A Business Bank Account is way more than just a separate bank account that you can only use for your business. This bank account offers series of perks and requirements that is created specifically for business. These banks account might offer more preferable fees and interest rates, but can help to create requirements for acceptable use.
Opening this type of account can be as easy as getting a new debit card or registering for a new line of credit at your current financial institution. The important part is that personal funds are separated from the company funds.
Business Bank Account
In a 2017 research by TD Bank, it was found that over 27% of business owners use similar bank account for both personal and business purposes. And sometimes, founders who bootstrap their companies begins by pulling from their own funds. However, as time goes on it gets more and more critical to separate your personal and business finances so as to protect both.
Difference Between Business & Personal Bank Accounts
A business account can’t have personal expenses withdrawn or deposited. But personal bank accounts, which is often a checking account and savings account, are used to make personal withdrawals for self-expenses.
During the early stages of business, founders can use their personal bank accounts to fund expenses or write checks for the company. But since the bank account is registered with the name of a single individual, it is considered to be a personal bank account.
Benefits of Business Bank Account
If you are included among business owners who use their personal account for business purposes, it may be working well for you. But there are a lot you are missing out. The benefits to registering for a business account will vary based on unique conditions and the account you choose.
- Offers easier expense tracking and monitoring
- This account allows banking access to employees safely
- It secures personal information for client transactions
- There is increased professionalism & trust
- Offers users ability to access a line of credit or apply for a loan if need arises
- Strengthen credit history of account owners
- Offers the ability to take full advantage of tax deductions
- Business-specific incentives like easier ACH payroll payments or higher interest yields
When to Register a Business Bank Account
You can open register an account for your business as soon as you get your Employee Identification Number (EID or federal tax ID). As soon as you open the business bank account, you should begin routing all of your business expenses through the account.
Types of Business Bank Account
Business checking account:
This is an all-purpose account that you can use to write checks, complete payroll, process ACH funds, deposit checks or cash, and make purchases with an issued business debit card.
Business savings account:
This account allows users to build an emergency fund and create wealth with more lucrative interest-building.
Cash management account:
Also known as CMA. This is an option that allows the account owner ability of saving, spending, and investing all in one. Offers a web-based account and a one-stop-shop for your business banking needs.
How to open a business bank account
Opening a business bank account is easy as long as you have done your research. Firstly, all you have to do is prepare each of the required documents, and then visit the bank you choose to bank with, whether online or in person.
Requirements to open a business bank account
They include:
- Your legal business name
- Employee identification number (EIN)
- Business address
- Business phone number, email address, website, etc.
- Driver’s License (for ID number and photo)
- Second photo identification, such as a passport
- Business license, partnership documents, or articles of corporation or organization depending on your business structure
- Account information for other accounts at the same or other financial institutions
- Names of individuals being issued cards, if necessary
Things to Consider to Choose a Bank
Before selecting a bank, you want to use for your business transactions, there are certain things you should consider:
- Fees
- Credit and debit cards
- Checks or ACH
- Introductory offers
- Mobile banking
- Merchant services
- FDIC – Federal Deposit Insurance Corporation
- Funding access
Online Business Bank Account
In these modern days, you may not even have to leave your home to open a business account. For a fast-moving business you may enjoy the benefit of the speed and accessibility offered by an online bank.
Below are some of the best online bank account to access:
- Ally
- American Express National Bank
- Barclays US Savings
- Capital One
- Charles Schwab
- Chime
- CIT Bank
- Discover Bank
- Marcus by Goldman Sachs
- Radius Bank
- Synchrony
And many more.
