When you own a small business, every dollar counts. Your business can’t reinvest money spent on banking fees. You can keep your money where it belongs – with your business if you open a free business checking account.
Businesses can open free business checking accounts with online institutions, large banks, local banks, and credit unions. There is no fee for these accounts, however they may charge fees for certain services, such as wire transfers, or in certain situations, such as overdrafts.
The goal of this guide is to explain everything you need to know about business checking accounts and provide tips you can use to compare accounts and choose the right one for your business.
Why do you need a business checking account?
Side hustlers may avoid opening a business checking account due to the higher fees and paperwork requirements.
Business checking accounts offer a number of excellent benefits for small business owners.
1. Simplifying the tax code
Separate bank accounts highly recommended for small business owners. Having a business checking account not legally required for a sole proprietor-the person who owns the business and is personally responsible for its debts-but it’s still an economic and tax advantage to have one.
2. A sense of professionalism and credibility
As a hobby, many side businesses get off to a profitable start. You may still view your Etsy business as a fun hobby even as your magical tea towels earn you more and more sales, if you started your shop on a whim to sell your unicorn embroidery.
Even if your small business started out as a hobby, a business checking account adds professionalism and credibility. If payments and transactions undertaken from an account that uses the name of your business, your clients and customers are more likely to trust you.
3. Limitation of Liability
Separation between you and your business is one of the advantages of registering your business as an LLC or corporation. If something goes wrong at your business or someone sues you for your business, this can shield you from personal liability.
4. Setting you up for future growth
Having a business checking account gives your small business more options for future growth, regardless of whether you intend to grow it. If you decide to apply for a business credit card in the future or for a business loan, having a business checking account legitimizes your business.
What You Need to Do to Open a Free Business Checking Account Online
Let’s take a look at the steps you can take in order to actually open an account.
You’ll find that these may differ slightly based on your account and platform (desktop vs. mobile). Generally speaking, however, here are the steps you can take to open a free business checking account online without a deposit:
1. Fill out your basic personal information.
It’s very likely that you will have to provide some basic personal information when you click on the “sign up” or “get started” button to open your free online business checking account. You may need to create an account first, where you enter your name, email address, and create a password. When you receive an email confirmation, you should log in.
You will need to provide your first and last name, your address, your email address, and your phone number, regardless of the type of business you own. In addition to your name, date of birth, and social security number, you’ll likely asked for a percentage of ownership in the business. It may be necessary for you to provide the same information for any other owners of the business in addition to yourself, depending on which small business bank you are dealing with.
As proof of your identity, you may also asked for a copy of your driver’s license or other valid government identification.
2. Provide information about your business.
Following the completion of your personal information, asked about your business. You’re likely to be asked for your business’s legal name, DBA (if applicable), address, entity type, industry, revenue estimate, and EIN (if you have one).
You may be required to include different documentation depending on the type of entity you have formed:
- As a sole proprietor, allowed to use your social security number instead of an EIN. Furthermore, you may require submit documents that prove you have a business license or registered a business name (i.e. DBA).
- If you are part of a partnership, you may need to provide a copy of the partnership agreement as well as proof of your business license.
- If you form an LLC, you must file articles of organization with the state.
- For corporations, you will need to present your articles of incorporation.
3. Submit your application and agree to the terms and conditions.
You’re likely to be asked to review an agreement document after you’ve filled out all of the information about your business and attached your business formation documents. Your application will then submitted for approval to the bank.
Generally speaking, since all of these banks offer online banking, your application will be approved very quickly as long as all the information matches. Upon approval, you’ll receive your login information, as well as a business debit card, and you can sign in to use your account immediately.
The benefit of a free business checking account with no opening deposit is that. At this point, you will probably want to transfer funds to begin managing your finances. However, you’re not required to do so.
The Bottom Line
As a result, more entrepreneurs, freelancers, and contractors have been switching to digital banks that offer free business checking accounts. Because these accounts offer the flexibility to manage your funds wherever you are. You won’t have to worry about excessive charges, transaction limits, or maintaining a fixed balance.
Also Read: Ultimate Guide to Quote to Cash: A small business guide
2 Comments