The decision to open a business bank account is a big one. It’s one of the things that can prove that you’re a legitimate small-business owner and that your company’s finances are distinct from your money.
There are many business bank accounts, each serving a different purpose. Ensure you put your money into the correct account type for your financial goals so you can access good spending and saving tools. Managing your money in this manner will allow you to maximize your bank’s return, minimize fees and the hassle of managing it.
Choosing what kind of business bank account you should get can be overwhelming. But a step-by-step guide can help you compare business bank accounts and decide which one works best for your business.
Steps On How To Open A Business Bank Account
1.Choose What Type Of Business Account You Need
Before doing anything else, you must first decide what type of business account you would need for your business. Will it be a savings account or a checking account?
The majority of small businesses want to open a checking account mainly because it’s ideal for business; it’s safer because you don’t need to carry cash all the time. Also, the funds under it are often insured.
Having a checking account simplifies the tracking of expenses, increases the likelihood of getting approved for business financing, and simplifies tax preparation. You can easily manage and schedule payments to ensure you get all the payables.
On the other hand, a small-business savings account is also helpful if you have extra cash and are looking to grow your business.
Having a savings account can help you prepare for unforeseen circumstances. A slow sales period will not negatively affect your business if you have enough savings. In addition, you can earn interest income by maintaining a savings account with a financial institution.
Look at the options available and choose the best one that suits your needs. It’s crucial to consider how much money you hope to save when you want to withdraw the funds and how much interest you can earn.
After determining the type of business bank account you require, you may select one and move on to the next step.
2. Determine The Added Features For Your Account
You will find that many banks will compete to get you to open an account with them. These banks would add features to their services to entice business owners. When choosing a business bank, determine whether any specific features would be beneficial for you.
Added features may include mobile and online banking options, the bank’s capabilities for paying bills, interest rates on savings accounts, discounts on ATM fees, minimum balance requirements, and transaction fees.
Consider the checking account that requires the smallest opening deposit if you have a limited amount of cash. If you have highly variable cash flow, choose an account that won’t charge you monthly fees for carrying a low balance.
Suppose you rely on accounting and payroll software to keep track of your finances. The bank account you choose should be compatible with that software. Otherwise, you’ll have to crunch the numbers manually.
3. Select The Appropriate Bank
With the type of business account you prefer and the added features you want, you can select the right bank for your business.
An existing banking relationship with a provider makes it convenient for you to open business accounts there. You can receive discounts on banking services and rate discounts on lending products.
On top of a good relationship, there are other things you need to consider when choosing a bank.
Decide whether a smaller community bank or a large and known bank is more comfortable for you. The size of the bank can have an impact on the services offered, the extra features, the number of branches, and the insurance coverage.
More often than not, large and well-known banks have better locations than small banks, but small banks sometimes provide better customer service and local expertise.
Whether you prefer a large or small bank, remember that you will be dealing with them for a long time, so you must choose carefully. The bank you choose should be able to scale its services to fit your business growth.
4. Gather All The Necessary Requirements
As soon as you decide which bank you want to open an account with, you can proceed to the next step: prepare all the necessary documents.
You will need to meet different requirements for each bank, but this list below should cover most things:
- EIN
- Personal and business information
- Business License
- Certificate of Assumed Name
- Organizational Documents
- Corporate bylaws
- Articles of incorporation
- Monthly credit card revenue
There are certain business and personal documents you will need depending on what type of business you have. There will be specific requirements that you need to provide if you’re a sole proprietor, a different set of requirements for partnership, and so on.
5. Open Your Business Bank Account
You can finally open an account once you’ve decided what type of business bank account you need, what features you want to be added, which bank you want to work with, and after gathering all your supporting documentation.
Depending on the bank, you may have to visit a branch to open an account, while others may let you complete the process online. You should ensure that there’s a branch near your business if the bank requires a branch visit and that you know who will sign for the account.
Takeaway
Opening a business bank account may seem straightforward, but there are a lot of things you need to take into consideration. And if you’re serious about growing your business and making it work in the long run, choosing the right bank and account type plays a big role.
By following these simple steps with the confidence of knowing what you need and want, you are on your way to your first business bank account.