How to Open a Business Bank Account

Opening a business bank account is a key step in getting your small business up and running. Not only does this type of account make it possible to accept payments from customers, but it also makes it easier for your accounting and provides protection for you in case the unthinkable happens.
 
Not sure how to get started? This guide will provide you with an overview of different types of business bank accounts, a thorough list of documents you might need to provide, and the steps to opening a business bank account.

Choosing a business bank account

Credit unions and banks offer a variety of options for small business owners, including business checking and business savings accounts. Lenders may also offer other products for small businesses, including overdraft protection, merchant services or payment processing solutions, and business credit cards.

When you look for a business account, be sure to understand any fees and restrictions on the account, such as monthly account fees and transaction limits.

• Business checking accounts work just like your personal checking account: You can deposit funds and make withdrawals using checks, a debit card, or with a bank teller; make purchases with an associated debit card or digital wallet; and move money using payment apps or wire transfer. Most business checking accounts also provide access to online banking tools, as well.
• Business interest checking accounts provide the same benefits as a standard business checking account, but you’ll earn interest on your balance. Monthly fees may be higher on interest-bearing checking accounts, but some financial institutions – including Patelco – will waive those charges if you maintain a minimum balance or meet other requirements.
• Business savings accounts allow you to deposit funds and earn interest over time. Unlike a certificate of deposit or other investments, you’ll have convenient access to your cash when you need it. As with other types of accounts, shop around to find the best option for your money. You’ll especially want to know if the account has monthly fees, minimum balance requirements, or a transaction limit.

Good to know

Be sure to understand any fees and restrictions associated with your business bank account, such as monthly account fees and transaction limits.

Gather the documents you might need

In order to open a small business bank account, you’ll need to provide some documents related to your business. The specifics may vary based on your financial institution, but you should expect to provide the following:

• Federal Identification Number (EIN): Issued by the Internal Revenue Service (IRS), your EIN is a nine-digit number assigned to your business used for tax purposes. It’s free: apply for one online through the IRS website.
• Business license: Depending on your location, your financial institution may request a copy of your business license, a license or permit that allows you to conduct business in a specified location. In California, business licenses are issued by a city or county. Check your business’s local government website to see what’s required. You can usually apply online.
• Operating agreement or partnership agreement: These legal documents outline the financial and functional decisions of your business. Your bank may request one as proof that you own the business.
• Legal identification: Your bank or credit union will need to see your driver’s license or passport, as well as identification for any other authorized signers on the business bank account (or owners with 25% or more beneficial interest in the company).
• Proof of address: You can provide a utility bill or lease agreement to verify your business location.
• Business formation documents: Depending on your type of business, these include your articles of incorporation or certificate of formation.

We’ve made it easy by compiling a list of what you need for a business account at Patelco.

Choose the best bank for your business

This step will require some research, but this decision will impact your entire business. Here’s what to consider as you look at financial institutions:

• Your business needs. If you expect a lot of activity with your account, look for a checking account that has a higher transaction limit – and lower fees if you go over that limit. A savings account might make sense if you need convenient access to your funds, anticipate fewer transactions, and want to hit long-term goals.
• Interest rates and fees. Which bank or credit union offers the most competitive rates and low fees?
• Online banking services. Does the bank or credit union offer convenient tools to help you manage your finances remotely?
• Online reviews. What are other business owners saying about their experiences with the bank?

Apply for your business bank account

When you’re ready to apply for your business bank account, you’ll need to provide the documents listed above. Depending on the bank, you can apply online, in person, or over the phone – but you’ll need to make an initial deposit once your application is approved.
 
To apply for a business account at Patelco, you will need to be an existing Patelco Credit Union member and own a business (or own a business and qualify for membership). Patelco business accounts can be opened through the Patelco Virtual Branch™, where our team members can walk you through the application process, review the required documents, and answer questions about the types of accounts and products available to you, including merchant services, overdraft protection, and the Patelco Business Rewards credit card.

Using your business bank account

Once you open an account, you can start using it to deposit and withdraw money, write checks (when applicable), and make online payments. You may also want to set up automatic transfers to your business savings account to help you save for future expenses.
 
As with any bank account, be sure to keep track of your transactions and reconcile your account regularly. Keep your business bank account information confidential and be aware of common business scams.
 
Congratulations! Opening a business bank account is a simple process, but it is an important step for any entrepreneur.