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How (and Why) to Open a Small Business Checking Account

Small Business Checking Account

Sometimes I will get a potential client that is using their personal bank account for their business.  Most of the time they’ve just started their new business, are new to freelancing, or are bloggers/Etsy-sellers/etc that have just started turning a real profit.

Whatever the case may be, and whether or not they hire me, I immediately advise these folks to get a small business checking account and separate their personal and business finances.  Here’s why, and how you can go about getting a small business checking account.

Why You Need a Small Business Checking Account

There are a couple of important reasons that you need a separate banking account for your small business—some legal, and some financial.    The most critical of these is protecting yourself from legal liability.  If you have tried to protect yourself by forming an LLC or corporation, but don’t keep your business and personal funds separate, you risk losing that protection.

Second, and close to my heart as a bookkeeper, is keeping your books clean and easily auditable.  God forbid the IRS chose to audit your business (which they probably will someday), it is MUCH EASIER to prove your revenue and expenses if they aren’t jumbled together with personal items.  In this same vein, it also saves you (or your bookkeeper) time when doing your monthly bookkeeping, reconciliation, and reporting.  Sorting thru and excluding personal expenses from your bookkeeping software is time-consuming and a waste of money.

What You’ll Need to Apply for a Small Business Checking Account

Gathering all the necessary documentation BEFORE you apply for a checking account can save you time and potential headaches.  The more prepared you are, the more likely the bank is to grant you a small business checking account.  At a minimum, you should have the following items handy:

  • Your federal tax ID, also known as an Employee Identification Number (EIN).
  • Business license and/or name filing document (such as a DBA)
  • Articles of Organization or Articles of Incorporation for LLCs, Partnerships and other business entities that aren’t a Sole Proprietorship
  • You driver’s license
  • Expected cash flow. This should show estimated monthly cash inflow and cash outflow and estimated number of transactions per month.  If you are already an established business with a robust bookkeeping system, this is as easy as pulling your last three months of Cash Flow statements.

Other things to consider before opening an account

Do you already have a business credit card thru a bank, or are you planning on getting one?  Having your credit card and checking account at the same bank can, in some instances, save you time and money.

You might also want to consider how “tech-savvy” a bank is before opening an account there.  As a busy entrepreneur, you probably rely on technology and automated systems to make your life and business manageable.  Does the bank offer automated feeds to Quickbooks Online?  Can you deposit checks virtually via a mobile app?  These are things worth considering before moving your money there.

Banks that Offer FREE Small Business Checking Accounts

I hate paying someone for the privilege to bank with them, and I suspect you do too.   Most local credit unions will offer free small business checking accounts, as will some of the larger national banks.

Here are the banks and credit unions that I’m aware of that offer free checking accounts to small business owners.  Obviously, not all these institutions are in all states, but this is a good starting place.

ONLINE banks that offer FREE small business checking accounts

In alphabetical order:

  • Bofl Federal Bank
  • EverBank
  • Small Business Bank

Sticks and bricks financial institutions that offer FREE small business checking accounts

In alphabetical order:

  • 1st State Bank
  • 5Star Bank
  • Affinity Federal Credit Union
  • Albina Community Bank
  • Alliant Credit Union
  • America First Credit Union
  • American Founders Bank
  • Ameris Bank
  • Amplify Credit Union
  • ANB Bank
  • Andes State Bank
  • Apple Bank for Savings
  • Arbor Bank
  • Arizona Bank and Trust
  • Arthur State Bank
  • Artisans Bank
  • Arvest Bank
  • Avenue Bank
  • Bank 1st
  • Bank Forward
  • Bank Iowa
  • Bank of Bozeman
  • Bank of Hawaii
  • Bank of Idaho
  • Bank of the Ozarks
  • Bank of Utah
  • Bar Harbor Bank & Trust
  • BBVA Compass
  • BECU
  • Bell State Bank & Trust
  • Big Horn Federal Savings Bank
  • BNC National Bank
  • Cathay Bank
  • Central National Bank
  • Columbia Bank
  • Columbia Credit Untion
  • Comerica Bank
  • Connexus Credit Union
  • Digital Federal Credit Union
  • Ent Credit Union
  • Farmington Bank
  • First Citizens Bank
  • First Merit Bank
  • First National Bank of Omaha
  • First National Bank of Pennsylvania
  • First Niagra Bank
  • First Utah Bank
  • FirstBank
  • Flagstar Bank
  • Gulf Coast Bank & Trust
  • Harborstone Credit Union
  • Home Bank
  • Horizon Bank
  • Huntington National Bank
  • Iberia Bank
  • Liberty Bank
  • MainSource Bank
  • MoreBank
  • National Cooperative Bank
  • Navy Federal Credit Union
  • Northrim Bank
  • Old National Bank
  • Opportunity Bank of Montana
  • Partner Colorado Credit Union
  • PlainsCapital Bank
  • Popular Community Bank
  • Space Coast Credit Union
  • State Street Bank
  • Summit Bank of Kansas City
  • The Bank of Princeton
  • The First
  • Trustmark
  • U.S. Bank
  • United Bank
  • United Teletech Financial Credit Union
  • Washington Trust
  • Westbury Bank
  • WESTconsin Credit Union
  • Wintrust Bank
  • Zions Bank