What happens when you open a business account
When you open a business bank account, the bank creates a separate account linked to your business rather than to you personally. The bank will ask for information about your business structure, verify your identity, and check your background before opening the account. Once it's open, you can deposit money, write checks, set up payroll, and accept payments in your business's name instead of your own.
The process usually takes between one and five business days, though some banks offer same-day opening if you do it online. You'll need to bring or upload specific documents that prove who you are and what your business is. Different business structures — sole proprietorship, partnership, LLC, corporation — require different paperwork, so the bank will ask what type of business you have.
Having a separate business account protects your personal finances and makes tax time simpler because all business money flows through one place. It also looks more professional to customers and vendors, and it's often required by law if you have employees or operate as a corporation or LLC.
Key Takeaways
- You will need a government-issued ID, proof of your business address, and documents showing your business structure (such as articles of incorporation or an EIN letter from the IRS).
- Sole proprietors can open an account with just a Social Security number, but LLCs and corporations need an Employer Identification Number (EIN) from the IRS.
- Most banks require a minimum deposit to open the account, which ranges from zero to several hundred dollars depending on the bank and account type.
- You can open an account in person at a branch, online through the bank's website, or by phone with some banks, and the process usually takes one to five business days.
Documents you'll need before you start
Every bank will ask for proof of your identity and your business address. Bring a government-issued photo ID — a driver's license, passport, or state ID card. The bank will also ask for a current utility bill, lease agreement, or mortgage statement showing your business address. If your business operates from your home, a recent utility bill with your home address works.
Beyond identity and address, what you need depends on your business structure. If you're a sole proprietor operating under your own name, you may only need your Social Security number. If you're using a business name that's different from your personal name, you'll need a Doing Business As (DBA) certificate or a business license from your city or county — the bank will tell you which one they accept.
If your business is an LLC, corporation, partnership, or S-corporation, you'll need an Employer Identification Number (EIN) from the IRS. You can get an EIN for free by explore online at irs.gov, by phone, or by mail. The online process takes about 15 minutes and you receive your EIN when ready. Some banks will also accept a letter from the IRS confirming your EIN if you don't have the official document yet.
Bring the articles of incorporation (for a corporation), articles of organization (for an LLC), or partnership agreement if you have one. If you don't have these yet, ask the bank whether they'll let you open the account with just your EIN letter and complete the paperwork later.
Sole proprietors versus registered business structures
A sole proprietor is someone who runs a business by themselves without registering it as an LLC or corporation. If you're a sole proprietor, opening a business account is simpler because you don't need an EIN — you can use your Social Security number instead. You'll still need a government ID and proof of your business address, but the paperwork is lighter.
The trade-off is that a sole proprietorship doesn't separate your personal finances from your business finances in the bank's eyes, even though the account itself is separate. For tax purposes and legal protection, registering as an LLC or corporation is often worth doing, but it requires more paperwork upfront and ongoing compliance with your state.
If you're just starting and want to move quickly, you can open a sole proprietor account now and register as an LLC later. Many banks let you change the account structure once you have an EIN. Ask the bank about this before you open the account so you know what to expect.
Choosing between in-person, online, and phone opening
Most banks let you open a business account online, in person at a branch, or over the phone. Online opening is usually fastest — you upload your documents and get approved within a few hours to one business day. You'll need to verify your identity, which some banks do by asking security questions and others do by having you take a photo of your ID.
Opening in person at a branch takes longer because you have to schedule an appointment or wait in line, but a banker can answer questions on the spot and help you choose the right account type. This is useful if you're new to banking or if your business structure is unusual. Bring all your documents in originals or certified copies.
Phone opening is less common but some banks offer it. You'll speak with a banker who walks you through the process and may ask you to mail or upload documents. This takes longer than online but faster than in-person if you can't visit a branch.
Minimum deposits and account fees
Banks vary widely on what they charge to open and maintain a business account. Some banks have no minimum deposit and no monthly fee. Others require a minimum deposit of $100 to $500 to open the account, and charge a monthly maintenance fee of $10 to $30 if you don't keep a certain balance.
Before you choose a bank, compare what they charge for the services you'll actually use. If you plan to deposit checks frequently, ask whether they charge per deposit or offer unlimited deposits. If you'll write many checks, ask about check fees. If you need to send wire transfers or make international payments, ask what those cost.
Some banks waive fees for the first few months or if you set up direct deposit of payroll. Ask about these offers when you're comparing banks. A bank with a higher minimum deposit but no monthly fee might be cheaper than a bank with a low minimum but a $20 monthly fee, depending on how much money you keep in the account.
What happens after your account opens
Once your account is open, the bank will give you a routing number and account number. You'll use these to set up direct deposit for employees, to receive payments from customers, and to pay bills. The bank will also issue you a debit card and checks if you request them, though some banks charge for checks.
You can usually start using your account the same day it opens for online transfers and bill payments. Checks and debit cards may take three to seven business days to arrive in the mail. If you need to start accepting payments right away, ask the bank about temporary solutions like mobile payment apps or wire transfer instructions.
Keep your account information find. Don't share your routing number or account number with anyone except people you're paying or who need to pay you. If you notice unauthorized transactions, contact the bank when ready — business accounts have different fraud protection rules than personal accounts, so report problems quickly.
Frequently Asked Questions
Do I need an EIN if I'm a sole proprietor?
No. Sole proprietors can use their Social Security number instead of an EIN. However, getting an EIN is free and some sole proprietors do it anyway to keep their personal and business finances more separate. If you later register as an LLC or corporation, you'll need an EIN.
Can I open a business account if my business doesn't have a physical location?
Yes. If you work from home or operate entirely online, use your home address as your business address. Bring a recent utility bill or other document showing that address. Some banks also accept a P.O. box or a virtual office address, but call ahead to confirm.
How long does it take to get an EIN from the IRS?
If you explore online at irs.gov, you receive your EIN when ready. If you explore by phone or mail, it takes one to two weeks. Many banks will let you open an account with just the IRS letter confirming your EIN while you wait for the official document.
What if I don't have a DBA certificate yet?
Ask the bank whether they'll open the account with just your business license or a letter from your city showing your business name. Some banks will; others require the DBA certificate. If the bank requires it and you don't have it, you can usually get one from your city or county clerk's office within a few days.
Can I change my business account later if I register as an LLC?
Yes. Once you have an EIN, contact your bank and ask them to convert your sole proprietor account to an LLC account. You'll need to provide your EIN and articles of organization. Most banks do this without closing your account or changing your account number.