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Can You Open a Business Bank Account Online?

Written by Marc Guberti

Marc Guberti is a Certified Personal Finance Counselor who has been a finance freelance writer
for five years. He has covered personal finance, investing, banking, credit cards, business
financing, and other topics.
Marc’s work has appeared in US News & World Report, USA Today, Investor Place, and other
publications. He graduated from Fordham University with a finance degree and resides in
Scarsdale, New York.
When he’s not writing, Marc enjoys spending time with the family and watching movies with
them (mostly from the 1930s and 40s). Marc is an avid runner who aims to run over 100
marathons in his lifetime.

Updated October 19, 2023​

6 min. read​

If you recently started a business, you may be wondering if a business bank account makes sense for your company. Of course, you already have a personal bank account, and money can go into that account instead. However, creating a business bank account has several advantages, and if you look at online banking solutions, those advantages multiply. 

Online banks have better perks than most financial institutions because these digital banks have no overhead. They also tend to be more modern with their integrations. In addition, smaller fintech companies can move quicker than financial institutions due to less red tape governing decisions. Discover how online banking can become the optimal solution for your business banking needs.

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Conventional vs. Online Business Bank Accounts: The Difference

Traditional and online banks both let you store money. While online banking may feel like the Wild West to someone who hasn’t gotten started, most of these banks are FDIC-insured, meaning they have the same protection as traditional banks and credit unions. Since online banks have fewer overhead expenses, they can pass those savings onto consumers with higher interest rates on savings accounts. As a result, you can make more money stashing your money in certain business bank accounts than putting them into blue-chip dividend stocks. That’s how good some of these savings account APYs get. 

These banks also have a key difference in how you withdraw funds. Traditional banks are simple. All you have to do is find a local branch, pay a visit, and you can deposit and withdraw funds. Online banking isn’t as simple, but that doesn’t necessarily make it complex. Instead of visiting a local bank, you have to visit an ATM to deposit and withdraw money. Most online banking companies have ATM networks across the United States which makes it easier to get fee-free withdrawals. Some fintech companies refund ATM fees that you may incur since they save a lot of money by not having physical branches. You can find ATMs at your local Walgreens, CVS, Target, and other retailers. Many online banks include a map feature that lets you locate the nearest ATM. 

It’s the same concept. You drive to a nearby location to deposit and withdraw cash. However, you may visit a retail store instead of a traditional bank. If you receive physical checks, you can take pictures of both sides of the check and automatically deposit it without leaving your home. Many financial institutions also have this mobile check deposit feature to save time if you receive physical checks.

The Benefits of Having a Business Bank Account Online

Having an online business bank account provides several advantages for small business owners and corporations.

Separate Your Finances

A business bank account lets you separate your business finances from your personal finances. Having no boundaries and blurry lines can result in you using personal funds for your business. Many business owners invest in their companies, but blurry lines can result in business owners taking excessive risks with their personal finances. It’s also easier to distinguish personal and business expenses, which can help with budgeting.

Simplify Tax Season

Tax season can get complicated if you use one bank account for all of your transactions. A separate business bank account gives you a point of reference for all of your business transactions, and everything else would be personal transactions. This clarity can save you hours of time browsing through the paperwork. Giving your accountant your tax documents and only supplying one bank account will complicate their efforts and result in a higher bill. You can save money every tax season with a business bank account, and you can even find more of your tax deductibles this way.

Legal Protection

What happens if someone sues your company? How does that impact your personal finances? If you do not have the necessary protections in place, a plaintiff can go after your personal assets. Creating a business bank account and setting up your business as an LLC turns your business into a separate entity, almost as if it were another ‘person,’ from a legal perspective. While a plaintiff can target funds in your business account, if you go business goes bankrupt, lenders and other plaintiffs cannot pursue your personal finances. 

Build Business Credit

A business checking account helps you build credit with each transaction and on-time payment. Business credit is critical for small business owners who seek additional financing. Lenders will ask about your score before giving you a loan since business credit scores offer a snapshot of how effectively you manage debt. A low credit score will block you out of many financing opportunities, while a high business credit score can help you secure a lower interest rate. An online business bank account makes it possible to grow your credit score with everyday transactions.

Business Software Integrations

Traditional banks also offer business software integrations, but online banks usually have them beat. You can integrate a business checking account with some of your favorite tools, like Square, Shopify, Quickbooks, and others. These integrations help business owners save time and simplify the user experience.

Higher Savings Rate

This is another area online banks trounce financial institutions. Since online banks have no physical branches, they save a lot of money. They don’t have to pay for mortgages, property taxes, staff, and maintenance for any of these properties. So where does all of that extra money go?

While that extra money goes into many areas, online banks use some of that money to maintain competitive interest rates for your savings account. As a result, you can earn respectable cash flow by doing business with an online bank. Some virtual banks offer savings rates that beat what you’d get from most dividend stocks and bonds.

Demonstrate You Take Your Business Seriously

A business bank account looks more professional than a personal account. It can make you more appealing to lenders when you ask for capital and can put you in a better frame of mind. When you have a business bank account, it’s clear that your business is more than just a hobby.

ATM Convenience

After getting over the learning curve for depositing and withdrawing cash from an online bank, you may find it more convenient. Online banks have expansive ATM networks, and you can find many of these ATMs at popular retailers. Visiting Target to get some clothing and gifts for the family? You can deposit or withdraw cash at one of their ATMs instead of making a separate trip to your bank. This saves the time and money you would have to spend on gas. If you receive a check, you can deposit it anywhere by taking pictures of it with your smartphone. Make sure you have the online banking app opened when taking the picture. Online banks walk you through this process, and many financial institutions offer this too.

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What Do You Typically Need to Open a Business Bank Account Online

Regardless of where you do banking, you will have to provide a few documents to provide your identity, your company’s identity, and that you own the company. Each online bank and financial institution has different requirements, but you will need the following:

  • Employer Identification Number (EIN)
  • Social Security Number (SSN)
  •  Business License
  • Business formation documents
  • Ownership agreements

Some banks will also require an initial deposit. They may have account minimums and other restrictions, but you don’t see as much of that with online banks. Since online banks have less overhead, they can afford to have no minimum balance requirements and do away with annual fees.

Things to Consider Before Choosing an Online Bank for Your Business

The online banking world has grown significantly over the past decade. Consumers have more choices, and it’s important to distinguish great banking companies from mediocre ones. Here are some things to keep in mind when shopping around for an online business bank account.

Fees and Charges

How much does it cost to open and maintain your bank account? Some online banks do not charge annual fees. Many of them have no hidden fees either. However, each online banking company is different. You should read the fine print before committing to a bank.

Mobile App

Online banks need mobile apps to function, and consumers should consider the functionality of the app. A mobile app with poor design is more difficult to use. Mobile banking apps should have seamless designs that make it easy to access important details when you need them. Many mobile banks let you do a demo to experience their app before you download it and create an account. They also provide screenshots to showcase how the app looks and works.

Customer Service

If you have a question about your bank account and need an issue resolved quickly, you will have to reach out to customer support. Online banks invest in customer service so customers get their issues resolved, but some support teams are better than others. Every bank will say they have the best customer service, but reviews will tell the truth. Many mobile banking apps have thousands of reviews, and you can see from those people if customer service is top-notch or in need of improvements. You should also consider how you would like to communicate with customer support representatives. Some banks let you call, email, or live chat with representatives, while others only offer some of those communication channels.

ATMs, Physical and Virtual Cards

A vast ATM network lets you avoid fees and take shorter drives to deposit and withdraw cash. Many banks also provide you with physical and virtual debit and credit cards. Make sure a bank provides the cards you need and has enticing rewards before creating your account.

Business Tools Integrations

Online banks usually do a good job with business tool integrations. Some fintech companies display integrations on their websites, while you may have to call other banks or read the reviews to see their business software integrations. If a fintech company does not advertise its integrations, chances are it doesn’t have as many as the top online banks in the industry.

Payments and Transfers

Most online banks make it easy to receive payments and transfer funds. It’s a basic feature that every bank has. Just make sure the app makes this simple, and you have no limits on the number of transactions you can make each month.

Access to Business Funding

Some online banks only let you manage your finances and then stop at that point. Others let you open a business checking account and then help you get loans, lines of credit, and other financial products that can fund your company.

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