How to open a business bank account in the US: Step-by-step guide
If you run a US business you may need a business bank account to run your company, file taxes, and keep on top of your accounting. But even if you’re not legally obliged to have a business account – as a freelancer or sole proprietorship for example – you may still decide that getting one is a smart move. Specialist business accounts can make it easier to review and arrange your company finances and access business services and support, and features designed to bring down the cost of common company transactions, too.
This guide covers all you need to know about business bank accounts in the US, including who needs one, how to open one, and how much they cost. Because business accounts offered by banks aren’t always the cheapest or most convenient option, we’ll also take a look at alternatives from specialist services like Wise and OFX. More on that later.
What is a business bank account?
A business bank account is a bank account used to transact on behalf of your business. You’ll use it to receive funds from customers, pay suppliers and contractors, and get both top-level and detailed insights into your company’s cash flow and performance.
Business accounts typically come with a range of features and benefits specifically aimed toward company owners, freelancers, and sole proprietors. We’ll dive into the full range of business bank account benefits a little later.
Does my business need a business account?
The type of business you run will influence whether it’s a legal or practical requirement for you to have a separate business bank account.
The most common business entity types in the US are:
- Sole Proprietorship
- Partnership
- Limited Liability Company (LLC)
- Corporation
If you have a corporation or LLC, or if you’re a sole proprietor or partnership that trades under a name other than your own, the chances are that you’ll be legally obliged to have a separate business bank account. That’s because they are seen as separate legal entities and you’ll need to keep your personal and business finances separate so you can file and pay taxes. If you are a freelancer sole proprietor trading under your own name you probably don’t technically need a business bank account – although one can certainly be useful.
More on why you may want a business bank account even if you don’t legally have to have one, next.
What are the benefits of having a business bank account?
Even if you’re not legally obliged to get a business bank account, having one can bring some great perks and make it easier and cheaper to transact on behalf of your business.
Here are some key benefits of having a US business bank account to consider:
- Business accounts often have lower fees for common company transactions
- Use your business account to analyze and track business performance, cash flow, and other key metrics
- Many business accounts offer tools to cut admin like accounting integrations and batch payment options
- Get a business account with a linked debit card and multi-user access, so you can delegate tasks and give your team the tools needed to do their jobs
- Some business accounts have multi-currency options, to get paid from customers overseas, run international payroll, and pay suppliers abroad
- Invoicing clients through a business account – in your company name – looks more professional than using a personal account
- You may be able to access additional business support and resources through your account provider
How to choose a business bank account
Choosing the right business account the first time will save a lot of hassle – and can also cut your costs and boost profit. There’s no one-size-fits-all approach here. The right account for you will depend on your business type, size, stage, and personal preferences. Here are a few things to consider when choosing:
- Are there ongoing fees you’ll need to pay on a monthly or annual basis?
- What are the transaction costs – especially for common transaction types?
- How easy is it to use the account, and what support is available if you need help?
- Are all the services you need available from the same provider?
- What are the costs of international transactions – getting paid by customers overseas, and paying international suppliers for example?
You don’t necessarily need to go to a bank to get a business account. An alternative is to look at specialist providers which can offer business accounts that allow you to manage day-to-day finances and may also offer additional features not available through banks. To give a flavor of some options, let’s compare some key points from a couple of specialists – Wise and OFX – against business accounts from 2 of the US’s largest banks.
| Account fees | Card options and fees | International usage | Key features | |
|---|---|---|---|---|
| Wise | No fee to open an account, once off fee of 9 USD for the card
No monthly charges, no minimum balance | Linked international business debit cards available. First card on the account is free. 2 free ATM withdrawals anywhere in the world, to a total of 100 USD/month; 1.5 USD + 1.5% after that | Send payments to 80+ countries, from 0.41% fee Hold and exchange 50+ currencies Local bank details for 10 currencies | Exchange currencies using the mid-market rate and low fees Integrate with cloud-based accounting software Make batch payments and automate workflow with the Wise API |
| OFX | No monthly charges, no minimum balance | Not available | Make payments around the world, with currency exchange costs that beat the banks Local bank details for 7+ currencies | Get paid in 7+ currencies from marketplaces, payment gateways, and direct from clients Set up one-off and automated payments in a range of currencies Integrate with Xero accounting software |
| Chase Business Complete Checking | 0 USD – 15 USD monthly fee Up to 5,000 USD no-fee cash deposits per statement cycle | Linked debit & credit cards available Free employee cards 0 USD – 195 USD annual fee
| Cards can be used internationally, but there may be a 3% transaction fee Transactions in USD Some options have no foreign transaction fees | Monthly fee can be waived if you meet certain criteria Chase QuickAccept allows payments from anywhere in the US |
| Bank of America Business Advantage Fundamentals Banking | 0 USD – 16 USD monthly fee | Linked debit cards available No ATM fees at Bank of America ATMs. | Account balance in USD only Incoming & outgoing wire transfer fees vary
| Monthly fee can be waived if you meet certain criteria 200 transactions at no fee Link to Zelle for business |
*Other business account options are available from JP Morgan Chase and Bank of America, which have their own features and fees – check the full details online for more
How much does it cost to open a business account?
US business accounts from online providers and banks have their own pricing models which can vary quite significantly. If you’re looking for an account with low or no ongoing fees, a specialist provider may offer the best value. However, if you’d rather pay a set monthly fee and have a number of free transactions rolled up into the costs applied, a traditional bank may serve your needs well.
Here’s a look at the basic costs for operating an account with the providers we profiled earlier:
| Provider | Account fees |
|---|---|
| Wise | No fee to open an account, 9 USD to get a card No monthly charges, no minimum balance |
| OFX | No monthly charges, no minimum balance |
| Chase Business Complete Checking | 0 USD – 15 USD monthly fee |
| Bank of America Business Advantage Fundamentals Banking | 0 USD – 16 USD monthly fee |
How to open a business account in the US
If you want to open a business bank account with a traditional US bank you can usually do it online or via a mobile device. You can call the bank first to talk through your application, check your eligibility and make sure you’re clear on the information. Alternatively, you can make an appointment to go to a branch to open an account.
Online providers may offer an easier verification process which can be carried out online.
Whichever route you choose to take, the basic steps are usually the same:
- Choose the provider and account that suits your needs
- Check and gather all the information and documents required
- Complete the application form in hard copy or online
- Provide your documents to the provider – either uploading digital copies or presenting them in a branch
- The bank or provider will verify your account, which may be instant, or may take a day or two
- Once your account is verified you’ll be able to add funds and get your linked card for easy spending
What do I need to open a business bank account?
The documents you need to open your account will depend on the type of business entity you have, and how long it has been operating. Usually you will need to provide your own ID – and often information and ID for any other major stakeholders. You’ll also need to prove the legal registration and name of your company.
Here’s an outline of the documents you’re likely to need if you have an incorporated business in the US:
- Employer Identification Number (EIN) (or a Social Security number, if you’re a sole proprietorship)
- Your business’s formation documents.
- Ownership agreements.
- Business license.
How long does it take to open a business bank account?
How long it takes to open your business bank account will depend on the provider you select. Verification can take a day or two, after which you’ll get full access to your account to start transacting.
Can I open a business bank account in the US as a non-resident?
Non-resident business owners can open company bank accounts in the US – although, in practice, banks may limit the options which are available to non-resident customers. That may mean you need to fulfill strict eligibility criteria or accept an account that doesn’t have all the functionality offered by a resident bank account.
Check out the non-resident business bank account options from your chosen provider – and compare them against some online and alternative accounts, which are often available regardless of residency.
Can I open a business bank account online?
Traditional US banks typically allow you to open your account online or via mobile apps. You may also be able to get a business account from an alternative provider online or via the provider’s app. Check out options like Wise and OFX for an entirely online onboarding experience with no need to visit a branch in person.
Can I switch business bank accounts?
Yes. If you decide the bank you use doesn’t offer the best available value for your business, you’re free to switch to another provider. You’ll need to double-check if your existing account has any early closure fees or other costs to pay when you change – but you’ll often find that the provider you’re moving to can offer a specialist switching service to help support the move.
Types of business accounts in the US
You’ll have a broad range of options when it comes to finding a US business account, looking at both traditional banks and alternative providers.
Here are a few common account types to consider:
- Everyday banking plans may have low monthly fees, or a higher ongoing charge with some free transactions included
- Pay-as-you-go type accounts have no monthly costs but higher service fees for the transactions you require
- Unlimited plans which have monthly fees but no charges for common transactions
- Specialist business accounts for specific industries, like agriculture
- Savings and investment accounts for businesses
- Multi-currency accounts allow companies to pay and get paid in foreign currencies more easily
With so many options to consider, doing some research is essential to help you find the perfect business account for your needs. Think carefully about how you’ll need to use the account, including common transactions and how you anticipate your business growing in the future, to find an account that will serve your business today and moving forwards.
Conclusion
Opening a business bank account is a smart move – and may be legally required depending on the type of business entity you own. Business accounts often come with features and perks which aren’t available to personal customers, in order to make it easier, cheaper, and faster to transact on behalf of your company.
US business accounts are available from all the major traditional banks, as well as a good range of online and specialist account providers. You’ll be able to find an account that suits your needs, based on your business type and personal preferences, using this guide as a starting point. Compare the options available from both traditional banks and alternatives, to find your perfect fit.
Opening a Business Account in the US FAQs
- Is it easy to open a business bank account in the US?
You can open a business account in the US with a traditional bank or an online alternative provider. It’s easy to get started as long as you have all the required documents. With traditional banks, you may have to visit a branch in person, while online providers have a digital onboarding process you can do from home.
- Do I need a business bank account if I am a sole trader?
If you’re a sole proprietor working under your own name, you’re not usually legally required to open a business bank account. However, if you operate under a different name you may be legally required to open a business account. Business bank accounts come with a range of benefits which can make them a good choice even if you’re not legally obliged to open one.
- How much does a business account cost?
US business accounts from traditional banks usually come with monthly fees which you may be able to waive by maintaining a minimum monthly balance or other criteria. There are also transaction fees to pay. Online specialist providers may be able to offer business accounts that have no monthly fees and no minimum balance.
- Does a US company need a US bank account?
Whether or not you need a specific business bank account will depend on your company type and structure. Take professional advice if you’re unsure of your obligations.
