What Is a Business Account?

A business bank account provides limited personal liability protection, separating your personal assets from your business liabilities. Additionally, it offers purchase protection under merchant services, safeguarding your transactions.

Having a dedicated business account enhances your credibility and professionalism when dealing with clients and suppliers, presenting your venture as a legitimate and well-organized entity.

Many business bank accounts come with a line of credit that you can utilize for emergencies, significant business purchases or bridging cash flow gaps.

Business accounts often come with higher fees compared to personal accounts. These fees can include monthly maintenance fees, transaction fees and other service charges that can quickly add up.

For instance, some business checking accounts may charge a monthly maintenance fee, which can be waived if certain conditions are met, like maintaining a minimum daily balance or completing a certain number of transactions. Additionally, business accounts may have fees for services like wire transfers, overdrafts and ATM usage, which can further increase costs.

Overdraft facilities provide a safety net for managing cash flow. They allow businesses to borrow a set amount of money when their account balance falls below zero. This can be useful for covering unexpected expenses or bridging gaps in cash flow.

Online banking tools are a standard feature of business accounts, offering a range of services such as digital payments, payroll management and account monitoring. These tools enable businesses to manage their finances remotely, making it easier to stay on top of transactions, pay bills and monitor cash flow.

Merchant services are payment processing solutions that can be linked to business accounts, enabling businesses to accept various forms of payment from customers. These services facilitate secure and efficient transactions, enhancing the customer experience and increasing sales.

Look for accounts with low or no monthly fees, especially if you're a small business or startup with limited cash flow. Be aware of any conditions that may waive these fees, such as maintaining a minimum balance.

Check if the account has a minimum balance requirement to avoid monthly fees or to earn interest. Ensure you can comfortably maintain this balance to avoid penalties.

If you plan to keep a large balance in your business account, look for accounts with competitive interest rates to earn some return on your money.

Consider the number of transactions you expect to make each month and choose an account with a suitable limit. Exceeding this limit may incur additional fees.

If your business frequently deals with cash or check deposits, look for accounts with convenient deposit options, such as mobile deposits or a large network of ATMs or branches.

Your Social Security number is used to verify your identity and may be required for certain business structures, such as sole proprietorships.

To confirm your identity, you need a valid government-issued ID, such as a driver's license or passport.

Your home address is required for account setup and may be used for communication purposes.

If your business operates under a name different from your personal name, you'll need a DBA certificate to verify this.

Depending on your business type and location, a business license or permit is often required.

An EIN is a unique identifier assigned to your business by the IRS and is usually required for business bank accounts.

Depending on your business structure, these may include articles of incorporation, articles of organization or a partnership agreement.

If you have a partnership or multimember LLC, you may need to provide a business operating agreement outlining the ownership structure and roles.