Open a Business Bank Account

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What is a business bank account? Do I need one?

Most of us have a personal bank account or two. You may have a checking account that you use to pay your bills and monthly expenses. You may also have a savings account where you store extra cash for a “rainy day” or for retirement years down the road. When you start a business, it’s typically a good idea to open a business bank account. Business bank accounts allow you to keep your personal money separate from your business money. Common business accounts include a checking account, savings account, credit card account, and a merchant services account. Merchant services accounts allow you to accept credit and debit card transactions from your customers.

What are the benefits?


Business banking offers limited personal liability protection by keeping your business funds separate from your personal funds. Merchant services also offer purchase protection for your customers and ensure that their personal information is secure. 


Much like a professional email ([email protected]), a business bank account will allow your customers to use credit cards or make checks out to the business instead of directly to you. Additionally, your employees will have the ability to handle day-to-day banking tasks on behalf of the business if you authorize them to do so.


All businesses are different, but most of the time we need capital to start and grow. If there is ever an emergency, perhaps the need of new equipment to fulfill a massive order, your business bank account may come with a line of credit you can use to make said purchase.

Purchasing Power:

Playing off of the preparedness benefit, credit card accounts will help you establish a credit history for your business so you can make large startup purchases.

What documents do I need to open a business bank account?

Employer Identification Number (EIN)

Your EIN is your business version of your personal Social Security number. It is how the IRS can identify your business. If you are a sole proprietor, you likely won’t need to provide an EIN, just your social security number will suffice. 

Business Formation Documents

Business formation documents could be things like a certified Certificate of Organization or even a trade name form. You should contact the bank you would like to open the account with to see what their requirements are for formation documents.


Ownership Agreements

Items like an operating agreement could be required to open an account if multiple business partners will have access to the account. Again, check with your bank to see if this will be a requirement to get started.


Frequently Asked Questions

Do you have questions about opening a business bank account? You should consider checking out our Resource Navigator. It houses the contact information of 400 of our most helpful partners from across the state, like the Small Business Development Center, who provides free to low-cost assistance to Iowa entrepreneurs and small business owners.

Q: Does having a business bank account make my business more legit?

A: Yes, having a business bank account can make your business more legitimate in the eyes of customers, vendors, and financial institutions. A business bank account shows that there is separation from your personal finances and business finances, a professional appearance, more access to financial services, and even compliance with regulations.

Q: Do I have to have a business bank account?

A: The legal requirements for having a business bank account vary depending on your location and the type of business entity you have. In many cases, it is not required by law to have a separate bank account for your business, especially if you are a sole proprietorship.

Q: Will a business bank account help me get a business loan?

A: Having a business bank account can be helpful in getting a business loan. Some ways that a business bank account can help you get a business include the demonstration of cash flow, building relationships with lenders, establishing creditworthiness, and documentation needed for providing funds.

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NOTICE: The information included on this website is to be used only as a guide. It is not intended to cover all provisions of the law or every taxpayer's specific circumstances.


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