when you're comparing banks. For instance, do you need a business bank account that includes detailed analytics? Do you want a mobile app that allows you to digitally deposit checks? Do you need a business debit card? Would it be useful to receive alerts when your balance is nearing your minimum?

Category : business

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