How Do I Open a Business Checking Account?
A business checking account that comes with specific benefits most businesses can utilize, while not required, is smart to have. For starters, a business bank account lends unique professional touches and legitimacy to your business and helps establish a good rapport with your bank. A business checking account can also be used by other individuals within your organization, especially your trusted employees and business partners.
Another benefit is that a business bank account lets you keep your commercial transactions well-organized, which helps with your business accounting and the process of filing taxes accurately.
Lastly, if you have a business checking account, you’ll also be able to access a variety of additional tools that banks often offer to businesses, such as the ability to accept payments from customers who prefer to pay using credit cards.
In this article we will walk you through the steps you need to follow to open a business bank account.
Decide On the Business Checking Account Type (or Types) You Need
Based on the intricacies and nature of your business or trade, you may have to set up multiple business checking accounts. For instance, you may want to open one account for taxes, another for payroll, and another for income or revenues. Aside from the potential for needing several business checking accounts, when starting a new venture, most business owners will set up the following accounts:
- Checking account
- Savings account
- Credit card account (Business credit line)
- Merchant services account
Choose Your Bank
The very first thing you need to do when creating a business checking account is to select a bank! And while there is no one right answer, many businesses find it advantageous to choose a trusted, local, community bank instead of a big-name national bank. Are you looking for some specialized features such as deposit reconciliation, mobile check deposit, or cash management services? The best bet is to check out the offerings of several banks in your local area, and do the research to find the best fit.
Collect and Submit Relevant Documents
Before you decide to go to the nearest branch of your preferred bank to open a business bank account, you’ll have to organize the required documents. This may vary from one bank to another, however, all banks will ask you to submit copies of the following documents:
- Business incorporation documents
- State or federal licenses (if applicable)
- Tax ID number
- A business or trade license
- Social security number (only for a sole proprietor)
If you’ve already chosen your bank, then contact the bank manager who’ll be able to list required documents to open a business checking account for you.
Open a Merchant Services Account
The logical step to follow once you’ve opened a business checking account is opening a merchant services account. By opening a merchant services account, your company will be in a position to accept payments, especially credit card payments. Before you make up your mind to open a merchant account with a specific bank, compare different banks based on the criteria mentioned below:
- Transaction fees
- Monthly fees (minimal)
- AVS charges (address verification services) – verification of credit card for averting fraudulent transactions
- The fees or percentage charged for processing every transaction
- ACH (Automated Clearing House) daily batch fees – fees for settling everyday credit card transactions
Depending on your business and industry, a significant percentage of your existing and potential customers may prefer to pay online. You can set up one or more online or digital payment systems including, but not limited to, PayPal, Amazon Pay, Square, and Google Pay. Alternatively, you can think about installing a POS system for processing in-person payments if many of your customers will pay in person at your business location.
When it comes to choosing a business checking account, there is no one-size-fits-all that’ll be suitable for every business. The nature of your industry, business model, amount of monthly sales, and other factors will largely determine the best business bank account type for you. The steps to open one however will be largely the same, and we hope this article today has been helpful in highlighting the steps for you.