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Opening a Business Bank Account Online
Use this step-by-step guide to understand the process of opening a business account online.
Step 1: Research Online Banks and Compare Account Options
Start by researching accounts at various financial institutions to find one that suits your business needs. Just as there are personal accounts, there are business checking accounts and business savings accounts.
Consider account fees, transaction limits, wire transfer fees, online banking features and customer support. Some accounts may offer interest on your balance, so look at the annual percent yield (APY) if the account has one.
Also, you should make sure the bank is a member of the FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration) so your money will be insured and safe.
Step 2: Prepare Required Documents and Information
You’ll need the following documents for your online business bank account application:
- Business registration documents: These may include your articles of incorporation, business license or certificate of formation.
- Employer Identification Number (EIN) or Social Security number (SSN): You need an EIN or SSN to identify your business for tax purposes. If your business has employees or multiple owners, you will need an EIN. If you’re a sole proprietor, you can use your SSN.
- Personal Identification Documents (ID): Anyone with access to your accounts, such as owners, partners and authorized signers, should be prepared to provide a government-issued ID such as a driver’s license or passport.
- Proof of business address: You will need a document that confirms the physical location of your business. If the business operates from a home address, check with the bank about its home-based business policies.
- Business license or permits: Not every business requires a license or permit, but if your industry is regulated by a licensing or permitting board, be sure to have proof of your authorization.
To ensure a smooth application process, create a checklist of the required documents specific to your chosen bank’s application.
Step 3: Initiate the Application Process
Go to the website of the bank you’ve chosen. Look for the option to “Apply Now” or “Open an Account” under the Business Accounts section, and click on it to begin the application process.
Be sure to complete the online application with accurate information. You’ll likely need to provide details about your business such as its legal name, address, type of business, industry and anticipated account activity.
Step 4: Provide Necessary Business and Personal Information
Scan or take clear photos of the necessary documents and upload them as instructed. Make sure the documents meet the bank’s requirements for format and file size.
Step 5: Review and Submit Your Application
After reviewing and agreeing to the bank’s terms, submit your application electronically. Some banks may require a small opening deposit. The bank will review your application, and it may contact you for additional information or verification if needed.
Step 6: Set Up Your Account and Start Banking
Upon approval, you’ll receive confirmation of your new business account. The bank will provide instructions for setting up online banking access, ordering checks and downloading the mobile app. If your account comes with a business debit card or credit card, you’ll receive them in the mail — follow the instructions provided to activate them.
Once your account is set up, you can start using it to receive payments, make purchases, pay bills and manage your business finances.
Benefits of a Business Banking Account
While it may not seem necessary to open a business bank account, especially if you are a single proprietor or a small business owner, there are good reasons to do so.
- Protect yourself: In the case of a lawsuit, it is best to have your personal assets separate and therefore protected.
- Simplify taxes: If all of your business expenses and dealings are in one easy-to-find place, it makes the process much smoother when dealing with the Internal Revenue Service.
- Build credit: In the long term, having a business checking account is the first step toward building credit as a business. That can be beneficial down the line if you need to take out a small business loan or want a business credit card.
Tips for Selecting the Right Online Bank
When selecting an online bank for your business, consider the following factors:
- Account fees and limitations: Your business checking account may have a minimum balance requirement, monthly maintenance fee, transaction fees, overdraft fees or ATM fees. You may also see transaction limits that cap the number of withdrawals and deposits you can make within a period.
- Account features and perks: Does it offer a mobile banking app with account alerts, customizable reporting tools and security measures like multi-factor authentication? Can you set up bill pay or ACH transfers to automate some of your cash flow?
- Integrations with your business tools: Check if you can integrate the account with the software you use for payment processing, payroll and accounting.
- Physical location or ATM capability: If you receive cash payments, you may also want to check that it’s convenient to make cash deposits.
- Business lending solutions: If you think you may expand or need credit in the future, consider whether the online bank offers business loans, lines of credit or business credit cards. Evaluate the terms, interest rates, loan amounts and eligibility criteria for those credit products.
- Regulatory compliance record and financial stability: You should check the reputation of your chosen bank by reading reviews. You should also verify that the bank is insured by the Federal Deposit Insurance Corporation (FDIC).
- Customer support: Look for reviews or testimonials from other business customers to gauge the bank’s responsiveness and reliability in addressing customer inquiries or issues. Check what support channels it offers and if they meet your needs.
Common Pitfalls to Avoid
When completing an online application for a business bank account, avoid these common mistakes that could lead to delays or complications.
- Incomplete or inaccurate information: Ensure you have all the information needed to begin the application, both personal and for the business. Double-check spellings, addresses and numerical data to avoid errors that could lead to application rejection or processing delays.
- Ignoring eligibility: Learn the bank’s requirements, including business type, ownership structure, industry restrictions and minimum balance requirements. Double-check you meet these criteria before proceeding with the application.
- Skipping the review process: Take time to review all the information before applying. Verify that you’ve uploaded all the documents correctly and that you’ve filled out all the fields in the application form.
If you encounter roadblocks during the online application process, reach out to the bank’s customer support team for assistance. After applying, follow up with the bank to confirm receipt and inquire about the status of your application. Stay proactive in addressing any outstanding requirements or issues that arise during the processing period.
The Bottom Line: Opening a Business Bank Account Online
Opening an account for your business allows you to separate your personal and business finances and conduct important business transactions swiftly and accurately.
The process begins with thorough research and comparison of online banks to find the one that best suits your needs. You’ll want to consider account fees, transaction limits, customer service and online banking features.
FAQ: How To Open a Business Bank Account Online
Yes, you’ll typically use your Social Security Number (SSN) as the taxpayer identification number for your business unless you’ve obtained an Employer Identification Number (EIN) from the IRS.
The time it takes can vary depending on several factors, including the specific bank’s processes, the completeness and accuracy of the application and any additional verification requirements. In general, the timeline for opening a business bank account online typically ranges from a few days to a couple of weeks.
In most cases, you will need to have your business registered before you can open a business bank account, whether you’re applying online or in person. Business registration provides the necessary legal documentation to establish the existence of your business, which banks typically require when opening a business account. An exception may be if you are operating as a sole proprietor.
Editor’s Note: Before making significant financial decisions, consider reviewing your options with someoneyou trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.
Erin QuinnContributor
Erin Quinn is a freelance writer and editor with a background in education, marketing, and non-profit administration. Erin’s first passion is communication and making difficult topics easy to understand. She loves to “nerd out” on personal finance topics and break all the cultural rules about discussing money.
When she isn’t copywriting, she is both working and volunteering in local non-profits to benefit school kids of all ages. As a military spouse, Erin loves getting to know whatever locale her family is in, especially if food is involved!
David GregoryEditor
David Gregory is a sharp-eyed content editor with more than a decade of experience in the financial services industry. Before that, he worked as a child and family therapist until his love of adventure caused him to quit his job, give away everything he owned and head off to Asia. David spent years working and traveling through numerous countries before returning home with his wife and two kids in tow. His love of reading led him to seek out training at UC San Diego to become an editor, and he has been working as an editor ever since. When he’s not working, he’s either reading a book, riding his bicycle or playing a board game with his kids (and sometimes with his wife).
