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No matter what line of business you’re in, maximizing your profit remains a priority. For this reason, you’ll want to ensure that you open a business bank account that cuts your costs while helping you grow your savings. Now that online banking is mainstream, opening your business account is easier than ever before.
How to Open a Business Bank Account Online in 5 Steps
With an increasing number of banks offering online banking solutions, it is now faster and simpler than ever to open a business bank account online. This step-by-step guide will show you how to open your new business account in no time!
Step 1: Get your documents in order
Before you start browsing online banks, it’s important to gather all the documents that you’ll need in order to apply for an account. By gathering all the required documents, you’ll be ready to apply as soon as you find the ideal business account for you.
Also, by organizing your documentation early, you’ll also be able to determine early on if there are any missing documents that you need to gather. Ultimately, the documents you need will heavily depend on your business type.
Sole Proprietor
Although some online banks such as Novo don’t generally require documentation from sole proprietors, personal details that are required by all banks include your Tax Identification Number (TIN) or your Social Security Number (SSN), your physical address, your phone number, your email address, and a copy of your ID.
If your bank of choice does require additional business documents, these would typically be your DBA (Doing Business As) certificate if you have registered a business name as well as an IRS SS-4 form or a 147 c Letter that verifies your Employment Identification Number.
Limited Liability Company (LLC)
Basic details that you will need to submit in order to open a business bank account for LLCs include your legal business name, the business’s physical address and phone number as registered with your Secretary of State, and the Business Employer Identification Number (EIN) as provided by the IRS. You may also need to provide the date that the business was established.
While not always a requirement, some banks may require you to disclose your annual revenue so make sure to have that information on hand. Other documents that may be required for additional verification are your business’s Articles of Organization as well as its Operating Agreement.
Corporations
As a corporation, many of the business details that you would submit during your application are the same or similar to those for an LLC. This includes the legal business name, physical address, and phone number as registered with your Secretary of State.
You’ll also be required to provide your Employer Identification Number (EIN). Unlike other types of businesses, you cannot provide a social security number or other form of identification instead of an EIN.
Other documents that online banks may want you to submit include the corporation’s Articles of Incorporation as well as the Company Bylaws.
General Partnership/Limited Liability Partnership (LLP)
Much like a sole proprietorship, you’ll need to submit your full name, physical address, phone number, email address and Social Security Number (SSN).
You may be required to provide a copy of your Partnership Agreement for further validation, as well as your Certificate of Partnership. Your Partnership Agreement should detail the percentages of ownership among partners as well as the distribution of profits and losses.
Step 2: Decide what type of bank account is right for you
Once you have all of your documents in order, it’s time to decide what type of bank account is ideal for you. This will largely depend on what activities you’re looking to perform in your account as well as your financial goals.
Business checking account
If you’re looking to perform banking transactions such as check and cash deposits, ATM withdrawals, ACH and wire transfers, and debit card purchases on a regular basis, then a business checking account is right for you.
The most versatile type of business account, a checking account makes it easy to manage your business’s day-to-day finances.
A major advantage of business checking accounts is that they often come with accounting software and other digital tools that help you to optimize the financial management of your business.
Business savings account
If you’re looking for an account that you can use to build your business’s savings as much as possible without performing regular transactions, then a savings account is worth considering.
These bank accounts come with higher interest rates than checking accounts, however, they are not geared towards making a high volume of transactions, meaning that you may end up paying high fees if you perform an excessive volume of transfers and withdrawals.
Certificate of deposit (CD) account
While this type of account earns you even more interest than a basic savings account, you’ll likely be barred from making any withdrawals for a fixed amount of time.
As a result, a certificate of deposit (CD) account is best for businesses that are looking to build their savings with extra funds that they don’t need to use in the daily operation of their business.
Merchant account
If you run a business that accepts credit and debit card payments from customers, then you may need a merchant account.
It is important to note, however, that while this account comes with its own set of fees, you will have to open a checking account before a merchant account as you will need a bank account to transfer your money to once it enters the merchant account.
Considering that they come with monthly fees as well as card transaction fees, you’ll need to think hard about whether a merchant account is worth it before opening one.
Step 3: Choose your bank
Once you know what bank account you’re looking for, then it’s time to compare banks. After all, you want to ensure that you select the bank that provides the best deal for you considering your specific business banking goals, whether that be paying low fees, earning high interest rates, utilizing digital money management tools, or receiving access to loans.
There is a wide array of online banking options available, ranging from traditional banks that have online banking features such as Bank of America and Chase to online-only banks such as Bluevine. If you own a small business, then there are also banks that focus on serving sole proprietors, freelancers, and other types of small businesses such as Lili and Novo.
Step 4: Start your online application
Once you know what bank you wish to join, head to the official website of your bank of choice.
Most online banks allow you to apply for your bank account within minutes from the homepage of their website.
Banks such as Bluevine, Lili, and Found pride themselves on allowing you to open your bank account and get started within minutes.
Step 5: Time to begin your money management journey!
Once you’ve successfully completed your application and your bank account is active, it’s time to begin your money management journey!
Make sure to deposit some money into your account so that you can begin saving and make sure to become familiar with your bank’s online portal as well as the available digital tools so that you can start optimizing the financial management of your business.
Consider downloading your bank’s mobile banking app as well so that you can keep track of your financial activities on the go.
How to Choose the Best Bank for You
With so many online accounts to choose from, you may find it difficult to determine which bank truly offers the best account for your business. For this reason, it’s important to identify important factors that you should assess when comparing different business bank accounts. Some factors may include:
Fees
Much like everyday business expenses, banking fees such as monthly fees, ATM fees, cash and check deposit fees, and ACH transaction fees chip away at your savings.
For this reason, finding a bank with low fees could help to maintain your business’s profit margins. Axos is one such bank, offering accounts with no monthly fee and full unlimited reimbursements on ATM fees.
Interest rates
While most of your business’s profitability is derived from strong sales, having a business account that offers a decent interest rate could help you to supplement your business’s income. Bluevine is one example, offering up to 2.0% APY on its checking account.
Rewards and benefits
From cashback on business debit card purchases as offered by to discounts from certain vendors, rewards programs can go a long way in helping you save money on purchases. Lili offers cashback rewards from a variety of stores, both online and in-person, while Novo offers a range of discounts and coupons.
Digital banking features
If you’re looking to optimize your financial management and make filing taxes and other accounting activities easier and more efficient, then it might be worth looking for a bank with digital financial tools.
While some business bank accounts such as Bank of America come with cash flow management tools to help you track your expenses, others such as Lili and Found have accounting tools to help you maximize your tax write-offs and automate your bookkeeping, along with pre-filled tax forms to make filing taxes quicker and easier.
Some bank accounts such as LendingClub and Novo come with invoicing software so that you can handle all of your financial matters from a single platform.
Access to loans
Depending on your business’s financial position, it’s important to consider whether you may need access to financing either now or in the future.
If there is a possibility of needing a loan, then it may be worth looking at a bank such as Axos, Chase for Business, and Bank of America, each of which offer a wide range of business loans, ranging from credit lines for small business owners to major loans to corporations.
Frequently Asked Questions (FAQs) About Online Business Bank Accounts
Do you still feel unsure about whether or not opening a business bank account is the right move for you and your business? Here are some of the most frequently asked questions and answers to help you decide!
Bottom Line on How to Open a Business Bank Account Online
By systematically following the above steps, you’ll see that opening a business bank account online is a straightforward and logical process. Thanks to the growing demand for digital banking solutions, the application process is also quick, meaning that once you find the right bank for you, you’ll be able to start conducting business in no time!
Best Business Bank Accounts by State
Below you will find an interactive U.S map that can help you locate and compare different banks and financial institutions that offer business accounts in your area.
