A business bank account separates your personal money from your business money
A business bank account is a separate account held in your business's name rather than your personal name. When you mix personal and business money in one account, it becomes hard to track what the business actually earned or spent — and if your business faces a lawsuit, a court may decide your personal savings are fair game because the line between them was blurry. A separate account protects both your record-keeping and your personal assets.
You do not need to be incorporated or have a formal business license to open one. Sole proprietors, partnerships, and LLCs can all open business accounts. Some banks will open an account for you as a sole proprietor using just your Social Security number. Others require you to register a business name first. The requirements vary by bank and by what type of business structure you have chosen.
Key Takeaways
- You will need a federal Employer Identification Number (EIN) if your business has employees, or you can use your Social Security number as a sole proprietor with no employees.
- Most banks require a government-issued ID, proof of your business address, and either your EIN or Social Security number before they will open the account.
- Sole proprietors can often open an account in person with just an ID and Social Security number, while LLCs and partnerships usually need formation documents from your state.
- Business accounts typically cost more than personal accounts and may have monthly fees, per-transaction fees, or minimum balance requirements depending on the bank.
- You can open an account online, by mail, or in person — online is usually fastest, but in-person lets you ask questions about fees and features before committing.
What documents and information you will need to bring
The exact list depends on your business structure and the bank you choose, but most banks ask for the same core items. Bring a government-issued photo ID — a driver's license or passport. Bring proof of your business address, which can be a utility bill, lease, or mortgage statement in your business's name. If you do not have a separate business address yet, some banks accept a home address with a letter from you stating that is where the business operates.
You will also need to prove who owns the business. For a sole proprietorship, that is your Social Security number. For an LLC or partnership, bring your Articles of Organization or Articles of Partnership — the document you filed with your state when you registered the business. If your business has employees or you plan to hire them, you will need an Employer Identification Number (EIN), which you can get free from the IRS website before you go to the bank.
Some banks ask for a business license or permit, though not all do. Call the bank ahead of time and ask what they require for your specific business structure. This saves you a trip back home for a missing document.
How to get an EIN if you need one
An Employer Identification Number is a nine-digit number the IRS uses to identify your business for tax purposes. You need one if you have employees. You may also want one as a sole proprietor even without employees, because it keeps your Social Security number off business documents and credit applications.
You can get an EIN free from the IRS. Go to irs.gov and search for "EIN". You can explore online and receive your number when ready, or explore by phone, fax, or mail. The online process is fastest — you answer questions about your business type, location, and ownership, and the IRS gives you the number on the spot. You do not need to have registered your business name with the state first, though you will need to know what your business name is.
If you are explore as an LLC or partnership, make sure the name and ownership structure you give the IRS matches what you filed with your state. The bank will compare them, and mismatches can delay opening your account.
The difference between sole proprietor, LLC, and partnership accounts
A sole proprietorship is a business owned by one person with no formal registration. To open a business account as a sole proprietor, most banks let you use your Social Security number and a government ID. Some banks will open the account in your personal name with a note that it is for business use, though this is less common now. You may not need any business formation documents because there are none — you straightforward started the business.
An LLC (Limited Liability Company) is a business structure you register with your state. To open an account, bring your Articles of Organization — the document you filed with your state when you created the LLC. The bank will want to see this because it proves the LLC exists and shows who the owner or owners are. The account will be in the LLC's name, not your personal name.
A partnership is owned by two or more people. To open an account, bring your Articles of Partnership or your partnership agreement, which shows who the partners are. Some banks require all partners to be present or to sign a form authorizing one partner to open the account on behalf of the partnership. Call ahead to ask what your bank requires.
Where to open the account: banks, credit unions, and online options
You can open a business account at a traditional bank, a credit union, or an online bank. Each has trade-offs. A traditional bank has physical branches where you can deposit cash and speak to someone in person, but business accounts often have higher fees and higher minimum balances. A credit union may have lower fees and more personalized service, but you have to be a member first — membership rules vary by credit union. An online bank has low or no monthly fees and no minimum balance, but you cannot deposit cash in person and customer service is by phone or email.
If you deposit cash regularly, a bank or credit union with branches is usually worth the higher fees. If you mostly receive payments by check or transfer, an online bank can save you money. Some people open accounts at two places — a local bank for cash deposits and an online bank for day-to-day spending.
You can open an account online, by mail, or in person. Online is fastest — you upload photos of your documents and get approved in hours or days. In person takes longer but lets you ask questions about fees, features, and what the bank can do for growing businesses. By mail is slowest and requires you to send original documents, which carries a small risk of loss.
What to expect after you open the account
Once the bank approves your account, you will receive a debit card, checks, and online banking access within one to two weeks. Some banks send these by mail; others let you pick them up at a branch. You will also get login information for online banking so you can check your balance, transfer money, and set up automatic payments.
Before you start using the account, log in and set up your online banking security — usually a password and a security question. Many banks offer mobile apps so you can check your balance and deposit checks by taking a photo. If your business receives regular payments, ask the bank about setting up direct deposit or ACH transfers, which are electronic transfers from customers' accounts to yours.
Keep your business and personal finances separate from day one. Deposit all business income into the business account and pay all business expenses from it. This makes tax time easier and protects you if your business is ever sued.
Fees and features to compare before you choose
Business accounts cost more than personal accounts. Most have a monthly maintenance fee ranging from nothing to $25 or more, depending on the bank and account type. Some waive the fee if you keep a minimum balance — often $1,000 to $5,000 — or if you set up direct deposit. Some charge per transaction: a fee for each check you write, each transfer you make, or each deposit you receive.
Before you open an account, ask the bank for a fee schedule and read it carefully. Ask whether the fees change if your business grows or if you add services like a business credit card or merchant processing. Ask whether the account includes online banking, mobile deposit, and bill pay at no extra cost. Some banks offer these; others charge extra.
Also ask about overdraft protection — what happens if you accidentally spend more than you have. Some banks automatically transfer money from a savings account; others charge an overdraft fee. Know the answer before it happens.
Frequently Asked Questions
Can I use my personal bank account for my business instead?
Legally, yes — but it is risky. If your business is sued, a court may treat your personal and business money as one pool and go after your personal savings. Also, mixing accounts makes taxes harder because you have to separate personal and business transactions yourself. A business account costs more but protects you and saves time at tax time.
Do I need to register my business name with the state before opening a bank account?
Not always. Sole proprietors can open an account without registering anything. LLCs and partnerships must register with the state first and bring the formation documents. If you are a sole proprietor and want to use a business name other than your legal name, some banks require you to file a "doing business as" (DBA) form with your county first — call the bank to ask.
What if I do not have a separate business address yet?
Most banks accept your home address as your business address if you are just starting out. Bring a utility bill or lease in your name and a letter stating that the business operates from that address. As your business grows, you can update your address with the bank.
How long does it take to open a business account?
Online applications are usually approved within hours or one business day. In-person applications can be approved the same day. By mail takes one to two weeks. After approval, it takes another one to two weeks to receive your debit card and checks by mail.
Can I open a business account if my business is not registered yet?
As a sole proprietor, yes — you do not have to register anything. For an LLC or partnership, you must register with your state first and bring the formation documents. If you have not registered yet, do that before going to the bank.