Step 3: Setting Up a Business Bank Account

  • Once you have established a legal business, the next step is to set up a Business Bank Account.
    • Unless you have created a Sole Proprietorship entity, having a business banking account is an absolute must. If a company is combining business and personal accounts, the corporate liability protection could be lost. This will open the door to creditors, including the IRS, pursing the personal assets of the business owner.
    • To create a business account your EIN / Tax ID Number, and depending on the type entity that was created, possibly a business license, partnership agreement or articles of incorporation will be required.
    • There are many types of business checking and savings account available. You should do some research to find one that best fits your requirements. Free or no fee business checking accounts are available at most major and local banks.
    • A business only operating account is essential for keeping your businesses expenses in one location. Running all purchases and payments through one account will making doing the business accounting significantly easier. It will also contain a record of all expenses in the case of an audit.
    • If you are going to be setting up payroll for employees, you may also want to consider opening a second checking account specifically for your payroll. Separating payroll out of your operating account will make your accounting and taxes significantly easier.
  • There are also other benefits to opening a business banking account.
    • Most banks have a “small business banking rep.” Their job is to create a relationship with local businesses, like yours, to help facilitate your needs. These reps can be an invaluable asset to a new business. They can aid you in establishing correct baking practices, and also make introductions through their networks to CPAs, merchant service providers, and business attorneys.
    • A good relationship with a bank can be something called upon when needed. You might not require it immediately, but this relationship will be the door way to you acquiring a business line of credit or credit cards. The availability of these funds can help you with everything from repairing a piece of equipment to the expansion of the company.
    • Taking credit cards from your customers will also require a business checking account as well as an EIN. The ability to take credit and debit cards is an added convenience for your customers, and absolute must for any business in any market.