Open a Business Checking Account | Company Incorp
October 7, 2022 | Company Incorp
If you are a small-business owner It is your responsibility to make every effort to establish your business’ legitimacy. One method to look as professional as you can is to open a business checking account. A business checking account allows you to operate as a company and also helps maintain your finances in good in order for tax purposes and business.
You need to open a corporate checking account to manage a limited liability corporation (LLC) or a corporation. It is not possible to conduct business using these kinds is not possible using an individual checking account.
Open a business checking accounts are not required to sole proprietors. It is possible to utilize your personal checking account for managing your business’s financials. However, opening a corporate checking account can allow you to manage your business in a professional manner and ensure the business, as well as your personal financials, remain distinct.
Whatever type of business you operate There are many advantages to open a business checking account.
Benefits to Open a Business Checking Accounts
Based on the Small Business Administration (SBA) the company checking account for business is essential for anyone who is serious about expanding your company. Here are a few reasons to set up a corporate checking account to yours.
- Separates Business and Personal Expenses
- Makes Tax Reporting and Filing Easier
- Offers Liability Protection
- Helps Owners Qualify for Business Loans and Lines of Credit
- Allows for Credit Card Transactions
- Increases Professional Appearance
- Provides Various Credit Options
Business Bank Accounts Types
There are many different types of bank accounts for businesses, such as conventional checking accounts for businesses as well as business savings accounts and, in the case of cash market accounts. These are the particulars of each kind.
Business Checking Account
As a personal check account, a company checking account lets you manage every day accounts payable and receivable tasks. This includes depositing and paying vendors, suppliers and employees, as well as your own. If you have an account with this type typically, you will receive corporate checks and a credit card that permits you to withdraw funds and deposit them at the bank as well as an ATM.
Certain banks offer interest-free checking accounts. If you keep a substantial balance on your business’s checking account, selecting one that offers interest is a smart choice. Before you open a business checking account, you should check interest rates at banks to find the ones that pay the most. The higher the interest you earn from your cash more profitable your business will be.
In addition, although some banks have a monthly charge for corporate checking accounts some have no or low fee accounts. Paying fees will depend on whether you have any other accounts with the bank or whether you’ll be depositing money and keeping an account with a minimum amount.
Business Savings Account
If you’re opening up a business check account, it’s usually recommended to open a savings account, too. The account lets you save money for regular expenses like monthly tax payments, insurance, and other. It can also be used to create an emergency reserve fund for your business because you never anticipate when unexpected roadblocks may occur.
Some savings accounts for businesses pay an interest rate, and you should keep this in mind when you are looking for the ideal arrangement. You may also utilize your savings account in order to pay any amount that exceeds the balance on your account for checking. This can help you avoid massive over-limit charges.
Money Market Account
An account for business use is usually an excellent option if you have an enormous amount of savings. This account which basically an amalgamation of savings and checking accounts and savings, has more interest than a traditional savings account. Due to this, money market accounts have higher minimum deposit requirements and minimum balances per month than traditional savings accounts.
You can withdraw the funds from a money market account as needed. It is common to receive an ATM card or a debit card to use the accounts. The amount of deposits you can make in a month is unlimitable, but there’s a limit to how many withdrawals you’re able to make each month.
Browse Our Blogs For More Information
Business Checking Accounts – How They Work
Business checking accounts permit you to manage your daily financial needs. The majority of checking accounts provide the following options.
Company checks can be used to pay your business bills. Once you’ve placed an order for your checks, you’ll be able to receive them with your company’s name and address. Additionally, you can use the checks to pay employees including yourself.
Debit Card Payments
Business checking accounts usually include the ability to use a debit card. This allows you to purchase items to support your company. You can also use your card at branch locations and ATMs to deposit or withdraw funds, as well as to pay your monthly bills to service providers and vendors.
If you employ employees, you may frequently procure debit cards for employees to make use of for business expenses. Additionally, you can establish spending limits.
ACH transfers are bank-to-bank transfers that are processed by the Automated Clearing House (ACH) Network. A good example is a payment you make to your landlord in order to pay for the rent for the office you have. These transactions are not paper-based, and banks generally don’t charge fees for ACH transactions. It is possible to pay one-time ACH payments, as well as regular ones.
Wire transfers are generally the best option in case you require to send or receive an enormous amount of money. It is possible to make wire transfers in the US or abroad. However, you will have to pay charges for sending wire transfers. Additionally, fees are more costly for international wire transfers.
How to open a business checking account
The process to open a business checking account is a couple of steps and requires certain documents. Before you apply, collect the following details:
Employer Identification Number (EIN)
An EIN (also known as a Federal Tax ID number, is utilized to identify a business entity. It is provided by IRS. The nine-digit number is your company’s social security number.
Businesses generally have an EIN to operate. Sole proprietorships do not require an EIN however there are many good reasons to have one. This includes protection from identity theft bringing credibility to your business and proving to your clients that you’re an independent contractor, not an employee. This increases their likelihood to choose you as a candidate for employment. An EIN can also allow you to establish credit for business.
In order to apply for an EIN, You must be the owner of the company or chief executive officer.
Business Founding Date
This date is the day you officially made your business a reality.
Email us anytime!
Email customer service 24/7 at firstname.lastname@example.org
Call us anytime!
Reach customer care 24/7 at 857-626-5813
It is necessary to provide the bank with the address for your business at which you have licensed your business. Sometimes, you can utilize an address for a PO box for those who work at home and do not want to disclose the address of your private.
Legal Business Name
You need to provide your full legal business name for your company.
This information includes your email address, phone number, and website URL.
Articles of Incorporation
If you’ve formed an LLC or a corporation then you’ll have to submit your articles of incorporation that you submitted to the state. The bank might also request a business partnership agreement in the event that there is a partnership. documents of an organization if operating an LLC as well as articles of incorporation if are a corporation.
Bring any relevant business licenses to prove you are authorized to conduct business in the area you’re operating from. Consult with your state, city and county officials to determine the approvals you’ll need to conduct business in your field.
Doing Business As (DBA) Certificate
Also known as a fictitious business name DBA is a type of business name that DBA permits you to run a business under a different business name without having to establish an entirely new entity. If, for instance, you offer consulting services, you will not be able to establish an account at a bank for business under your own name, however, you can do so under an DBA name, like the name of your consulting firm.
A majority of banks will request a copy of your DBA certificate when you create a business checking account.
You’ll have to present evidence that proves the authenticity of who you are. This could include an official photo ID issued by the government, like a driver’s license or passport.
The Steps to Open a Business Checking Account
- Find the bank at which you’d like to open the checking account.
- Decide if you’d like to create the account online, in person, or by phone.
- Download the checking account application and fill it out. If you visit an institution or call an office, a representative from the bank will fill out the forms for you, while you supply all the information required and the documentation. If you are applying online, you’ll need to enter the required details.
- It is essential to submit the proper documentation and other information when you apply. Make sure to check your application to ensure that it is accurate. Incorrect information can slow the process of your application. It could even result in an application being rejected.
- There’s a good chance that you’ll require an initial deposit when you’ve completed the necessary paperwork for your account. There’s usually a minimum amount that must be made. You can make a deposit using cash, check or electronic transfer when you submit your application in person. You’ll have to pay via electronic transfer when you apply either online or over the phone.
- When you open your business checking account, you should take advantage of the chance to apply for other accounts, including a savings or money market account, as well as a credit card as well as a business line of credit. By doing this, you can prepare yourself for future needs in funding.
- Create overdraft protection and alerts if your checking account gets negative. This will allow you to resolve the issue fast before it escalates into a larger issue that will cost you penalties and fees for late payments.
- Close old accounts in the event of need. If you’re switching accounts ensure that you close the old account.
Contact Company Incorp today! Let us help you form a company with the help of our business experts.