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Business bank account requirements: everything you need to know

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Updated on:
December 12, 2022
December 12, 2022
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Explore Bonsai, a services automation suite, made for consultants, agencies, coaches and more.
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One of the biggest mistakes you can make as a business owner is to have the same bank account for personal and business finances. It makes it unnecessarily hard to measure how your business is performing financially because you have all these transactions happening that are not business-related.

That’s why the very first step after registering your business should be to open a business bank account. However, unlike a personal bank account, business bank accounts come with unique requirements that you have to fulfill to get the account approved.

In this post, we explore the whole process of opening a business bank account including the necessary documents, the different types of business bank accounts, and how to choose the best bank for your business.

Note: If you want a business bank account, then try Bonsai's business account for consultants, coaches, lawyers and other professional services. Our checking account has no hidden fees or minimums and is simple to create. Our account can help you manage your finances, save on taxes, and get paid faster. Try it our for yourself. Sign up today. If you are looking for the best bank for home services, construction, barbers, or freelancers check out BlueVine as a great option!

What are the requirements to open a business bank account

We will try to cover everything you need to open a business bank account but, the requirements may vary depending on the bank, your business entity, and the location of your business.

Personal Identification

This is a mandatory requirement for anyone looking to open a business bank account. After all, the bank needs to confirm that you are who you say you are and also ensure that nobody else can access your account.

For personal identification, you are required to present a government-issued photo ID which could be your driver’s license or your passport.

Some banks may also require that you provide your personal mailing address and social security number.

If you are a business with many owners, most banks typically require that you provide the personal details of all owners with a stake of 25% or above in your business.

Employer Identification Number (EIN)

This is a mandatory requirement for all business structures except a sole proprietorship. Although you can't open a bank account with just an EIN, it is a necessary provision. It’s not a legal requirement for sole proprietors to have an Employer identification number and, therefore, the bank allows them to use their social security number instead.

For other business structures, you'd need to check the bank's requirements to open a business checking account without an EIN.

Business formation documents

You will be required to have a copy of your business formation documents before you open a business account.

For sole proprietorships, this means the business name registration form and DBA certificate if applicable. If you are a partnership then it's the Partnership agreement.

For LLCs, it means Articles of Organization, and for Corporations, it means Articles of Incorporation.

Basically, the bank is looking for information about the business such as business name, address, DBA name, entity type, industry, and the type of business you are running.

Ownership agreement

The bank needs documents highlighting the ownership agreements between members in an LLC, Corporations, and partners. These will outline the responsibility of each member and their specific rights in the business.

Business license

Your business license is necessary for the financial institution to prove that you have permission to legally conduct business in your state or city. I know that some states don’t require that businesses have operating licenses and in these cases, the bank will make an exception.

Monthly credit revenue

If your business wishes to open a merchants service account to process debit and credit cards, it’s required that they provide the bank with the business's average credit card revenue. If it’s a new business, you won’t have this information so what the bank will need is an estimate of the expected revenue from credit cards.

The step by step process of opening a business bank account

Let's review all the steps you need to take to open a bank account.

Step 1: Choose the appropriate account for your business

Here are the three main types of business bank accounts that you can open:

Business checking account

This is an account that allows you to receive and withdraw money at any time. It’s the account you open for everyday use such as buying business equipment, paying employees, rent, and other business expenses.

When opening a checking account with any bank consider these factors, maximum monthly transactions, bank accessibility, and all related fees. Some banks also offer interest on business checking accounts under certain conditions so, watch out for those.

Business savings account

This is an account for business income that you want to save for the long term. And the best thing about business savings accounts is that they earn you interest. However, they will come with conditions like a minimum deposit that can earn interest and the inability to withdraw until a certain period has elapsed.

The annual percentage yield and account fees also vary from one bank to the other.

Merchant services account

This is the account you open if you plan on receiving debit and credit card payments. Something to note is you can’t open a merchant’s service account unless you first have a checking account.

Step 2: Choose a bank

Once you know the account you need for your business, the next step is to find a bank with the best benefits. Here are some things to consider when choosing a bank for your business.

  • Account variety - If you can find a bank that offers all the banking services you need then the better. If a bank only offers a business checking account and doesn’t have a merchant services account, it means you have to use two banks which bring the extra hassle of balancing the two accounts.
  • Fees - Business bank accounts may have monthly fees or even transaction fees if you exceed your allowed monthly transactions. When choosing a bank, compare their rates as that translates either to an increase or decrease of your revenue. Other bank fees to consider include cash deposit fees, ATM fees, and wire transfer fees.
  • Interest rates - A bank’s interest rate is important because it serves as an additional revenue stream. This will mostly apply to business savings but some banks also offer interest rates on business checking accounts.
  • Branch and ATM network - For convenience purposes, you want to have a business account with a bank that’s easily accessible to you. This is one of the reasons why online bank accounts are becoming so popular. They are not limited by time or location. Discover where to open a business bank account online here.
  • Account management tools - Apart from easy withdrawal and deposit, you need to consider how easy your bank of choice makes it for you to manage your account. Does it have an online portal, do they have a mobile app, do these online services support deposits, withdrawals, and direct transfers?
  • Additional features to consider when choosing a bank include bill pay, invoicing system, and integration with other accounting software

Step 3: Gather the necessary documents

We have already looked at the documents that banks will require in order to approve your business bank account. Put all of them in order and visit your bank of choice.

If it’s an online bank, the better, you can complete the application process from anywhere.

Step 4: Apply for the account

Complete the application process and wait for the approval. The approval period will vary for different banks.

Once they have certified that the documents are okay, your account becomes activated. However, some banks may require that you make an initial deposit to activate the account.

Bonsai's business account is an automatically approved business bank account so you do not need to apply.

Is it better to apply in person or online?

It depends. Each has its own benefits but if I was to go with one then it would be online banking because of the convenience it offers.

And this is not just because you can apply from anywhere, it’s also because online banking comes with more flexibility. They give you more ways to manage your accounts and their customer service is always very available and eager to help.

And, you don’t have to look far to understand what I’m talking about. We have just the perfect online banking solution for you..

Benefits of a business bank account

There are many benefits of having a business bank account. We'll quickly go over some of them.

It protects your personal funds

If you have just one account for business and personal use and the business suffers major losses or goes bankrupt, creditors will come after the whole account including income that did not come from the business. It doesn’t matter if you are running a limited liability company or a corporation both of which offer personal liability protection.

Tax benefits

Unless you have a business bank account, the IRS will assume you are running your business as a hobby and will, therefore, not allow you to deduct business expenses from your income. So, you end up paying more tax than you should.

Easier accounting

As we mentioned, having one account for both business and personal needs gives you the extra work of separating personal transactions from business transactions.

Additional payment options

Personal bank accounts do not support payments through debit and credit cards which is a major limitation in these current times. You end up losing business because customers can only pay through cash or check.

Multiple people can access business funds

If you are running a partnership, a multi-member LLC, or a corporation, your partners also want to know what’s going on with the business funds. With a business account, they can all have access but with a personal account, it’s tricky because you have other funds in the account that are not business-related.

Increased professionalism and boosted credibility

Your business looks more professional when transacting through a business account complete with details about your business than with a personal account. Also, as a customer, you feel more secure making payments to a business than to an individual. Especially if it’s an online business and you have not personally met the business owner.

Bonsai's business account: The best business checking account

Bonsai's business account is our new business checking account that provides you with an easy and efficient way to manage, save, and spend your funds. The tool ticks all the best features of a business checking account.

To begin with, you can integrate it with our other tool, Bonsai Payment, or any other tool you have to facilitate direct payments to the checking account. If you want to make purchases or fund a subscription, Bonsai's business account provides you with both virtual and physical cards to use.

With payments, you have the option to use virtual or physical cards.

But, if there is one feature that makes this online business checking account stand out is the ability to create envelopes for more granular management of cash.

The envelopes are meant to help you save money for different purposes. For instance, you can create an envelope for tax money where you will be saving only funds meant to pay your annual or quarterly tax.

Better yet you can automate the account so that when money comes into the checking account a certain percentage gets automatically allocated to a certain envelope.

Bonsai's business account also supports ATM withdrawals although you can only withdraw $300 in a single day.

As of right now, Bonsai does not charge you anything for transactions you make. Open an account for free today.


If there is one thing that’s clear up to this point is you can’t run a successful business without a separate business bank account. And now that you know everything you need to open one, the real question becomes which is the best account for you? And we have given you an option to consider. Ready to give it a try?

Explore Bonsai, a services automation suite, made for consultants, agencies, coaches and more.
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