If you are starting a new business, one of the first steps you’ll need to take is to open a business bank account. While you may be seeding your startup with your own cash, that doesn’t make it a good idea to use your personal bank account for all business expenses and financial matters. Having a business bank account will allow you to separate your personal finances from your business finances—a step you are legally required to take if you are operating your business as a legal entity, such as an LLC or a corporation. Not only does using personal checks for business expenses look unprofessional, but it can also compromise any limited liability protection that you are afforded when you register a legal business entity. Bottom line, there are many, many reasons to have a bank account intended specifically and exclusively for your business.
The question why many first-time entrepreneurs often find themselves asking at this juncture is “What do I need to open a business bank account?” Once you understand that a business account is a must-have, it’s logical that the next step would be to assemble all the resources or documentation necessary to make a formal application for a business account with your bank or credit union. In this post, we will explore what you can expect from the application process when opening a business bank account at Resource One Credit Union.
Documents Required to Open a Business Bank Account
When you go to open any type of bank account—whether it’s a personal savings account, a business checking account, or something else—you will have to come prepared with the right documentation. The list of documents required to open a business bank account is a little longer than the list of documents needed to open a personal bank account, but not extensively so. You should expect to provide your Social Security Number or Employer Identification Number, and personal identification (such as a driver’s license, a state ID card, or a passport). Copies of your business license and assumed name/DBA (doing business as) certificate, signed partnership agreements with any other partners involved in the business (if applicable), and organizing documents filed with the state will also be necessary.
What Else Do You Need to Start a New Business Bank Account?
Having the right documentation in order will make applying for a new business bank account much easier and faster than it will be if you misplace or forget a key document. However, remember that documentation is only a part of the equation when it comes to opening a new business bank account. Here are a few other considerations to remember, as well:
- Find an account that matches what you want or need for your business
When it comes to applying for a personal bank account, you shouldn’t just apply for the first account you see. Instead, it’s always advisable to shop around at a few different financial institutions and find out which accounts they offer and what features or benefits those accounts include. The same is true for a business bank account. Banks and credit unions will typically design a few different account options for their business clients, simply because they know that not every business is going to need the same thing. A small startup has decidedly different banking needs than a large and well-established company. To serve as many customers or members as possible, banks will make sure to diversify their offerings. Taking the time to research different accounts, therefore, will increase your chances of finding an account that is structured optimally to benefit where your business is right now.
For instance, at Resource One, we offer three tiers of business checking accounts: SOHO Checking, Growth Checking, and Enterprise Checking. We designed the SOHO Checking account specifically for sole proprietorships or very small businesses. This account only requires a minimum opening deposit of $25, includes no service fee, and allows for 99 free transactions. Since small businesses don’t tend to have a ton of banking activity, this low-transaction account makes complete sense for ventures in that category. Further up the ladder, our Growth Checking account has an opening deposit requirement of at least $250, includes a monthly service charge of $25, and requires companies to maintain an ongoing balance of at least $5,000. Still, it also includes 1,000 free transactions per month. Enterprise Checking, finally, is intended for very large businesses and is an account we will tailor to suit your unique requirements.
- Plan ahead for minimum deposits and balances.
The question “What do I need to open a business bank account?” isn’t just about documentation, but also about cash on hand. All of our business checking and savings accounts come with a minimum opening deposit requirement, and most of them also include ongoing balance requirements that you have to maintain to avoid charges. With our SOHO Checking and basic Business Savings accounts, you’ll only need an opening balance of $25. Growth Checking has an opening balance requirement of $250, while Enterprise Checking and our Business Money Market savings account both require an upfront deposit of at least $2,500. Ongoing balance demands vary from $0 (SOHO Checking) to $25 (Growth Checking and Business Savings) to $2,500 or more (Business Money Market and Enterprise Checking).
With our savings accounts, your balance may also impact how much interest you can earn on your money over time. With Business Savings, you’ll earn interest as long as you have at least $250 in the account. With Business Money Market, you’ll graduate to different interest tiers as your balance hits $10,000, $25,000, $50,000, or $100,000.
All these balance factors should be on your mind as you select a business account or fill out an application, as they may impact your ability to use the account as you prefer.
Open Your Business Account Today at Resource One Credit Union
At Resource One Credit Union, we are here to help you enjoy the considerable benefits of having a business checking or savings account with a member-owned credit union. Contact us to learn more or start your application process today!