How to Open a Business Bank Account

How to Open a Business Bank Account
Once your business starts making money, it’s important to put it in the right place. Here's how to open a business bank account and what you need to open one.
by Madelyn Young Jan 28, 2022 — 5 min read
How to Open a Business Bank Account

This article is for educational purposes and does not constitute legal, financial, or tax advice. For specific advice applicable to your business, please contact a professional. Square, Inc. is a financial services company, not a bank. Banking services are provided by the Square banking affiliate, Square Financial Services, Inc. or Sutton Bank; Members FDIC.

Once your business starts to make money, it’s important to put it in the right place. A business bank account allows you to separate your business finances from your personal finances, helping you better monitor and manage your business’s cash flow while helping limit your personal liability.

Although it’s a relatively simple process, opening a business bank account tends to require more specific documentation than opening a personal account. Here are four steps you’ll need to take to start a new bank account for your business.

1. Determine your business bank account needs

There are four common kinds of business bank accounts, and you may need more than one. They are:

  1. A business checking account, which enables you to receive payments under your business name and spend funds using business debit cards, checks, or wire transfers. This is the account you’d use to manage payroll and handle other operational expenses.
  2. A business savings account, which allows you to store funds safely while earning interest.
  3. A business credit card account, which enables you and other authorized users to make purchases on credit and pay them off later.
  4. A merchant services account, which allows you to accept credit and debit card transactions from customers in a safe manner, with purchase protection for customers and security for their personal information.

2. Prepare your required information and documents

The details and documentation you’ll need to open a business bank account can vary depending on what type of business you operate and what kind of account you seek. There are several documents and pieces of information business owners need to gather before opening a business bank account.

If you operate a limited liability company (LLC) or corporation, some things you may be asked to provide in your application include:

If your business has multiple owners, you will likely need to provide personal information and government-issued photo identification for every owner with 25% or more ownership in the business. If you are a sole proprietor, you may need to provide some of the above documents and information as well, depending on which bank you use for your business needs.

3. Understand the costs associated with opening a business bank account

As you look into which bank you want to work with, you’ll want to pay close attention to the associated costs. You may find a bank offers “free” checking and introductory offers, for example, but there are always costs involved — and they vary depending on which type of account(s) you opt for.


For merchant services accounts, understand terms such as:


Keep an eye out for account minimum balance requirements, which are a minimum dollar amount required typically to waive an account’s monthly fee. Both business savings and checking accounts could have a minimum balance requirement depending on the bank. In addition to minimum balance requirements, it’s important to keep an eye on overdraft fees. If you spend more money than you have available in your account, you could be paying an additional fee for overdrafting. Square Checking accounts do not have minimum balance requirements or overdraft fees.

4. Apply for an account

The last step is to get started with your application. Most banks offer the option to apply for an account either in person or online. Once you submit your application, you should expect an answer on whether you’ve been approved within one to five business days. If you apply for an account with an online-only digital bank, you may see a faster approval time than with a traditional branch-based bank.

Make the right choice for yourself and your business

Ultimately, having a business bank account helps you protect your personal finances by protecting both your business and your customers. You can use a business bank account to better manage cash flow, use a business debit card or business credit card for business needs, and more. Having savings, a credit card, and a line of credit — which often comes with your business checking account — also helps prepare you for emergencies and can enable you to finance any major purchases for your company.

For more on the benefits of having a business bank account, get advice from the U.S. Small Business Administration here.

Square, Inc. is a financial services company, not a bank. Banking services are provided by Square’s banking affiliate, Square Financial Services, Inc. or Sutton Bank; Members FDIC.

FAQ: How to Open a Business Bank Account

What do you need to open a business bank account

Do I need a business bank account for an LLC?

You are not legally required to open a business bank account for an LLC, though it is highly recommend. Keeping business and personal finances separated can protect your business in the case of an audit.

Madelyn Young
Madelyn Young is a Brooklyn-based writer covering business-, finance-, and technology-related topics. Prior to going freelance in 2018, Madelyn spent ten years as an in-house writer and editor for various B2B startups, agencies, and media companies – first in Cleveland, OH, then Miami, FL, then NYC.


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