How to Get a Startup Business Bank Account
A business bank account is absolutely essential to a startup and is an important next step after forming your business. Business bank accounts are necessities when it comes to cash flow management, but they also provide additional benefits for startups and their founders.
To get started opening a startup business bank account, you first need to obtain the required documentation, then simply follow the 4 steps below to open a bank account for your business.
Requirements to Open a Startup Bank Account
Before you open a business bank account, there are some documents and information you’ll need to gather. Here’s what you’ll need to open a startup business bank account:
- Government-issued photo ID
- Personal contact information (phone and email)
- Date of birth
- Social Security number (SSN)
- Employer Identification Number (EIN)
- Business name (DBA as well, if applicable)
- Address and phone number for your business
- Industry and business type
- Formation documents, business structure type, and date formed
How to Get a Startup Business Bank Account
With all your documentation in hand, you’re ready to open a bank account for your business.
1. Choose a Bank Account
There are a few different types of business bank accounts you can choose from as a business owner: business checking accounts, business savings accounts, and merchant accounts. Before you start applying for a bank account, you need to choose the right account for your startup.
- Business checking accounts are the most common choice of bank account for new businesses. This is most often used for daily transactions.
- Business savings accounts are best for long-term cash holding. They are structured similarly to business checking accounts, however, with business savings accounts, you are typically able to accrue interest on your deposited cash if you meet the required minimums.
- Merchant accounts are a special type of account used primarily for accepting payments from debit and credit cards securely.
Keep in mind that as your startup scales, your banking needs may change. For example, you may not require a business savings account right away, or you may need multiple accounts as your business grows to separate cash flow for different use cases.
2. Choose a Bank
Once you’ve determined the right bank account type for your startup’s needs, your next step is to choose a bank for your business.
When choosing a bank account for your business, there are a few important considerations you need to make: fees and benefits.
You likely want to opt for a business bank account that offers the lowest fees without sacrificing benefits that may be essential for your startup, including personal liability protection, an optional line of credit, and purchasing power.
Fees you should consider when opening a new business bank account for your startup are transaction fees, minimum account balance fees, and early termination fees, to name a few.
3. Compile Your Documents & Submit Your Application
Using the list above, ensure that you have compiled all of the necessary documentation for opening a business bank account.
Then, you’re ready to start applying. The application process depends on the bank you’ve chosen. However, many banks allow you to submit applications online, in person, or over the phone.
It is important to note that while many banks do not require you to immediately input funds, some require an opening deposit. Check with your bank prior to opening an account to ensure you are aware of their deposit requirements.
4. Set Up Your Business Bank Account
With your bank account approved and opened, you can start setting up your business bank account by adding any authorized users and setting up any necessary payments that will be made from your bank account.
Set up looks different for every business; however, we encourage startup founders to connect their bank accounts with accounting software to help manage their startup finances from the start.
Best Business Bank Accounts for Startups
As we mentioned above, there are two things to consider when choosing a bank to open your business bank account with: fees and benefits. With this considered, here are our top choices for the best bank accounts for startups:
Mercury is our top choice for startup banking due to their low fees and many benefits. With Mercury, startups receive free ACH and wire transfers, non-minimum balance or maintenance fees, and a $200 new account bonus when you deposit at least $10,000.
Best of all, you can receive free business checking with a welcome offer and $5 million in FDIC insurance from Mercury here.
Lili is another great startup bank option. With no minimum balance requirements, expedited ecommerce payments, and excellent cash back rewards, Lili offers both low fees and a myriad of benefits for startups and small businesses.
With Relay, startups can leverage free domestic and international wires as well as up to 50 virtual or physical debit Mastercards. Plus, Relay offers financial management solutions alongside its banking services.
If you would like to assess more startup bank account options, check out our guide to the best banks for startups.
Frequently Asked Questions
What do you need to open a business bank account?
Business bank accounts offer many benefits, from credibility with customers to streamlining tax preparation. However, the most important reason to open a bank account for your startup is personal liability protection through the separation of your business and personal assets.
How do I open a bank account for a startup?
To open a business bank account, simply choose a bank account type and the bank you’d like to work with, compile the necessary documentation, and apply.
What kind of bank account should you open when starting a business?
There are a few different types of business bank accounts to choose from: business checking accounts, business saving accounts, and merchant accounts. The right bank account for your startup is largely dependent on your business needs.
How do I open a business bank account online?
You can apply to business bank accounts online with many banks. To do so, decide the type of bank account you want to open and search for banks that offer an online application process.