If you recently started a new business, one of the first things that you should set up is a business checking account for depositing funds and paying bills on behalf of your company. Even if you are operating as a sole proprietorship, you should keep your personal and business funds separate for tax and accounting purposes. Limited liability companies and corporations must keep business and personal funds separate or risk losing the liability protection provided by their legal entity. This concept is commonly referred to as “piercing the corporate veil”.
Estimate the monetary value of the deposits that will be made into your business account each month. This amount will dictate which type of account you should open. Most banks offer free business checking services to companies with estimated monthly deposits below $5,000. Businesses with higher estimated deposits may choose to open an account with a nominal monthly maintenance fee.
Choose a bank to open an account with. Contact banks in your area or view their websites to find additional information about the services they offer. Ask other business owners about their experiences with particular bank branches. Also consider the proximity of the bank to your office or business location. You may need to deposit funds on a daily basis depending on your business. Therefore, you may want to choose a bank that is close and convenient to get to.
Gather all of the information that you will need before you go to the bank. If you are a sole proprietor, you will need to provide two forms of identification and your employer identification number (if you have one) to open an account. Partnerships will need to provide the above-mentioned items plus a partnership agreement that details whom has the authority to make deposits and withdrawals from the account. Limited liability companies and corporations will need to provide an operating agreement in lieu of a partnership agreement. Contact your bank before you go to open an account if they have any additional documentary requirements in addition to those mentioned above.
Provide all required documents to an account representative at the bank that you chose. Inform the bank of your estimated deposit or transaction amount so that they may discuss the advantages and disadvantages of the different account types that they offer with you. The account representative will ask you additional information about the business such as the business name, address and phone number, the names and addresses of those persons who will have authority to access the account and your business structure. You will also be required to deposit a starting balance into the account. Most banks require a starting balance of at least $100. Your starting deposit should complete the account set-up process. You may be given the opportunity to sign up for a debit or check card. You may do this if you wish. You will receive your business checks and/or debit card in the mail within one to two weeks of opening your account.
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