How To: Open a Business Bank Account
by: Gaines Kilpatrick | ChooseWhat.com
Simply put, you have to have a bank account in order to do business.
All business revenues and expenses should flow through a bank account set up specifically for that business.
Combining business and personal funds is not wise due to the significant problems it can cause, but in some cases it's even against the law. For this reason, opening a bank account for your business is something you should do as soon as you can.
Before you open a business bank account, you should:
- Name Your Business
- Set Up a Business Mailing Address
- Set Up a Phone Number
- Set Up a Fax Number
- Form an LLC
- Get an EIN
Assemble the Necessary Information
At the company-level you will need to provide:
- Name of Company
- Physical Address
- Mailing Address
- Phone Number
- Fax Number
- Certificate of Formation from the Secretary of State
- Federal Tax ID Number (or EIN), evidenced by a filed tax return or confirmation letter from the IRS.
The signer of the paper will need to provide:
- Company Title (e.g. "Vice President")
- Personal Contact Info: Full Name, Physical Address, Mailing Address, Home/Work/Cell Phone Numbers
- Social Security Number (also supply a copy of the license)
- Date of Birth
- E-Mail Address
- Money: Typically, you'll need to make an initial deposit to open a new account (this varies but can be anywhere from $25 to $100).
Select a Bank
Things to consider when selecting a bank:
Cost: Every bank has different kinds of accounts for different kinds of companies. Cost is mostly based on the number of transactions (i.e. checks you write and deposits you make) being processed in a given month. Most banks offer some form of free business account provided you follow certain rules such as maintaining a minimum balance.
Convenience: With the advances in technology and online banking, the physical location of your bank isn’t that big of a deal anymore. Many banks now offer remote banking services, such as providing the customer with check scanners so they can make deposits at their office (this is relatively cheap). However, some people may prefer the branch face-to-face model. You should make sure your bank of choice offers all of the online services, check cards, etc. that you will need to run your business.
Size of Bank: Large national banks might have branches all over town, or even all over the country, but it’s really difficult to develop a relationship with a large bank. If you start with a small regional bank, you can get to know the banker in charge of your account, which can be very beneficial. If you have a problem, you can call someone who knows who you are and can help you. If you want to explore an SBA loan, line of credit or other type of financing, you will have a relationship with a banker familiar with your company and your needs.
For information on the experience of banking with a smaller institution or a national chain, read our STARTicle.
Open Your Account
After you've assembled the necessary information and considered your needs, you’re ready to walk into the branch and sign up. If you decided to go with a smaller bank, let them know that you've selected their bank because you’re interested in developing a closer relationship than is usually possible with a larger chain and you would like to meet the banker who will be handling your account.
- Make sure your bank has the ability to integrate with Quickbooks or whichever bookkeeping software you use. The ability to download transactions instead of manually entering them will save you a lot of time.
- Instead of ordering a checkbook, use your bookkeeping software to write your checks. You can order checks that you can load into your printer and print them directly from Quickbooks and most bookkeeping software products. This will save you a lot of time and it looks professional.