What is a business bank account?

Published Thursday 2 July 2026

Table of contents

• Why do you need a business bank account?
• Business banking requirements: What do you need to open a business bank account?
• How to open a business bank account
• Types of business bank accounts
• Fees and features to compare
• How to keep business and personal finances separate
• Simplify business banking with Xero
• FAQs on business banking requirements

Key takeaways

• A business bank account keeps personal and business finances legally separate, protecting personal assets, simplifying tax filing, and presenting a professional image to clients and vendors.
• Business banking requirements vary by bank and business structure, but most banks ask for personal identification, an employer identification number (EIN), proof of business formation, and an opening deposit.
• Opening a business bank account involves forming your business, getting an EIN, choosing a bank, gathering your documents, and making an initial deposit.
• Comparing account types, fees, and features helps you find the right fit for your business's transaction volume, cash handling needs, and growth plans.

Why do you need a business bank account?

Separating business and personal finances is one of the most practical steps you can take when starting or running a business. A dedicated business bank account offers several key advantages.

• Liability protection: Keeping business funds in a separate account maintains the legal distinction between you and your business. Mixing personal and business funds can pierce the corporate veil, exposing personal assets in a lawsuit.
• Professionalism: Clients and vendors expect to pay a business entity. Receiving payments through a personal account can erode trust and complicate contracts. The SBA notes that business banking lets customers make checks out to your business instead of directly to you, and allows you to authorize employees to handle day-to-day banking tasks on behalf of the business.
• Tax simplification: A dedicated account produces a clean transaction record, making it easier to prepare tax returns and respond to audits. You can learn more about tracking deductions with organized records.
• Access to business credit: Banks typically require a business account before you can apply for business loans, lines of credit, or business credit cards.

Business banking requirements: What do you need to open a business bank account?

Business banking requirements vary based on the bank, the type of account, your business structure, and other factors. Here are the documents most banks ask for when you open a business bank account.

• the business's name, address, and phone number
• your personal identification
• proof the business exists
• the business's employer identification number (EIN)
• a minimum deposit
• the names of other account owners or signatories

Before opening a small business bank account, contact the bank and ask which documents are required for approval. That way, you'll know exactly what to bring.

The IRS has more information on starting a business and how to get an EIN.

Proof of the business's existence

The required documents vary based on the business's structure and whether it's an LLC.

• DBA checking account requirements: Proof of a "doing business as" (DBA) name registered with the state. This applies to sole proprietors and partnerships that haven't formed an LLC and are using a trade, fictitious, or DBA name.
• LLC bank account requirements: A certificate of good standing from your state's secretary of state. You receive this when you set up the LLC, but it's also public information that you, your banker, or anyone else can access online. In some states, it's called a certificate of fact, a certificate of authorization, or a certificate of status.
• Corporate business banking requirements: Articles of incorporation, proof that the corporation authorized opening a small business bank account, and ID verification for everyone who owns more than 25% of the business. This 25% threshold comes from FinCEN's Customer Due Diligence (CDD) Final Rule, which requires covered financial institutions to identify and verify the identity of any individual who owns 25% or more of a legal entity when that entity opens an account. Depending on your state and the bank's rules, you may need a certificate of registration, a corporate charter, or a certificate of good standing instead of the certificate of incorporation.

The IRS provides additional guidance on business structures.

Account owners and signatories

An account owner has full access to the account and is responsible for overdrafts or other issues. A signatory can sign checks or withdraw cash but doesn't own the account.

Most banks require all account owners to come to the bank in person with proof of ID. If the bank lets you open a business bank account online, you may be able to handle that remotely. Typically, you can add signatories without their presence, but they may need to come to the bank to finalize the process.

How to open a business bank account

Here's a step-by-step look at how to open a business bank account for LLCs or any other type of business.

1. Form your business. The process depends on your business structure and the laws in your state. Typically, you register a trade name (DBA name), form an LLC, or establish a corporation with your state's secretary of state.
2. Get an EIN. Most banks require an EIN for small business checking and savings accounts. The IRS requires an EIN for businesses that have employees, operate as partnerships or corporations, or file excise tax returns. Note: sole proprietors and single-member LLCs may be able to use their Social Security Number (SSN) in some cases, but having an EIN is generally recommended.
3. Choose a bank. Look for a bank offering the features you want with the lowest fees possible. Also consider convenience; for example, you need a local bank for cash deposits.
4. Gather your information. Contact the bank or check its website to learn about its business banking requirements. Typically, you need your personal ID, the business's EIN, and proof of active registration with the state.
5. Go to the bank. While you may be able to open some business checking accounts online, you'll usually need to visit a branch in person. Consider calling ahead to book time with a banker before you arrive.
6. Make a deposit. Most banks require an opening deposit. The amount varies based on the type of account and the bank's business banking requirements.
7. Order checks and debit cards. Your banker will help you order what you need. You may need multiple debit cards if the account has multiple owners or you want signatories to be able to access the funds.

The SBA's guide to opening a business bank account covers additional steps and checklists.

Types of business bank accounts

Not all business bank accounts serve the same purpose. Choosing the right combination of accounts depends on your transaction volume, cash flow needs, and growth plans.

• Business checking account: The primary account for day-to-day transactions, including deposits, payments, and payroll. Most businesses open this first.
• Business savings account: Used to set aside funds for tax obligations, emergencies, or future investments. This type of account typically earns interest.
• Merchant services account: Required for businesses that accept credit or debit card payments. It processes card transactions and transfers funds to your main account.
• Money market account: Combines features of checking and savings, usually with higher interest rates and some transaction limits. It's a good option for businesses that want to earn more on reserves while keeping limited access to funds.

Fees and features to compare

The best business bank account is subjective. The account that works best for your business may be completely different than the one that works for the business owner down the street. To narrow in on the right choice, look at features and costs carefully.

Features to consider include:

• mobile banking with mobile deposits
• ATMs, including location, fees, and whether they accept cash deposits
• business bill pay
• Zelle to transfer funds to accounts at other banks
• fraud monitoring
• 0% liability for fraudulent debit card transactions
• low-cost checks

Most business bank accounts also charge fees, such as:

• Transaction fees: fees for wires, stop payments, insufficient funds, returned payments, bad checks, and ATM withdrawals.
• Cash handling fees: typically apply if you deposit over a certain threshold of cash each month.
• Account fees: may be a set monthly fee, often waived if you meet minimum balance requirements.
• Interest rates: how much interest the bank pays on savings accounts and rates for overdrafts or lines of credit linked to the account.

The goal is to strike a balance between the features you want and the fees you're willing to pay.

How to keep business and personal finances separate

In theory, keeping business and personal funds separate is easy: use your business account for business expenses and your personal account for personal expenses. In practice, it can get trickier. Keep these tips in mind.

• Always carry checks or debit cards for both accounts. That way, if you see something you need, you can buy it with the right account, whether it's personal or business related.
• Make two separate payments for mixed-use expenses. For example, if you buy a laptop to split between personal and business use, pay for half of it out of your business account and the rest from your personal account.
• Reimburse yourself for business expenses paid with personal funds. If you need to use your personal funds for a business purchase, reimburse yourself the exact amount from your business account and note the transaction in your accounting records.

Simplify business banking with Xero

Once you set up your business bank account, sync it to Xero and easily track all of your business expenses. Xero makes reconciling account transactions easy, and it quickly learns how to automatically categorize common transactions, saving you time on admin.

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FAQs on business banking requirements

Here are answers to common questions about opening and managing a business bank account.

Do I need a business bank account?

Yes, all businesses benefit from having a separate bank account. It simplifies tax filing, keeps personal assets protected, and for LLCs and corporations, helps maintain the legal separation that prevents personal liability for business debts.

What is required to open a business bank account?

Most banks require personal identification, an EIN, proof of business formation (such as a certificate of good standing or articles of incorporation), and an opening deposit. If multiple people own 25% or more of the business, they'll all need to provide personal identification and contact details.

Is it hard to get approved for a business bank account?

No. If you can open a personal bank account, you should be able to open a business account. The business needs an EIN (federal tax ID number) and must be in good standing with the state.

What does an LLC need to open a bank account?

An LLC needs proof that it exists and is in good standing with the state. This typically means a certificate of good standing from the secretary of state in your state.

Can I open a business bank account without an LLC?

Yes. You'll need an EIN and proof you've registered a DBA or trade name with your state or local government. Sole proprietors, partnerships, and corporations can all open business bank accounts without an LLC.