What are the requirements of a business checking account?

Opening a business bank account should be at the top of your to-do list when founding a business. Ideally, you’ll want a business checking account that offers all the tools you need to manage your cash flow, track expenses, and make bill payments. Most banking platforms offer them, but not all have the same business checking account requirements. Use this guide to help you find the best banking solution for your company.

Determining your eligibility for a business checking account

Business checking eligibility criteria will differ between financial institutions. Most business banking platforms have an EIN requirement, so you usually can’t open a business account with just your Social Security number. If you’re opening a corporate checking account, they may want to see incorporation documents for banking. We’ll get into that in more detail below.

The structure of your business may dictate who’s eligible to open a business account. For example, a sole proprietor can open an account with one signature, while a corporation, partnership, or LLC (depending on its size) often need multiple signatories. The bank normally makes that decision, but it should also be in your corporate bylaws. Mandating multi-party banking accounts is a common security practice for corporations.

When researching how to open a business checking account, compare those requirements at different banks or online platforms. After that, you can start gathering the documents you may need.   

One last note: Remember that financial institutions have business bank account compliance rules they must adhere to. The bank or platform can refuse you if they decide your business is “non-compliant” with their guidelines. Incorrect or misleading statements on your application are one reason they might do that. Avoid those at all costs.

Necessary documentation to open a business checking account

One of the first steps in forming a business is to request an Employer Identification Number (EIN). An EIN, also known as a federal identification number, is your business’s unique identifier. The IRS uses it for business tax filings, and vendors and partners may request it to review your company’s credit history and business credit score.

The Internal Revenue Service (IRS) is the issuing body for EINs. They’ll assign you a number within minutes if you apply online. You can also fax or mail your request using Form SS-4. Keep a copy of that form for your records and save a hard copy of the confirmation letter the IRS mails back to you. The bank will accept either. They may also ask for:

• DBA Certificate (if not incorporated): The “DBA” stands for “doing business as.” It’s an ownership status for non-incorporated businesses. DBA certificates are typically issued by the town or city where your business is located.   
• Articles of Incorporation: Articles of Incorporation are formation documents that show your business’s name, address, registered agent, and corporate structure (LLC, C-Corp, S-Corp, non-profit, etc.). They do not include your bylaws, which are separate.
• Personal Identification: Each account signatory will be asked for two forms of identification. Most banks accept a state-issued license, passport, social security card, or birth certificate. At least one form must be a photo ID.
• Business Licenses (if needed): Certain towns and cities require business licenses to operate in specific fields. Food vendors or retail stores are a good examples of this. The bank may want to see these licenses if they’re required.     

If you’re opening a business checking account online, you may need to digitize these documents so you can upload them. 

The final document you will need is the completed application. Answer all questions honestly and in detail. Most institutions can open an account for you in under an hour, if there are no issues with your documents or application.

Minimum balance requirements

Beyond having the proper documentation, it’s possible your account will require a minimum balance for business account holders. This could be zero, or it could be several hundred dollars, depending on the account provider and the account type. Your company must have the minimum amount ready to deposit if you want to initiate the business account setup, though some accounts may give you a few days to complete the process.  

Another variation of this is the “minimum deposit” requirement. That’s a rule that every deposit needs to be for at least a minimum amount. That’s okay for a consulting firm that only gets big checks, but it doesn’t work for ecommerce businesses selling $20 products. Make sure that your business checking account doesn’t also have a “minimum deposit” rule.

Business checking accounts that charge monthly fees may also require that you keep a minimum balance to cover them. The best way to avoid these fees is to simply do business with a banking platform that doesn’t charge them. You can also look for places that offer additional benefits or features, like high annual percentage yield (APY) and overdraft protection, if you keep a minimum balance or maintain a certain level of activity. 

Fee structures and considerations 

With the rise of online competition, dozens of banks have decided to no longer charge monthly maintenance fees—but others charge for transactions or assess a fee for overdrafts. These need to be factored in when you’re reviewing business bank accounts. Each of those fees is an expense that your bookkeeper must account for.

Some banking platforms give you ways to avoid fees, like overdraft protection you can use to cover checks when funds are unavailable. Business banking platforms can facilitate that by opening a line of credit for your business. Some may even proactively draw from your line of credit to cover a check, instead of sending it back with an “insufficient funds” notice.

There are sometimes transaction limits business account holders can agree to if they want to avoid monthly fees, but that only works for certain types of businesses. Companies with a high volume of debits and credits need a business checking account that doesn’t have transaction fees or a limit on how many transactions you can make per month. Make sure you choose the account that fits your needs.

Choosing the right checking account for your business needs

If you want specific account features, you can look for banking platforms with multiple business checking plans. That’s where you’ll most likely find the services you want, including debit cards, online business banking features, automated bill pay, and access to working capital in the form of a business line of credit or business credit card. Other sought-after features are the ability to create sub-accounts and API connectivity to accounting platforms.

Financial management for businesses is hard, but choosing a business bank account shouldn’t be. The factors you’re comparing should include customer service, accessibility, features, services, fees, and balance/transaction limits. Your business account should match your business needs, so take your time and review each of your options carefully.

Another variable in this equation is the type of bank or account provider you choose. National and regional banks are often impersonal and tend to underserve small business owners. Community banks are more personalized. The best online banking platforms offer customer service by phone, chat, or email—plus, their fees are low and processing times are fast. Whichever you choose, make sure your business checking account meets your comfort level and can scale with your business.