Opening a business bank account in the USA is a critical step for any entrepreneur or small business owner.
Whether you’re a resident or a non-resident, setting up a dedicated account for your business is essential for separating personal and business finances, ensuring compliance with U.S. tax laws and building your company’s credibility.
In this guide, we’ll walk you through the step-by-step process of opening a business bank account in the USA, including the documentation required, options for non-residents and a comparison of the best banks available.
Why You Need a Business Bank Account in the USA
Opening a business bank account is more than just a formality, it’s a foundational part of running a successful business. Here’s why:
- Legal Requirement: Many business structures, such as LLCs, C-Corps, and S-Corps, require a separate business account to maintain limited liability and legal separation between personal and business finances.
- Tax Reporting: A dedicated business account simplifies tax filing by keeping business transactions separate, and it helps avoid issues during IRS audits.
- Professionalism & Credibility: Operating with a business bank account enhances the credibility of your business, especially when dealing with clients, vendors, and employees.
- Business Growth: Having a business account facilitates taking out business loans, managing payroll, and handling larger transactions more efficiently.
According to the U.S. Small Business Administration, there are over 32.5 million small businesses operating in the U.S., many of which rely on business banking services to grow and manage their finances effectively.
Types of Corporate Entities in the USA
Before opening a business bank account, it’s crucial to understand the type of business structure you have, as it impacts the account setup process.
Here’s a quick overview of the most common corporate entities:
- Sole Proprietorship: Easiest to set up but not legally separate from the owner. Opening a business account for a sole proprietorship usually requires your Social Security Number (SSN) and business license.
- Limited Liability Company (LLC): A popular choice for small businesses, an LLC offers limited liability protection. Banks require the LLC’s Articles of Organization and Employer Identification Number (EIN).
- C-Corporation (C-Corp): A separate legal entity from its owners, typically used by larger businesses. You’ll need the C-Corp’s Articles of Incorporation and EIN to open a business account.
- S-Corporation (S-Corp): Similar to a C-Corp, but with different tax treatment. Banks require the S-Corp’s EIN and other incorporation documents.
- Partnership: Involves two or more individuals or entities. Partnerships need a partnership agreement and EIN to open a business bank account.
Choosing the right business structure affects not only your legal obligations but also the type of bank account you’ll need.
Step-by-Step Process: How to Open a Business Bank Account in the USA
Opening a business bank account in the USA can be broken down into simple steps:
1. Choose the Right Bank
Start by researching banks that offer services tailored to your business’s needs. Consider factors such as fees, account features, online banking capabilities and customer service.
2. Gather the Required Documents
Banks require various documents depending on your business type. We’ll cover the specific documents you need in the next section.
3. Visit the Bank or Apply Online
While many banks offer online applications, some require you to visit a branch in person, especially for more complex business structures.
4. Provide Initial Deposit
Most banks require an initial deposit to open the account, which can vary from $50 to $1,000 depending on the bank and account type.
5. Activate Online Banking and Payment Solutions
After your account is opened, set up online banking, mobile apps and any payment processing services you may need for your business.
Essential Documents Required to Open a Business Bank Account
To open a business bank account in the USA, you’ll need the following documents:
For U.S. Residents:
- Employer Identification Number (EIN): Issued by the IRS for tax reporting purposes.
- Articles of Incorporation/Organization: For LLCs, C-Corps, and S-Corps.
- Business License: Depending on the state and local regulations.
- Partnership Agreement: If you’re opening an account for a partnership.
- Personal Identification: A driver’s license, passport, or other government-issued ID.
For Non-Residents:
- Incorporation Documents: Non-residents must establish a U.S.-based entity such as an LLC or corporation.
- ITIN (Individual Taxpayer Identification Number): If you don’t have a Social Security Number.
- Proof of Business Address: Some banks may also require proof of a U.S. business address.
Can You Open a Business Bank Account in the USA as a Non-Resident?
Yes, non-residents can open a business bank account in the USA, but the process can be more complex. Here are a few key steps:
- Set Up a U.S. Business Entity: Non-residents often need to establish a U.S. LLC or C-Corp to qualify for a business bank account. This can be done through incorporation services that cater to international entrepreneurs.
- Obtain an EIN: You’ll need to apply for an Employer Identification Number (EIN) from the IRS. This can be done online, and you’ll need the EIN for tax reporting.
- Travel to the USA: Some banks require you to visit the branch in person to open an account, especially if you are a non-resident.
Alternatively, some online banks and fintech solutions allow non-residents to open business accounts without physically visiting the U.S.
Best Banks for Business Accounts in the USA
When choosing a business bank account, consider factors like fees, features and accessibility. Here’s a comparison of the top banks:
1. JP Morgan Chase
- Fees: Monthly maintenance fees can be waived with a minimum balance.
- Best For: Small to medium-sized businesses with frequent transactions.
- Features: Excellent online banking, comprehensive account management tools, and business credit cards.
2. Bank of America
- Fees: Low monthly fees with the option to waive.
- Best For: Businesses looking for strong customer support and online services.
- Features: Cash flow monitoring, business savings accounts and small business loans.
3. Wells Fargo
- Fees: Competitive fee structure with free transactions up to a certain limit.
- Best For: Startups and small businesses with simple banking needs.
- Features: Offers business insurance, payroll services, and low-fee checking accounts.
4. Citibank
- Fees: Higher fees, but with premium services for international businesses.
- Best For: Companies dealing with frequent international transactions.
- Features: Global transaction services, corporate credit cards, and wealth management.
Understanding Banking Fees and Charges in the USA
Business banking fees can quickly add up, so it’s important to understand the common types:
- Monthly Maintenance Fees: Some banks charge fees between $10 and $30 per month, which can usually be waived if you maintain a minimum balance.
- Transaction Fees: Certain banks limit the number of free monthly transactions, with additional fees for each transaction beyond the limit.
- Wire Transfer Fees: Domestic wire transfers typically cost $15–$30, while international transfers may cost $35 or more.
- ATM Fees: Using an out-of-network ATM can result in fees ranging from $2 to $5.
To minimize fees, compare banks and select an account that aligns with your business’s transaction volume and banking habits.
International Transactions and Money Transfers
International businesses often deal with high fees for cross-border transactions. Consider these tips for saving money:
- Use Fintech Solutions: Companies like Wise (formerly TransferWise) offer low-cost international transfers and multi-currency accounts that help reduce fees.
- Avoid International Wire Transfers: Instead, opt for payment gateways like PayPal or Stripe that offer better exchange rates and lower fees.
Alternative Solutions: Opening a Business Bank Account Online
With the rise of digital banking, many entrepreneurs are opting to open business bank accounts online.
Banks like BlueVine, Mercury and Novo offer completely online banking solutions without the need to visit a physical branch.
These banks are particularly useful for non-resident entrepreneurs who may face challenges with traditional banking institutions.
However, always review the services and fees before committing to an online bank.
Conclusion: Take the Next Step
Opening a business bank account in the USA is a crucial part of running a legitimate and successful business.
Whether you’re a resident or non-resident, following the steps outlined in this guide will help you navigate the process smoothly.
Ready to take the next step?
Start by gathering the required documents and researching the best bank for your business’s unique needs. Need more guidance?
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Disclaimer
The opinions expressed in this article are those of the author alone and do not necessarily reflect the views of Entrepreneur Villa, its creators or staff. Entrepreneur Villa is not responsible for the accuracy or reliability of any information presented in this content.
Frequently Asked Questions
Answer: To open a business bank account in the USA, choose the right bank, gather documents like your EIN, and business incorporation papers, and follow the bank’s application process, either in-person or online.
Answer: Yes, non-residents can open a business bank account in the USA by using services like US incorporation providers, and traveling to the USA to present required documents.
Answer: You’ll typically need an EIN, Articles of Incorporation, business license, proof of business address, and identification documents to open a business bank account.
Answer: JP Morgan Chase, Bank of America, Citibank, and Wells Fargo are among the best banks for opening business accounts in the USA, offering various services and fee structures.
Answer: Some banks and financial institutions offer the option to open a business bank account online, though specific documentation and criteria must be met.
Answer: Opening a business bank account in the USA can be free, but monthly maintenance fees and transaction charges apply depending on the bank and account type.
Answer: Sole Proprietorships, LLCs, C-Corps, S-Corps, and Partnerships can open a business bank account in the USA, with specific requirements varying for each entity.
Answer: Yes, an EIN (Employer Identification Number) is required for most business entities to open a bank account, as it serves as the business’s tax ID.
Answer: Common fees for business bank accounts include monthly maintenance fees, transaction fees, ATM fees, and minimum balance penalties, which vary by bank.
Answer: Yes, most US business bank accounts allow international transfers, but fees can be high. Alternatives like Wise or PayPal may offer lower-cost options for frequent transfers.