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Opening a corporate bank account has more requirements than other business bank accounts. Read on to learn about what you need to open one.
Not having a corporate bank account can put the business at risk. Without it, you'll be mixing business funds with personal funds. This can lead to reduced transparency or trustworthiness of your business. And risk personal funds and assets. Fortunately, opening a corporate bank account isn't as hard as it seems. You'll be reaping its benefits in just a few minutes. In bite-sized pieces, learn about how to open one, what documents are needed, and how much you need to prepare for it.
A corporate bank account is a type of account opened by corporations. It holds your business' finances to ensure they are separate from your personal funds. Applying for a corporate account is necessary because a corporation is a separate legal entity. However, before you can open an account, you'll first need board approval. This is a requirement by law for corporations. Even if you're a single-owner corporation, your "board" needs to vote on the account's details, features, access options, and purpose. This is written through a corporate resolution.
If you are opening business banking accounts at more than one bank, you'll have to write a corporate resolution for each bank.
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Non-U.S. citizens can use a Permanent Resident Alien Card (Green Card), Passport, or Matricula Consular Card.
Corporations must have a TIN or EIN. This is a 9-digit number issued by the Internal Revenue Service (IRS). It is used to identify your company for tax purposes.
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Opening a bank account in-person and online have the same document requirements. However, there are some differences and pros and cons to the process.
If you're applying in person, it's best to make an appointment with the bank first. Have all your documents and initial deposit (if required) prepared beforehand, so you don't need to go back. The authorized representative(s) stated in your board resolution will need to be present for account opening. With in-person application you get to develop a relationship with your banker, making it more personal. This makes customer support way easier as they can easily answer your questions regarding the account.
For nonprofit corporations, two non-voting board members should be present if no voting member is available.
Pro tip: Sometimes, applications can take days or weeks to process. But a bank may let you submit the documents in stages if you're in a good relationship with them. This is useful if you don't have all the requirements for a one-day process.
This would depend on the bank of your choice. Some banks ask for $5, $25, $50, and even a $1,000 opening deposit. Other banks don't require a minimum deposit at all. However, they may require monthly fees. For more specific info, you can consult your bank for account opening fees.
Some banks don't have a minimum deposit fee or a monthly fee. However, they may have a minimum daily balance. You can weigh the pros and cons of the money involved as you research different banks.
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Having a corporate bank account will give your business many benefits. The most important are liability protection, having a clear financial record, and the ability to take loans for your business.
With a separate business account, you are protected from being personally liable for any business debts or legal claims. Without this protection, your personal funds and assets can be taken if you're sued. If you choose not to have a business account, you end up mixing your personal and business funds. You can lose your liability protection with this. This is called "piercing the corporate veil."
You'll be needing a business bank account to apply for a business loan. Whether you're a startup or have years in the business, it's better to be prepared for a loan. By opening a corporate bank account, you have the option to apply for a term loan, business line of credit, SBA loan, or other loans provided by the bank.
Did you know?
84% of Americans say that banks are making it easier to get financial services as they improve their technology. [1] This increases the safety and convenience of businesses, small and corporations alike.
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Opening the "right" business account can seem daunting. We've listed some of the main things you'll want to consider when opening a corporate bank account.
Do you want to earn interest or other rewards? If so, look for a bank that offers that. For example, Bluevine offers 4.25% APY on balances up to $3M for Premier customers; 3.0% APY on balances up to $250,000 for Plus customers; 2.0% APY on balances up to $250,000 for Standard tier customers that meet monthly eligibility requirements. [2] Other banks offer high-interest rates up to a certain amount.
Some banks allow you to have unlimited transactions. But others do not. Other banks give you a maximum number of free transactions per month. If you exceed that number, you'll be charged a fee. Also, take note of the dollar limits for ACH transactions, check and cash deposits, wire transfers, etc. As a business owner, it's best to know beforehand how much money you could be spending and receiving. This will help you gauge which bank would work best for you.
Online banks can definitely save you time and money. They partner with large ATM networks throughout the country. But note that depositing cash is more difficult. If you opt for a traditional bank, you'll want to ensure that branches and ATMs are nearby where you operate. Traditional banks usually have a wider range of business services.
What's the difference between a business and a corporate account?
Opening a corporate bank account has stricter requirements. Corporations need a corporate resolution to open an account. The board will have to clearly state who can access the account and how the vote was done. Can I open a corporate bank account online?
Yes, some banks allow you to open an account online. You just have to complete the necessary forms and present the required documents electronically. They will typically have deadlines for you to submit the supplemental documents. How much does it cost to open a corporate bank account?
Many banks don't require a minimum deposit to open an account. Some may have a monthly fee, but it can often be waived by maintaining a minimum balance. How long does it take to open a corporate bank account?
Applying for an account online can take about 15 minutes, but the actual processing time may vary per bank. If you're applying in person and have all the necessary documents, it can be done in a day.
A corporate bank account is especially important for corporate businesses. To open an account, you'll be asked for documentation about your business. Individuals with access to the organization's account must also provide information for identification and verification purposes. Also, only a select few can become authorized individuals to access the account. These are typically the owners with a specific percentage of ownership, be it 10% - 25%. You can make the application in person or online. If you are opening an account in person, some banks require the presence of specific individuals. As long as you can provide the needed documents, you'll be able to easily open a corporate account.
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