Whether you are a new or seasoned entrepreneur, a business bank account can help you separate your personal and business expenses for taxes. It's an easy way to organize your tax deductions, bookkeeping, leave a transparent audit trail for the IRS and separate your personal and business finances.
Well, in this article, we'll break down all the costs to open a business bank account, what you'll need in order to get started and show you some free options. Let's start with the price to open a business account.
Note: If you want to open a business bank account with no hidden or monthly fees, no minimum balance requirements or credit checks, try Bonsai Cash. Our online business checking account comes with a business debit card and has an automatic savings feature to help you prepare for taxes. Open an account today.
How much does it cost to open a business bank account?
There may be special deals available to you if you open a business bank account under the same bank which has your personal accounts.
Some require an opening deposit or minimum balance, and others have different fees for various types of transactions i.e. monthly service fee, excess transaction fees, cash handling fee.
We'll dive into the different types of fees you should consider when you are open a business bank account.
Monthly Maintenance Fee
Generally, in order to get started, banks require an opening deposit ranges from $5 to $1,000. Others have no initial deposit and some have a monthly maintenance fee. A monthly fee is charged by banks to cover extra perks of having a business checking account such as: overdraft coverage programs, cash back on spending, and no charge for using ATMs outside the system.
Banks often require you to maintain a daily balance of $1,500 to avoid any monthly maintenance fees. The majority of basic business checking accounts will have monthly fees ranging from $10-$50. There are some with no monthly maintenance fee.
Excess Transaction Fees
Transactions fees are charged when your business processes a customer's payment. Some banks charge business customers a fee for any transactions over a certain limit i.e. the first 25 transactions free, then 40 cents per transaction after.
Cash Handling Fee
Cash handling fees are charged by banks when they have to process bills and coins deposited over a certain limit.
You can deposit only a certain amount of cash at many banks. After that, you’ll be charged a fee to process all those bills and coins. Typically, the fees range from 20 cents to 30 cents above the designated limit.
Early Termination Fees
Some banks have contracts with processors where if one party cancels the agreement early, will need to pay fees for the early termination. In the terms of agreement, you may sign a multi-year contract for processors set you up with a merchant services account.
Note: if you want to open a business checking account to help you organize your finances better from your personal expenses, try Bonsai Cash. We have zero minimum balance requirements, no monthly maintenance fees or hidden fees and allow you to instantly create as many sub accounts as you'll need. Try an account today.
What is needed to open a business checking account?
The requirements to open business accounts differ from a normal personal banking or savings account. We'll quickly review the things you'll need in order to meet the business bank account requirements to open an account.
Let's list some of the other requirements you'll need to open business bank accounts.
Articles of incorporation - will prove to the banks that your business is properly structured. You'd use these legal documents to formally register your business with the State and other entities.
Employer identification number (EIN) - an employer identification number is a a unique nine-digit number tax ID number assigned by the IRS to business entities operating in the United States. Getting an EIN is a fairly simple process that can be done on the IRS website.
Personal identification documents - such as a Social Security number (you'll typically only use a social security number if you are a sole proprietorship), driver's license number, financial accounts, email addresses, addresses, phone numbers, and birth date.
Business license - a business license needs to show you can legally operate/conduct business in your location or region. Some banks will ask for this before they allow you to open a new account.
Balance transfer fees - Balance transfer fees are charged by lenders to a borrower to transfer existing debt from another institution. This fee is commonly charged by credit card companies when cardholders move balances from one card to another.
Monthly credit card payments - Banks want to see how much you'll be spending with credit card transactions. Banks make money off of credit transaction fees and if you accept credit card payments, they will want to know how often you'll be making these types of business deals.
You'll be able to accurately manage your business's budget, project cash flow as well as track income and expenses. There are no initial deposit, no minimum balance requirements to keep, no foreign transaction rates and no monthly account fees.
You'll get hooked up with a virtual and physical business debit card.
Our 'envelopes' feature allows you to create separate business accounts instantly. Envelopes are similar to sub-accounts. You'd be able to instantly make business savings accounts, vacation funds, personal funds and tax accounts.
It's harder to prove expenses purchased through a personal bank accounts were made specifically for business.
Protect your personal account finances from your business
By having history with a bank, you'll be able to open business credit cards much easier. Review the different perks you'd be eligible for such as cash back or rewards programs and make your decision.
Makes obtaining business loans much easier. When you open a business account, it may also help your business build credit. You'd usually be offered credit cards with the bank and these lines of credit will help you make getting loans easier.
Do Your Research Before You Open An Account
We reviewed the costs associated with opening a bank account for your business as well as the benefits you'd receive. Not properly organizing your personal and business finances can lead to a headache with the IRS down the line if you are ever audited.
Compare the best bank accounts for business and carefully read through their fees to see which one is suited for your operation.
Bonsai Cash is one account to manage your business's finances. It is really easy to set up, there are no hidden fees or minimums and requires no initial cash deposits. You do not need to even apply to get approved. Just open a business bank account today. See for yourself and organize your business finances easier today.
Explore Bonsai Banking - the integrated small business banking solution providing financial services for interior designers and other self-employed professionals. Compare your options and discover the Bonsai advantage.