Opening a Business Checking Account

Opening a business checking account is the next step in the process when starting your own web or online business.  While some business owners might be tempted to simply utilize their existing personal checking accounts, doing so is generally a bad idea for a number of reasons.  Accountants refer to this dilemma as “commingling” of funds and it can be particularly perilous should you be audited by the IRS at any time in the future.  Having a separate business checking account is necessary and really the only way to go, and you’ll be glad you did when it comes time to filing your income taxes.

The bottom line is that any legitimate business requires a business checking account.  Sole proprietors, home-based businesses and even the smallest micro businesses can greatly benefit from a business checking account.  Luckily, opening a business checking account is relatively easy.

Step 1:  Gather Your Paperwork

First, you’ll need to gather all of the documentation that will be required by your banking institution to open your account.  Here’s a list of things that will be required:

1. Articles of Incorporation (applicable for C-corporations or S-corporations only) OR your Articles of Organization (applicable for Limited Liability Companies only)
2. Cash, check or money order for opening account balance deposit
3. Business License (if local authorities require one for your category of business)
4. Employer Identification Number (EIN) or Social Security Number
5. Photo identification such as a driver’s license or state-issued ID card
6. Second identification card with name and signature of account holder such as a credit card

Step 2:  Visit Your Local Bank

After you gathered all of the necessary paperwork, the next step is to visit a local bank or credit union of your choice in the area and ask to open a business checking account.  We highly recommend that you visit your local bank to setup your checking account in person.  Opening your account in person also provides an opportunity to start building a relationship with your local bank for financing needs that may arise when you decide to grow or expand your business. Having a relationship established with your local banker is a distinct advantage when you’re in the market for a small business loan or line of credit. 

If you prefer, you can alternatively begin the process by applying online at several major national banks (see below).  Keep in mind when you’re applying online though that you’ll have to hand deliver or fax some of the essential paperwork required anyway to verify your business status:

• Chase Business Banking
• CitiBusiness Checking
• Bank of America Small Business
• HSBC Business Checking
• US Bank Business Checking
• Wells Fargo Small Business

Again, we recommend visiting a local bank branch to setup your account instead of doing so online.

Step 3:  Complete Your Application

Completing the application for your checking account is a pretty straight forward process that requires basic information such as your name, personal address, business name, business address (if different), as well as your Employer Identification Number (EIN) and Social Security Number.  If your business has been set up as a corporation or a limited liability company, you will be asked to provide the Articles of Incorporation or Articles of Organization to prove that you’re an officer of the corporation and authorized to be a “signatory” on the account. 

Step 4:  Make Your Initial Deposit

The next step is to make the initial deposit as required by your bank via cash, check or money order.  Keep in mind that competition for business checking accounts is intense so you should be able to setup an account with an initial deposit of as little as $100, or even less in some instances.  Other banks will require larger initial deposits around $500. 

Step 5:  Ordering Your Checks

Next, the bank representatives will ask you about ordering checks for your account.  We recommend holding off on ordering any checks from the bank directly because the prices that bank institutions typically charge for checks is usually pretty high.  We recommend simply getting the initial blank checks that the bank will provide for free and, instead of ordering your checks directly through your bank, instead buy the checks from a discount provider online.  In most cases, you can buy business checks online for 50% of what a bank will charge you for the same checks.

Information that you’ll need to order checks from a discount provider online:

• Name, address, telephone number of your local bank branch
• Name, address, telephone number of your business
• Bank account number
• Bank routing number

All of the information that you’ll need from your bank will typically be provided on the blank checks that the bank will give you when you open the account.

Here are a few additional check ordering resources that we recommend as well: 

• ChecksUnlimited.com
• CheckCrafters.com

Step 6:  Using Your Account

The final step is to simply start using your checking account regularly to pay bills and make deposits. You should receive your new checks and any debit card that may be included in your account within 5 to 7 business days (longer if you order your checks directly from the bank).

Other Things To Keep in Mind:

• If you want to have an additional signer on the account (such as a spouse), you will need to have that individual present with personal identification when you set up the account.
• Be careful about who you allow to be a signer on your business account.  Be absolutely sure that there is a vital and necessary purpose before allowing anyone, in addition to yourself, to have signature authority on your business checking account.

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