Every business needs a way to manage its finances, including the ability to send and receive payments. That’s why opening a business bank account is one of the very first things you should do when you start a new business.
At CFE, we have many business clients who trust us with their money and turn to us for financial advice and assistance. When a new business member approaches us, it’s inevitable that one of the first questions they ask is this:
What do I need to open a business bank account?
We’re here to help. Here’s everything you need to know to open your business bank account and secure your company’s financial stability.
Why You Need a Business Bank Account
Let’s start by talking about why you need a business bank account. If you’re operating as a Sole Proprietor or a Single-Member LLC, you might be wondering why you can’t simply combine your business and personal finances in a single account.
The risk of doing that is you may make mistakes with your business accounting. A business bank account offers you:
- Protection from personal liability for business expenses and financial obligations
- The ability to accept credit card payments and electronic transfers from customers or clients
- Access to an experienced business lender who can help provide you with the capital you need
- The ability to apply for business credit cards to help you handle large expenses and build your business credit
Your business bank account will open up financing options that you wouldn’t have without one, and it offers you protection from personal liability, as well.
Required Documentation for a Business Bank Account
To open your business bank account, you’ll need some basic documentation and information to bring with you to your bank or credit union. Here’s a breakdown of what you should bring:
- Your Employer Identification Number, or EIN. The EIN is the business equivalent of a Social Security Number, and it’s what you’ll use to file your taxes
- Your business formation documents, including Articles of Incorporation or an LLC Operating Agreement
- Your business license
- Ownership agreements
Having these documents ready will ensure you don’t hit any snares while opening your new business bank account.
It’s also a good idea to think about what you’re going to want to do with your new account. Different lending institutions offer different services and incentives. If you know you’ll be sending batch ACH payments, for example, then it’s a good idea to see how much a lender charges and whether they offer batch discounts.
Things to Look for in a Business Bank Account
When you’re considering lenders in the area, it’s important to understand which features and capabilities you need for your business banking. Here are some things to keep in mind:
- Introductory offers may help you save some money up front to get your business started on the right foot. Many financial institutions offer incentives to business owners.
- Interest rates for savings and checking accounts. Some financial institutions offer interest even on business checking accounts, which can be a big incentive to choose them.
- Interest rates for lines of credit. If you are looking for a bank account with a line of credit, it makes sense to compare interest rates and choose the most favorable one.
- Transaction fees. How much will a bank or credit union charge you for transactions, including wire transfers and ACHs? Fees can vary greatly from institution to institution.
- Early termination fees. Will you be penalized if you close your account?
- Minimum account balance fees. Some business bank accounts have minimum balance requirements or minimum deposits.
- Online banking and deposits. It can be helpful to be able to manage your business finances online.
You should think about your business needs and make a list of features you want. That will put you in the best position to compare financial institutions and choose the one that’s best for you.
Business Bank Accounts Available to CFE Members
CFE offers a wide array of business banking options to our members. You should choose the option that’s best suited to your needs. Here are some of the account variations to consider.
- Business Essential Checking for small companies with minimal banking requirements.
- Business Enterprise Checking to help you run your business efficiently.
- Business Access Checking to help you increase your profits and minimize your expenses.
- Business Non-Profit Checking, a special account just for non-profit organizations.
- Business Money Market Accounts with tiered dividend rates and check-writing capabilities.
In addition to these accounts, we also offer business credit cards and debit cards that can be linked to your checking account.
Opening a business bank account is a necessity to keep your personal and business finances separate and meet the financial obligations of your company. The right account can help you maximize your profits while managing your money.
To learn more about CFE’s business bank account options, please click here now.