Updated: Mar 7, 2022
Learn step by step, the process freely how to open a bank that will separate personal finances from commercial finances.
This mind process includes using the Social Security Card, to open up a new business. This business you will open first, is a bank. You now become a partner with the bank and you collect the same methods of payments and you follow the same rules and regulations for your new franchise. 🥇
Start your journey by activating this exact bank account to become a multi-millionaire. Learn the strategies how to not use personal credit cards at all, or take personal loans at all. After activation of this particular account, you will be listed in the system to hold unlimited cash flow credit.
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How To Open a Sole Proprietorship Bank Account in 5 Steps
Setting up a bank account for a sole proprietorship is a straightforward process that you can accomplish in five easy steps. Begin by registering your business name, finding the best account, and assembling the required documents. When you have the required documents ready, apply online or in person at your local branch. Lastly, fund your account so you can begin using it.
1. Register Your Business Name
If your business operates under any name other than your personal name, it’s a good idea to register your fictitious business name through the register of deeds or county clerk’s office before you apply for a bank account. This costs anywhere from $5 to $100.
Separately, you can register your business with your secretary of state’s office, county, or other local business agency. Sole proprietorships and general partnerships don’t usually require registration, but this varies by state. Some states allow you to register your business online, but most states process applications in person or by mail. You can also use a legal filing service to register your business for you. LegalZoom is one service that can help you with this. Registration costs vary depending on the state where you live, your industry, and the type of business you want to form. Generally, costs range from $100 to $800. Whether you apply online, in person, or by mail, it can take up to 30 days for approval.
2. Research to Find the Best Bank Account
Set aside some time to find the bank account that will work best for your sole proprietorship. Take a close look at locations, products and services, fees, and terms. This article on how to choose a bank for your small business can help you make this decision.
Look at any features important to you when it comes to a bank account, such as payment processing software integration, or accounting software integration. Decide whether you prefer an online bank or a traditional one with branch locations and ATMs if you’ll be making cash deposits.
It’s important to consider the following factors when choosing a business checking account:
Terms and fees: Business checking accounts often charge fees for account activity, including minimum balance, number of transactions, wire transfers, cash processing, and ATM use. Most banks offer options to waive monthly service fees if you maintain a minimum balance. Digital banks are usually free of many of these fees.
Account features: Most business accounts come with online and mobile banking, but some have additional business services like invoicing, payment app integration, and business lending. Choose an account that will help support your business activity.
Bank network: Most traditional banks offer both physical branch locations and an online banking experience. Online-only banks offer a digital banking experience, with some providing in-network ATMs or third-party ATMs. If your business is cash-heavy, you’ll need convenient access and high deposit limits; a traditional bank would be a better option because ATM usage for cash deposits is limited with digital banks.
Best Business Checking Accounts for Sole Proprietors
A business savings account is a great interest-earning tool for sole proprietors to set aside money for future expenses and unexpected expenses and to keep personal savings separate from business savings. These accounts are a good match with business checking accounts to help you grow your deposits over time.
Consider the following factors when selecting a business savings account:
Terms and fees: Some savings accounts have monthly maintenance fees when you don’t keep a minimum balance. Fees may vary depending on the bank, so you should review your account terms for minimum balance fees.
Account features: The best savings accounts offer high annual percentage yields (APYs) that can help you maximize your dollar. You may also have access to financial management tools.
Bank network: Although traditional banks take cash deposits, most digital banks don’t have physical locations and don’t accept cash deposits. If you need in-person access to your savings account, a traditional branch with nationwide locations may be best.
Best Business Savings Accounts for Sole Proprietors
3. Gather the Required Documents
Not all banks require the same documentation to open an account. A sole proprietorship requires the least amount of documentation necessary. Be sure to bring the following:
Valid personal identification (ID)
Doing-business-as (DBA) certificate if your business name is different from your personal name
Social Security number (SSN)
These are sometimes required by the bank:
Employer identification number (EIN), which is the same as a business tax identification number (tax ID)
Business license may also be required depending on your industry
4. Apply Online or In Person
You can apply either online or in person at a traditional bank, although some banks require an in-person application. If you’re planning on expanding your business or you think you’ll want to add more products or services to your business account, such as a loan or line of credit, applying in person may be a better option than applying online. When you apply in person, you can build a relationship with your bank representative who, over time, can help you reach your financial goals.
Online applications are more convenient and can be done at any time, but you’ll need to send your business documentation via email within the first two weeks of opening an account. Since digital banks rarely have physical locations, have all your documentation ready when you apply online.
5. Fund Your New Account
Once your account is open, the quickest way to fund it is by doing an electronic transfer from another account. If your bank allows deposits via check or cash, you can make the deposit at a branch or ATM.
Some banks have an initial probationary period where deposited checks may be held longer than normal for additional verification. When a bank places a hold, you won’t have access to your funds until the hold has expired―usually a few extra days. This cautionary period usually lasts from one to six months, depending on the bank.
Separating Your Business and Personal Finances
You could use a personal bank account for a sole proprietorship because it’s not considered a separate business entity. However, a separate business bank account is recommended to keep your personal and business finances separate. With a business account, you can readily track your expenditures and income and more easily recognize areas of opportunity to grow or reduce expenses.
A business account will help keep your finances organized throughout the year and make it much easier to manage during tax season. If you’re interested in learning more, check out our article on separating business and personal financesfor more tips and recommendations.
Opening a business bank account for your sole proprietorship helps keep your business finances organized. With your ID and business documentation, you can open an account online or at your local branch. Be sure to choose a bank account that offers the features and fee structure that aligns with your business. Additional information on the different types of bank accounts and their requirements can be found in our article about how to open a business bank account.