Business banking can be a great step if you want to separate your business and personal finances.

You'll need a business license and business documentation to open a business bank account.

You can use a social security number as identification if you're a sole proprietor.

Read Insider's guide on the best free business checking accounts.


If you've started your own business, you may be ready to open a business bank account.
The US Small Business Administration recommends opening a business bank account once you're set to begin making business expenses or income.
Business banking requires basic personal information and business documentation. Different accounts will also give you the chance to manage your finances more professionally.  

Should you open a business bank account?
Whether you're a freelancer, small business owner, or full-scale corporation executive, a business bank account is an important stepping stone for beginning businesses.
Ultimately, business bank accounts help separate personal finances from your business finances. When you file your taxes for your business, you'll need to have a clear idea of your operations throughout the year. A business bank account is an ideal place for documenting income and expenses.
When you're managing daily operations, you want to be able to conduct your business professionally. Once you've developed a formal business plan and received the necessary certificates and licenses for your business, opening a business bank account will be the next step.
Types of business bank accounts
Business banking has similar account options to personal banking. These are the most common business bank accounts that are available at most banks: 
Business checking account: You can manage everyday business operations with a business checking account. 
Business savings account: Business savings accounts let you save money while earning interest.
Business money market account: Business money market accounts may provide easier access to your money than a traditional savings account. You might have access to your account through a free debit card or a higher number of monthly withdrawals. 
Business CD: Business CDs lock in your deposit at a certain rate for a specific amount of time. You'll want to be mindful of early withdrawal penalties, though. 
Merchant services account: Merchant service accounts are ideal for managing debit or credit card transactions. 

What do you need to open a business bank account?
Personal documentation
All owners of the business must come together to open an account and bring personal documentation.
Like with a personal bank account, you'll need to bring two forms of government-issued IDs. You can use a driver's license or passport as personal identification if you're at a branch.
If you're applying for a business bank account online, include your full name as it's written on your ID. For online applications, additional authorization forms may be required with the signatures of all the business owners, since you're not verifying your identity in person.
Business license
Depending on where you live and the type of business you own, federal and state business licenses and permits will be mandatory to establish your business.
When you open a business account, make sure to bring any business licenses required for your business. These licenses indicate that you are following state and federal laws. 
Employer identification number (EIN) or social security number (SSN)
An EIN is necessary for any business that is considered a partnership or corporation.
You'll need an EIN to open a business account if you aren't the only person in charge of your business. Sole proprietors can use their SSN instead of an EIN. 
If you currently don't have an EIN and aren't the sole owner of your business, you can apply for one using this IRS tool online. You can get your EIN the same day you fill out the application online.
Additional business documentation
Regardless of partnership or business, every business owner needs basic business information to open an account, like the business name and address.
You may also need additional business documentation to open an account depending on your type of business and where you bank.
If you're part of a partnership, you may be asked to provide a partnership agreement or certificate of the limited partnership. If there isn't a formal partnership agreement, you'll have to make a written document that states a formal partnership hasn't been formed.
Business owners of a limited liability company or corporation may require additional documents that outline their business agreements and operations, like an LLC operating agreement or corporate bylaws.









Sophia Acevedo


Personal Finance Reviews Fellow

Source: Business Insider

Powered by NewsAPI.org