A checking account is also referred to as a debit, personal account, or current account. It allows you to withdraw money at any time. Small businesses need a checking account to conduct day-to-day activities. Checking accounts that are free to open is preferable since they eliminate the expenses associated with establishing an account.
Setting up a business checking account, in the end, helps clearly separate your commercial and personal money, provides more protection to your personal assets, and makes it simpler to keep track of your company costs throughout the year for tax purposes.
A checking account with a debit card also reduces the hassle of waiting in line at banks to withdraw cash since you may access your money anytime using an ATM. Furthermore, having a checking account that enables business owners to access their money through a unique app is critical for firm expansion.
- Is It Possible To Open A Business Checking Account Online
- What Are The Requirements For Opening A Free Business Checking Account
- What Banks Offer Free Business Checking Accounts
- 1) Capital One 360 Checking
- 2) Ally Bank Interest Checking
- 3) Discover Bank Cashback Debit
- 4) Axos Bank Rewards Checking
- 5) First Internet Bank Free Checking
- Can I Open A Business Checking Account If I Have Bad Credit
- Is Your Money Safe After Opening A Business Checking Account
- What Happens If My Business Checking Account Stays Dormant
- Bottom Line
- Related Articles
Is It Possible To Open A Business Checking Account Online
Yes. Online business checking accounts are a fantastic alternative for freelancers and other firms who don’t have to handle cash. They are typically less expensive and still include all of the necessary services. You can also benefit from a business checking account at a regular bank or credit union with physical branches if you take cash.
What Are The Requirements For Opening A Free Business Checking Account
Opening a business or company checking account is not as simple as opening a personal checking account. You’ll need to produce appropriate documentation, which will be determined by the type of business you own.
For example, a sole proprietor must submit their federal tax ID number (TIN) letter and a business license or fictitious name certificate, whereas an LLC or corporation must provide beneficial owner information and a certificate of good standing.
Here’s a list of the most important materials required to open a business checking account online:
- Two forms of identification will be required.
Bring your state-issued driver’s license or passport, as well as another form of ID with your names on it, such as a credit card or a utility bill.
- Your tax identification number
Until your company is properly registered with the IRS, it isn’t official. Make sure you’ve submitted an application for your federal tax ID number, also known as an EIN, with the IRS.
- Business documentation
You will need to contact officials in the state where your company is based in order to obtain additional documentation that verifies your business is lawfully registered and licensed to operate. If your company is a corporation or an LLC, you’ll almost certainly need a Certificate of Good Standing. This indicates that you’ve paid all required fees and completed all necessary tasks, and it is usually secured by the Secretary of State’s office or a state’s Division of Corporations.
- Assumed name certificate
Sole proprietorships and limited partnerships are the main types of businesses that use assumed names. Let’s assume your name is Tim Ryan, but you want to operate as “Tim Ryan Painting.” That’s your intended name, which may also be referred to as a DBA (doing business as), a fictitious name, or a trade name certificate. You’ll most likely be able to get this through your county clerk’s office.
- Beneficial owner information
Banks are required to identify who has a 25 percent or greater ownership interest in your firm, which is the magic number that makes you a “beneficial owner”. If you own the company with someone else, you’ll need to figure out how much equity each of you owns in it. You should expect to fill out a short form at your bank.
- A clear understanding of your business plan is essential
Prepare to discuss the nature of your company, your yearly sales expectations, where your suppliers and vendors are based, and other details.
What Banks Offer Free Business Checking Accounts
If you are looking to open a free business checking account, then you can consider the following banks:
1) Capital One 360 Checking
You may use the Capital One 360 Checking account without making a deposit. There is no minimum balance requirement for this account. You will also be able to get a free debit card, mobile banking, Overdraft protection, internet banking, and Access to over 39,000 ATMs across the United States in addition to other benefits.
2) Ally Bank Interest Checking
Ally Bank Interest Checking is a fantastic checking account because it provides free checks. Furthermore, the bank has numerous ATMs throughout the country. The APY available to you depends on your account balance. The process is entirely online.
3) Discover Bank Cashback Debit
Discover Bank Cashback Debit account is a free checking account with no FDIC insurance and low-interest introductory rate periods. You may use their debit card to earn 1% cash back on purchases above $3000, which is the maximum amount that can be reimbursed during the first year.
4) Axos Bank Rewards Checking
The bank provides you with a free checking account that does not have a minimum balance requirement. You can also use online and mobile banking, as well as free check deposits. You’ll also get unlimited free reimbursements for domestic ATMs.
5) First Internet Bank Free Checking
You will be given an exclusive free online banking account by the bank. You will have unrestricted access to your mobile banking. Furthermore, you will be able to write as many checks as you want. You will also receive a free ATM card for use.
Can I Open A Business Checking Account If I Have Bad Credit
Currently, there is no longer any restriction on opening an account with any bank. Because you are not borrowing any money, if you create a debit account, you will not have to pass a credit check. You are an excellent client for the bank since they will get money from your transaction.
However, if your credit is poor, you will not be able to obtain a credit account. Keep in mind that having a credit account and a credit card allows you to borrow money from your bank to buy items and services and pay it back at the end of the month.
Is Your Money Safe After Opening A Business Checking Account
It’s critical to keep your money in a bank account because banks have adequate security. Banks’ vaults are quite difficult to access, except via authorized personnel. Furthermore, bank premises are protected by securities officers with rifles who keep watch over the site against robbers.
Furthermore, banks do not always have cash on hand. The majority of banks store money at the Federal Reserve Bank to earn interest and keep it safe. They might have a little sum in their vaults for operational purposes. You must notify them ahead of time if you need to withdraw a large amount of money so that they can go to the Federal Reserve Bank.
What Happens If My Business Checking Account Stays Dormant
Banks require you to keep your account active by making deposits and withdrawals dependent on the type of bank account you have. If you fail to utilize your account for a lengthy time, it will go inactive.
Most banks charge you a fee for having an inactive account. You might be fined if your account isn’t activated on time. It is often a minor sum of money, however.
Bottom Line
Do extensive research before establishing a business checking account. Look around and see what kinds of services are available to small firms in the market. Consider costs, cash deposit restrictions, interest rates, transaction restrictions, account maintenance requirements, and access to digital company banking tools.