It is important to keep your personal and business account separate for many reason. You must already know that as you are looking to open a business bank account. To understand how to open a business bank account, you must understand what is required. It is very easy to open a business bank account, all you need is some documents. The crucial thing to understand here is which business bank account to open. So, we will guide you to understand what to look for before opening you business bank account.
How to Open a Business Bank Account
You have to follow very simple 3 steps to open a bank account. It is crucial for you to go through this process to choose the best suitable business bank account for your business:
- Choose the type of business account you want
- Consider the important factors and compare the banks
- Finally, gather the documents & open a bank account
Types of Business Bank Account
There are multiple types of business bank account. One of the crucial thing to decide is the type of account before you open a business bank account. There are many to choose from but you must understand the needs of every type and what suits your business the best. You must only compare same or similar type of bank account of other banks.
1. Business Checking Account
It is the most versatile type of account out of all. This account has very few restrictions and allows a very easy way of banking for a business. It gives you several options to access your money. If you looking to use this account on a daily basis, then this is the perfect type of account for you.
2. Business Savings Account
If you are looking for an account which is not going to be used everyday and in the near future atleast, then you can go for the business savings account. This can not be your go to type of account. Although you will get good interest rates on these savings. You will also get 6 free withdrawals and have limitations on tradoff.
3. Merchant Account
Merchant account could be most useful to those business that accepts debit and credit transactions. You will get low transaction fees. The way it works is that whenever a customer pays you, you will receive the payment in this bank and then gets transfer to your other account. So this can not be your only account.
4. Business Money Market Account
It is not the most common type of business account for business but if you are looking for an account with a mix of savings and checking, then it might be perfect for you. This type gives you 6 free withdrawals, the interest rate may vary from bank to bank. Along with this, they also offer more ways to access your money. It may have higher minimum balance requirement depending on the bank.
5. Business Certificate of Deposit Account
Another type of business account are these, which are also an alternative to savings account but they are not the best option if you are looking to keep your money in this bank account for operating expense. The main problem with this account is that you are agreeing to put money for a certain period of time. If you withdraw the money before this period then there will be penalty. The longer you keep your money for the more interest you will get.
What To Consider Before Choosing A Business Bank Account?
It is important to look at a few thing before finally choosing your bank to open a business bank account. You must look at a few features and how they offer to help your business. After which you can consider comparing different banks and their features and what additonally they offer. Here are things to consider before you make your choice.
- The minimum balance requirement
- The monthly fees of any kind (account maintenance or card charges)
- How many free transaction and charges of additional transactions
- Withdrawals and Deposits limits
- Online and mobile banking.
- Wiring, transfer and payment capabilities.
- Incidental fees (stop payment, nonsufficient funds, overdrafts).
- Any additional features
What Documents are Required For Business Bank Account?
Once you are sure of the account type and finally made your decision of which bank to choose. Ensure you are aware of the business bank account requirement. Then, gather documents to speed up your process. You can open a business bank account online or by visiting the bank. The most common documents that the banks ask for are:
- Peronal Identifications
- Employer Identification Number (EIN)
- Business License
- Ownership Agreement
- Business’s formation documents
Keeping these documents handy can help you open your bank account very quickly. These documents are very important and so you must have them all. Without it your bank account will not open.
This is how to open a business bank account, it is important to know all this so you get a better understanding of the complete process. You must make your decision wisely, it is crucial that you choose a bank account which suits your business. In the end do not forget to take you document to open a bank account.