How to Open a Business Bank Account
One of the best ways to establish a business identity is to open a bank account in the name of the business. A business bank account is also a necessity for a business to obtain credit separate from the personal credit of the business owner. Business bank accounts are available for new businesses or for established businesses.
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Things You'll Need
- EIN (Employer Identification Number)
- Proof of business existence
- Business contact information
- Personal identification
- Cash or cash equivalent
Instructions
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1
Decide what form the business will take, and file the necessary paperwork (see Resources). There are several legal forms for a business entity that are available in every state. These are: Sole Proprietorship, LLC (Limited Liability Company), General Partnership, C Corporation (Inc. or Ltd.) and Sub Chapter S Corporation (Inc. or Ltd.). Other legal forms for business entities are only available in some states.These are: LLP (Limited Liability Partnership), PS (Professional Service Corporation), LP (Limited Partnership) and Non-Profit Corporations.
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2
Obtain an EIN, or Employer Identification Number, from the IRS (see Resources). This number can be obtained instantly at the IRS website. A business need not be incorporated or have actual employees other than the business owner to obtain an EIN. The EIN must be changed if the legal form of the business changes, for instance, if a sole proprietorship is transformed into an LLC, which is why the business owner should determine the business structure first. There is no charge to obtain an original or new EIN.
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3
Decide what type of business bank account you need. The business account can be a savings account, checking account or CD (Certificate of Deposit), although it's most common to begin with a business checking account and a business debit card with a Visa or MasterCard logo. You can also open a business savings account or CD with an Internet-based bank. These accounts usually require an established checking account at another bank before they can be opened.
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4
Choose the bank for the business account. Sometimes business owners can obtain favorable deals by opening business accounts at the same bank where they have their personal accounts. Shop around to get the best deals on transaction fees, interest paid on CDs and other features.
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Gather the necessary paperwork, along with cash equivalent for the deposit and approach the bank. The bank will usually require an address and a phone number as well, but these can be the same as the personal phone number and address, in the case of home-based businesses.
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Tips & Warnings
For business accounts where more than one person has access, each person must present identification and a signature before the account can be opened, although in some instances this can be done without the person or persons being physically present. The initial deposit must almost always be made in cash or a cash equivalent, such as a transfer from available funds in an existing account, a cashier's check or a money order. Many banks will have a minimum deposit for opening an account, along with a minimum balance necessary to keep the account open.
