What Is A Business Checking Account?

Ready to learn everything you need to know about business checking accounts?

We cover exactly what business checking accounts are, how they work, when you need one, how much they cost, and more.

What Is A Business Checking Account?

A business checking account is a bank account where a business can deposit, withdraw, and transfer business funds. Checking accounts are ideal for everyday business expenses or funds that aren’t going to sit in an account for long, like payroll, supply purchases, etc. Long-term funds are a better fit for business savings accounts.

How Does A Business Checking Account Work?

Business checking accounts work as a sort of holding place for business funds that you want easy access to. With a business checking account, you can:

• Transfer money to and from your account (typically via wire transfers or ACH)
• Deposit cash
• Make withdrawals
• Deposit checks
• Write checks
• Earn checking-specific rewards like APY and/or cashback
• Track expenses

Many business checking accounts offer additional feature perks like cash flow management, business credit score building, invoicing, or even more unique services like built-in bookkeeping or tax support.

Business Checking Accounts VS Personal Checking Accounts

A business checking account operates in the same way as a personal checking account. The main differences are that business accounts are for business funds and personal accounts are for personal funds. A business checking account adds liability protection for you and your business.

Each type of account also offers slightly different features that better target each specific audience. For example, personal checking accounts often include personal credit score building, while business accounts often include features like invoicing or accounting software integrations.

Learn more about the differences between personal and business checking accounts.

The Benefits Of A Business Checking Account

Business checking accounts keep you protected and prepared for your small business future. Having a business checking account is a professional addition that shows you are serious about your business and the funds it receives. Plus, you get a slew of checking features like expense tracking and cash flow management that make managing your business finances easier.

Here are some of the many benefits of having a business checking account:

• Easily moving money in and out of your checking account
• Potentially earning cash-back or APY on your checking balance
• Tracking expenses & managing cash flow
• Separating business & personal expenses
• Protecting you and your business by reducing your liability as a business owner
• Displaying a professional business image
• Integrating directly with accounting software for easier expense tracking
• Improving chances of getting business credit cards and loans

How Much Does A Business Checking Account Cost?

Business checking accounts generally cost between $0-$10/month. Some business checking accounts have much higher monthly fees, but usually, it’s because they are offering an additional service or unique feature set, like Lili Bank, which costs up to $35/month but includes bookkeeping services built into its checking account.

If your business checking account costs more than $10/month and doesn’t have a way to waive that fee or a unique feature set to justify the cost, you should consider a bank off our list of the best business checking accounts instead. There are plenty of secure, reliable checking accounts with great features and no monthly maintenance fees whatsoever.

Business checking accounts come with more fees than just a monthly maintenance fee. Some fees are quite common, while others are less common and fairly avoidable like stop payment fees and card replacement fees.

When Do You Need A Business Checking Account?

If you have a business, odds are you need a business checking account.

Besides it being easier to keep your personal and business funds separate from each other, a business checking account decreases your personal liability.

When you set up your business structure in a way that limits your liability as well (as is the case with a Limited Liability Corporation, LLC) it’s crucial to keep your business and personal money separate. This way, your personal money can’t be touched if you were to be sued — or otherwise owe more money than your business is able to afford.

also for opening business credit cards or qualifying for business loans, a business bank account is almost always required.

How To Open A Business Checking Account

To open a business checking account, you’ll first need to decide on the best online bank account for you. Look for rewards, features, transaction types, and transaction limits that match your business’s needs and budget. Once you’ve found the right account, you usually can fill out a quick online application.

You’ll be asked for certain documentation to prove you’re eligible for opening an account.

What Do I Need To Open A Business Checking Account?

In order to open a business checking account, you will need several documents. This most often includes:

• An Employer Identification Number (EIN) and/or SSN
• Business formation documents depending on your ownership structure
• A business license

Check with your bank to see about any additional requirements, and then gather all of these things together and visit the bank or credit union of your choice in person or online. Our step-by-step guide on how to open a business bank account can provide even more guidance.