How Do I Open a Business Bank Account?

How Do I Open a Business Bank Account?

For those starting a business or operating a small business, keeping personal and business finances separate is crucial. The first step to doing so is opening a business bank account. With a business bank account, not only are you then able to accept payments in your business’s name, but you provide yourself & your company an extra layer of protection. Opening a bank account for your business doesn’t take long, but you do need a few items before you can get started. Here’s everything you need to open a business bank account.

EIN Number

The first thing you’ll need is an Employer Identification Number (EIN) or your social security number. An EIN is essentially a social security number for your business. The IRS issues and manages your EIN, so if you still need one, contact them. If you’re operating a sole proprietorship with no employees, you can likely open a business bank account without an EIN. If you’re not sure, seek assistance from a CPA on whether or not you should obtain an EIN.

Identification

You’ll need personal or business identification in order to open the account, depending on the type of business. For a sole proprietorship operating under your own name, you’ll need a state-issued ID (such as a driver’s license or passport) and your social security number as mentioned above. Otherwise, you’ll need proof of your business’s identification—such as a business license or partnership agreement. If your business is a partnership, you’ll need to show an agreement listing all partners in addition to the business’s name. You may need additional documentation, depending on the institution.

Deposit

In order to finish opening the account, you’ll need to make a deposit. Each bank varies on what they require for your initial deposit, so be sure to find out in advance what that number will be.

Why Open a Business Bank Account?

Keeping your business’s finances and your personal finances separate is crucial. Not only will it make tracking expenses significantly easier for you, but it will help protect you in the end. When tax season comes around and it’s time to make deductions and organize your files, you’re going to have significantly less of a headache than if it were all mingled with your personal transactions. Opening a business bank account also helps your business establish credit. Your business will have its own credit score, and it will need a good one in order to qualify for a credit card or loan down the line. Keeping your business finances separate now (even if you’re not bringing in as much income as you’d like just yet) sets you up to build credit and scale your business.

Opening a Bank Account for Your Business

Be sure to have all of the proper documentation together when you go to open the account. If you have a financial institution picked out, give them a call and ask what they require in order to open a checking account for your business. Inquire about any current offers they might be running as well. Many banks will offer limited-time incentives for opening an account, such as a monetary contribution towards your balance.

Looking for assistance in setting up your business’s financials? Contact Chris Haro CPA for expert assistance in bookkeeping, financial planning, payroll, and more. Our team has extensive experience in providing small business owners with the right tools for a healthy financial foundation.


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