A business bank account makes it easier to run your company. Corporate accounts work similarly to personal ones; you can pay in money, withdraw it, write checks, make online transfers, etc. This article will show you the requirements to open a business account online and how you can go about that.
Why do you need to open a business bank account?
1. Easier accounting
Corporate accounts ensure that you separate your company funds from personal funds. This makes it easier to keep track of business transactions and report them accurately. It also makes identifying corporate expenses you can deduct from your tax liabilities easier.
2. To establish a credit line
Most banks require a corporate bank account if you need a loan for expansion. You’ll find it difficult to access credit from your banking institution without one.
3. It looks more professional
A separate corporate account makes you look more professional in the eyes of customers and vendors. It shows that your company is serious and in it for the long run. Offering personal bank details to vendors can make them think your business is a hobby that won’t last long.
4. Limited liability
Limited liability companies (LLCs) must open corporate bank accounts. LLCs are structured so the owners are not personally liable for company debts. If your LLC does not have a separate account, you’ll likely lose your limited liability protection in the case of bankruptcy.
5. To accept online payments
You can hardly accept online payments on a personal account. You’ll need corporate accounts for this purpose.
When can you open a business bank account?
You can open a corporate account after you’re sure of having these documents;
1. Personal identification
The financial institution will demand valid identification for yourself as the company owner. It could be a passport, driver’s license, or any government-issued document. They may also demand identification for other shareholders of the corporation.
2. Certificate of Incorporation
The bank will demand proof that your company is registered with and formally recognized by the government. The proof will be the Certificate of Incorporation issued by your government after you register the company.
3. Tax ID
You’ll likely need to provide a tax identification number before a financial institution can give you a corporate account. Your domestic tax agency issues this number.
You may need to provide a government-issued license that permits you to operate in your business area. This requirement mainly pertains to regulated businesses such as law firms, hospitals, and financial services.
5. Financial statement
You may need to provide past revenue, profit, and loss reports to your banking institution.
What type of business account should I open?
There are several types of corporate accounts that you can choose from. They include
- Merchant: This type of account allows businesses to accept and process electronic payments. It’s the one to choose if your operations are primarily online.
- Savings: This type is best for saving your profits and earning a healthy interest.
- Checking: This is ideal for managing payroll, vendor payments, rent, and other recurring expenses.
- Foreign: You’ll need this to transact in foreign currencies with global partners.
Many people overlook opening corporate accounts, but it’s important. It makes you look more professional and gives you limited liability, among other benefits we mentioned. We also listed the requirements for opening such accounts and the types to open.
There are many corporate banking platforms to choose from. You can open a business account online or offline, with the former being more convenient.