When first starting a small business, it’s common to overlap personal and professional finances. But as your business begins to grow, you’ll need to isolate the transactions between these 2 categories. Opening a business bank account is the easiest way to keep your finances separate. All of your business expenses and revenue will flow through this account—including your own payroll.
If you’ve never opened a business bank account, there are a few important pieces of information you’ll need available before applying. This will make the opening process faster and easier.
How Do I Open a Business Bank Account?
Most financial institutions can help you set up a business bank account, so you can choose the organization where you currently bank or find another that better meets your needs. Before your meeting, pull together the following information:
- Your Employer Identification Number (EIN) as assigned by the IRS: You may be able to use your Social Security number if you don’t have an EIN.
- Your business formation documents and registration within your state: You will receive this when you become an LLC or corporation in your area.
- Your ownership agreements if you have multiple partners
- Your business license, if your profession requires one (examples include teachers, lawyers, nurses, contractors, and therapists, among others)
You can expect your financial services provider to ask about the nature of your business, the expected number of monthly transactions, and your business history. This information will give them an idea of the account size you require and the types of services the bank can provide to streamline your financial needs.
You should be able to set up the account in a single meeting if you have these documents. However, it may take a few days to become active.
Is It Free to Open a Business Bank Account?
The cost to open a business bank account will vary depending on the financial institution you use. Every bank or credit union has its own fees and guidelines, so you may want to shop around before settling on your ideal provider.
Start with your current bank. They might let you open another account for free, even a business account, in order to keep your business.
Along with setup fees, some banks charge monthly maintenance fees for holding your money. Ask about any costs associated with keeping an account, along with any daily transaction thresholds they might have. You may have to pay more if you have several daily transactions or expect to have frequent large transactions.
Finally, some banks require a substantial deposit and minimum amount in the account—otherwise, they will charge daily fees. Look for financial service providers that will let you open a free business checking account online with no deposit if you don’t have enough cash to meet these minimum requirements.
As a whole, your business bank account should not cost you money or should only be a small part of your monthly expenses.
Can I Open a Business Bank Account Without an LLC?
There are some circumstances that require you to open a business bank account to operate. For example, if you operate an LLC, you’ll need to prove that your business expenses and income are separate from your personal costs. You will often find services marketed toward a business bank account for LLCs in order to help new business owners.
Sole proprietors and companies that have a DBA (“Doing Business As”) designation are not legally required to have an LLC or a separate business bank account. However, some financial institutions might ask you to create an LLC in order to bank with them or will recommend another company that does not require one.
Even if you aren’t currently operating as an LLC, you may want to open a business bank account in case you establish a business designation in the future—or just to mitigate issues with overlapping personal and professional financials.
How Do I Pay Myself From My LLC?
The next step in your process is to set up a bank account for managing transactions. As a business owner, you also need to figure out how to get paid—thankfully, there are multiple ways to pay yourself from your LLC.
First, you can manually move funds from your business bank account to your personal account. You want to make sure you pay yourself the same amount monthly as a flat salary—this way, you won’t steal from your own company.
Another option is to look into a service like Gusto, which is available through Sunrise. You can set up a payroll system for yourself and your employees that easily deposits money into your account each week or month.
With a payroll system, you can enjoy the consistency of a fixed salary even if your income fluctuates.
Sync Your Bank Transactions With Sunrise
Once you create a bank account, look for bookkeeping tools that can help you organize your transactions and keep your company in order. Sunrise is a free service for small business owners. Our tools can help with taxes, the creation of reports like your profit and loss statements (P&Ls), and invoicing. Explore what we have to offer to see if it’s right for you.