Are you struggling to manage the finances of your sole proprietorship business? Then you should open a business bank account. A separate business bank account for sole proprietorship offers countless benefits to business growth.
Sole proprietorships are a simple way for a person to launch a business, and setting up a bank account for a sole proprietorship is essential in legitimizing your business to customers. Please read our guide to learn how to open a bank account for your sole proprietorship.
What Is a Business Bank Account?
A business bank account is separate from a personal bank account used for business transactions, such as accepting payments, paying employees and vendors, and saving money for the business.
Business bank accounts also offer several features that can help businesses manage their finances more effectively, including writing checks, making online payments, building business credits, tracking business expenses, etc.
Why Do You Need a Business Bank Account for Your Sole Proprietorship Business?
Although a business bank account is not legally required for a sole proprietorship, it is highly recommended to open one. A sole proprietorship is a business owned and operated by one person. It is tough to manage sole business transactions. To relieve this issue, a sole proprietorship should establish a business bank account to manage business finance.
Also, we added some important benefits for sole proprietorship business bank accounts below.
- Separate Your Finances: A business bank account keeps your business and personal finances separate.
- Safeguard Your Assets: Separating your business and personal accounts helps to protect your personal assets.
- Easy Accounting and Monitoring: With a business account, tracking expenses, budgeting, and monitoring spending is quite easy.
- Banking Features: You will access various banking services, such as online banking, mobile banking apps, merchant services, business credit cards, overdraft protection, and account management tools.
- Easy Tax Preparation: With a business bank account, gathering required tax information will always be easy.
- Grow Business Credibility: A business bank account enhances your business image and builds your business credit, which helps your business grow.
Business Bank Account Categories
Before opening a business bank account, you should know about its categories. Then you can select a suitable bank account for your business. Some of the most common categories are given below:
- Business Checking Account
It is the most common type of business account used for writing checks, making online payments, and withdrawing cash.
- Business Savings Account
A savings account is used to save money for the business. Also, with savings accounts, you can earn interest on funds.
- Business Money Market Account
It is a hybrid of checking and savings accounts. And it offers higher interest than regular savings accounts.
- Business Credit Card
Business credit is used to build business credit and make purchases for your business.
- Business Merchant Account
A merchant account is necessary for accepting business credit and debit card payments. Some popular companies that open merchant accounts include Square, Stripe, and PayPal.
How to Choose the Best Business Bank Account for Sole Proprietorship?
Before choosing the best business bank account, you should consider some facts that match your business requirements. Those are listed below:
- Consider your business’s size and needs.
- Check account fees and requirements, including maintenance, transaction, ATM, and deposit fees.
- Check the features an account offers, including transaction limits, online banking, mobile banking, credit and debit card payments, merchant service, etc.
- Assess customer services.
- Consider interest rates.
- Check out the bookkeeping software facility.
- Check for the ability to link to other accounts.
Some of the Best Business Bank Accounts for Sole Proprietors
You can find several amazing bank accounts for your sole proprietorship business. We listed some popular choices below:
Sole Proprietorship Business Bank Account Requirements
Before opening your sole proprietorship bank account, you must meet the requirements. We listed some requirements that you will gradually need to follow. Take a look:
Sole Proprietorship Business Eligibility for Opening a Bank Account
To open a business bank account for your sole proprietorship in the United States, you must normally fulfill the following eligibility criteria:
- Your business should be legal with a confirmed business license.
- Business owners should provide valid personal identification documents.
- Business owners should prove their country of citizenship (US or foreign).
- Business owners should have a minimum of 25% ownership of the business.
- The applicant’s age requirement is 18 years or older.
- Must have an SSN or ITIN.
What Will You Need to Open a Sole Proprietorship Business Account?
Below are the documents you’ll need to apply online:
- Name and address of your sole proprietorship business.
- Business owner’s information, including passport, NID, driving license, etc.
- Contact information.
- Photo proof of identity.
- Business tax ID number, or an SSN or ITIN.
- Business legal documents, including business license.
- Business name certificate.
- Business formation documents (articles of organization).
How Do You Open a Sole Proprietorship Business Bank Account Online?
Now that you have decided to open a bank account for your sole proprietorship, let’s get into the procedure for opening your account.
- Research and Select a Bank: Before choosing the right bank account, research several banks, compare them, and choose one according to your business requirements.
- Gather Information: You should gather all the required information and documents before applying for a bank account.
- Bank Website: To apply for an account, visit the bank’s official website.
- Apply for the Account: Now, you can apply online by submitting all the necessary information and documents.
- Verification: After submitting your application, the bank will conduct verification.
- Approval: You must wait some time to get the account approved. Then you will get confirmation of the account via email.
After the account approval confirmation, you have to provide a minimum amount to the account to access your business bank account. After the successful opening of your bank account, you can use it for a lot of bank activities, including fund transfers, payments, and monitoring transactions.
Get Help
As a non-resident, applying for a bank account in the US could take a lot of work. To solve this, you can get help from a professional like Business Globalizer.
Business Globalizer can assist you in opening your account in a few days. They can handle all your paperwork correctly and hassle-free; you just need to give them a knock.
FAQs
Q1: Can I use my personal bank account to do business as a sole proprietor?
Answer: Yes, you can. It’s not legally required to have a separate business bank account for your sole proprietorship business. But it would be beneficial to have one.
Q2: How much money do I need to create a bank account for my business?
Answer: The minimum deposit to open a bank account depends on the type of business account. But the approximate range is $25 to a few hundred dollars.
Q3: Do sole proprietorship bank accounts require EINs?
Answer: No, you don’t need an EIN to open a business bank account.
Bottomline
As a hard-working sole proprietor or freelancer, you already have the opportunity to have a successful business, and a business bank account can boost your business growth. So don’t waste your time. Contact us and open your business sole proprietorship bank account today.
