What Documents Do I Need To Open a Business Bank Account?
October 15, 2024
A business bank account is a significant step in establishing your business. It helps separate personal and business finances and maintain liability protection. Moreover, it simplifies financial management and makes your bookkeeping easier.
A survey by the NFIB reveals that 97% of small business owners maintain a dedicated bank account for their business.[1] To open one, you need to provide specific documents and meet certain requirements. Here, learn everything you need to know to open a business bank account.
Why Open a Business Bank Account?
Having a dedicated business bank account is crucial for several reasons:
- Professionalism.
- Financial management.
- Simplified tax reporting.
- Payment processing and merchant services.
- Access to some business loans and lines of credit.
A business account helps establish your business as a legitimate entity, making transactions with clients and vendors more professional. It also allows you to keep your business and personal finances separate, which makes it easier to track expenses and revenue. And, separating your accounts simplifies tax preparation and filing. This reduces the risk of errors and helps ensure compliance.
Finally, a business bank account often provides access to additional services. These services can include merchant services and payment processing. A bank account might also help you access certain small business loans and credit lines, subject to credit approval.
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Types of Business Bank Accounts
When you choose a business bank account, consider:
- Checking accounts.
- Savings accounts.
- Money market accounts (MMAs).
- Certificates of deposit (CDs).
Small business checking accounts are designed for everyday transactions and managing your business’s cash flow. Business savings accounts are to set aside funds for future needs or emergencies. Plus, they usually offer interest earnings on the balance.
MMAs offer higher interest rates and may include check-writing capabilities and limited transactions. And, CDs provide higher interest rates for funds that are deposited for a fixed term.
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What You Need To Open a Business Bank Account
To open a business bank account, you’ll need specific information and documents. The requirements depend on the type of business, but here’s a general guide.
1. Basic Information for All Businesses
All businesses need to provide:
- Business name.
- Physical business address.
- Employer Identification Number (EIN).
- Names of beneficial owners and the controlling person (anyone who owns 25% or more and the person managing the business).
You can obtain an EIN for free from the IRS for free during normal business hours.[2]
2. Business Documents
You'll need additional documents to prove your business exists, depending on your structure:
- Articles of Incorporation (for-profit and nonprofit corporations).
- Partnership Agreement (for partnerships).
- Operating Agreement (for LLCs).
- Assumed Name Certificate or DBA (for sole proprietorships).
- Business license (if required by your industry).
- Resolution (for all businesses to show who can open the account).
In Indiana, most business documents can be obtained through InBiz.[3] For more information, see the Business Owner's Guide on In.gov.[4]
3. Personal Identification
For everyone involved in the account, you’ll need a government-issued ID, like a driver’s license or passport. This ensures the bank can verify the identity of each person managing the account.
4. Proof of Address
You’ll also need to provide a utility bill or lease agreement to confirm the business address. This helps the bank verify the location where your business operates.
By having all these documents ready, you’ll make the process of opening your business bank account much smoother.
Requirements To Open a Business Bank Account
Requirements can vary by bank, but generally, you will need:
- Essential documents.
- An initial deposit.
- Good financial history.
Documentation will always be required when you open a business bank account.
You may also need to fund your account with an initial deposit, which will vary by bank and account type.
You don’t need a high credit score to open a business bank account. However, a history of negative banking or poor credit might restrict your options. Banks aren’t obligated to approve every application and can decline for several reasons. If your application is denied, the bank must explain why.
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What To Consider When You Open a Business Bank Account
Before opening a business bank account, look at:
- Fees and costs.
- Interest/earning rates, if applicable.
- Bank services.
- Accessibility.
First of all, you’ll want to make sure you know what you’re going to pay. Some business bank accounts are free, and some charge a monthly maintenance fee. So, look at monthly fees, transaction fees, and any others associated with the account. Likewise, with savings accounts, find out how much interest the account will accrue.
Next, look at the services the bank offers. For example, does the business account come ready for payment processing? If not, what will a third-party payment processor cost? And, does the bank have financial management services?
Finally, choose a bank that has convenient branch locations or online banking solutions. Centier Bank operates more than 59 branch locations throughout Northern, Central, and Southern Indiana. We also provide online/mobile banking. This helps make sure that you are able to manage your finances.
How To Open a Business Bank Account
To open a business bank account, follow these steps:
- Make sure you have all the necessary paperwork, including business formation documents, identification, and proof of address.
- Choose a bank that offers the features and services that align with your business needs.
- Fill out the application form, either online or in person.
- Fund the account as required by the bank’s minimum deposit policy.
- Register for online access to manage your account efficiently.
- Set up merchant services as needed. If your bank doesn’t offer this, connect your payment processing solution with your new account.
Once you've completed these steps, your account will be ready to manage your business funds. Moreover, you’ll be on your way to a brighter financial future.
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Open a Business Bank Account With Centier Today
A business bank account is a crucial tool to manage your company’s finances. At Centier Bank, we are dedicated to making this process as smooth and efficient as possible.
Our straightforward and customer-focused approach helps make sure that you receive personalized service tailored to your specific needs. Our team will then guide you through each step.
To open a business checking, savings, MMA, or CD account with Centier, connect with a banker today.
References:
[1] https://www.nfib.com/content/press-release/economy/new-nfib-survey-small-businesses-rank-banking-operations-and-confidence-in-banking-system
[2] https://sa.www4.irs.gov/modiein/individual/index.jsp
