A wise person once said – the journey of a thousand miles starts when you take the first step. Entrepreneurship isn’t for the faint of heart. Startups are hard. Running a business is hard. But it’s no doubt one of the most fulfilling journeys you’ll ever embark on in your life.
Is it scary? Yes.
Is it worth it? Absolutely!
You just need to start.
Once you register your business, the next step involves opening a business bank account. Who wants to physically go to the bank and fill out a bunch of forms, especially if they don’t have to? Can you open an online business bank account? Here’s everything you need to know.
Why Do You Need a Business Bank Account?
The thought of whether you need a business bank account at all has likely crossed your mind at some point. Do you need one? Or can you just use your existing personal bank account?
Well, you could, but we wouldn’t recommend it.
It’s always a good idea to keep your personal and business finances separate. It makes it easy to manage cash flow, track expenses, and calculate tax liabilities – both for your business and personal finances.
It’s also important to keep in mind that business bank accounts are designed specifically for businesses. There are certain perks you get that you otherwise wouldn’t be able to access if you were using a personal account to manage your business transactions.
Most banks have invaluable resources that small business owners can use to grow their enterprises or scale their operations if they ever needed to. They have helplines and advice streams that new businesses can use to get started on the right foot. These benefits would only be available business account holders.
Having a dedicated account for your business transactions also paves the way for your business to borrow money. And make no mistake about it – that’s a facility you’re going to need.
Who Can Open a Business Bank Account?
This brings us to the next question – who needs a business bank account? If you’re already running a small business and are using your personal account to process the transactions that come through, you may need to set up a business bank account as your enterprise continues to expand.
If you already have a small business or plan to incorporate it as a limited company, you’ll need to get a business bank account. Here are a few questions to help you decide if you need one.
- Does your business process a large volume of transactions?
- Are your business expenses becoming increasingly hard to track?
- Is completing your tax return a complete nightmare when trying to ID business-related expenses?
- Do you want to apply for a business credit card?
- Are you thinking of taking a business loan to scale your operations?
- Are you losing customers because your business doesn’t accept card payments?
- Do you need to link Fattmerchant payment processing services like preset card payments and mobile payments to a bank account?
If you answered “yes” to any of the questions above, you’re going to need a business bank account.
What Do I Need to Open a Business Bank Account?
Opening a business bank account is a pretty straightforward process. Here’s a list of the basic requirements.
- Personal identification documents like a driver’s license or passport
- Employer Identification Number (EIN) or Social Security Number (SSN)
- Business license displaying the business’ and the owner’s name
- Certificate of assumed/fictitious/trade name – Doing Business As (DBA)
- Organizing documents as filed with the state
- Partnership Agreement with the names of the business and partner(s) – if it has more than one owner
- Monthly credit card revenue – for merchant accounts
Keep in mind that the requirements will vary depending on the type of business. Once you have everything you need, the next step involves choosing the type of business bank account to open. There are generally two options to consider:
- Business Checking Account – This type of account is appropriate for businesses that primarily handle working capital. It grants you quick and easy access to cash through electronic payments, checks, and debit cards.
- Business Savings Account – This is appropriate for business owners looking to stow away the money their business has accrued, aside from the working capital they handle on a day-to-day basis
How to Open a Business Bank Account Online
Once you’ve figured out the type of account you need, you’re now ready to open an account for it. It’s important to mention at this point that not many traditional banks will let you open a business account online. However, several online-based banks do.
The process is the same for all of them. You’ll need to fill out an online form with the requested information, confirm your identity, attach the requested documents, and make an initial deposit. That’s it.
Best Online Bank for Small Business
With so many online banks geared towards small business owners, how do you choose the right one? Here are some great options to consider.
Azlo Business Checking
Azlo is an online-based bank that allows business owners to open a business checking account quickly and conveniently, and all online. It has no transaction limits, no account fees, and no minimum opening deposit required to get started.
You get to make free ACH transfers and payments, as well as receive payments from your customers instantly. Simply visit the official website to get started.
Axos Business Checking
Axos is yet another option for opening business bank accounts online. The bank offers three options for business owners – basic business checking, analyzed business checking, and business interest checking accounts.
Bank Account for Cannabis Business
Not many banks, online or otherwise, accept deposits from cannabis businesses. This is mainly because marijuana is still listed on Schedule 1 of the Controlled Substances Act.
Under federal law, deposits obtained from what would be deemed as “illegal transactions” cannot be insured by the FDIC, and this is a requirement for all banks that have depository accounts. You can immediately see why it would be difficult for them to allow cannabis businesses to open business bank accounts.
Technology Meets Convenience
With all the perks a business bank account has to offer, opening one is a no-brainer. And the fact that you can do it online means you have no excuses when it comes to getting your business off the ground or growing an existing one.
Provided that your business is not in the cannabis, cryptocurrency, or internet gambling industry, you’re good to go. Azlo and Axos would be a great place to start.
If you have any questions on the legality of opening an online business account for your specific enterprise, chat online with a Laws101.com attorney today.