Business Bank Account

Business Bank Account Requirements

Keeping your business money separate from personal monies is a legal requirement for most business forms and a smart practice for proprietors and partnerships. As you go through the steps of getting your business established and your accounting systems in order, opening a business checking account is inevitable. You may also need or want a business savings, payroll or merchant account. All of these are possible with a simple set of credentials that legal businesses should be able to provide.

Tax Identification Number

Regardless of your form of business or state, banks always need your tax identification number to record who owns and operates the account. For a sole proprietor, this can be either a Social Security number or a business Tax Identification Number. For other forms of business, you can use either a Tax Identification Number or an Employer Identification Number issued by the Internal Revenue Service using Forms SS-4 or SS-5. Additionally, if you have multiple signers or authorized agents on your account, the bank will require the Social Security numbers of all authorized parties for federal security and compliance purposes.

Legal Documents

To have a business account, you have to show you have a business. For corporations, limited liability companies and limited liability partnerships, proof consists of your articles of incorporation or other organization documents filed with your state as well as the letter of approval from your state. General partnerships must show either a partnership agreement or proof of state registration. Sole proprietorships must show either proof of a legal business name issued from their county or a business license showing the business name and owner.

Variations

Requirements can vary by state and bank. Some banks and states allow for opening accounts online or by phone if you have all the information handy, other jurisdictions and banks may be stricter and require in-person applications. Avoid complexities by checking with your bank and going in if required with all your documents and signers for an in-person application.

Opening Deposit

Every account has to have something in it. Banks offer opening deposit options from $100 to many thousands of dollars. Accounts may have no fees or pay interest in exchange for larger resting balances. You will also find differences in the minimums required for payroll and merchant accounts, which usually require higher resting balances as compared to small business checking accounts. Study your bank's account offerings to choose which makes sense for your business. Consult a banking representative if you need help.

How to Apply for a Business Bank Account

Whether your business is brand new or has been in operation for many years, a separate checking and savings account is important. As a business owner, you need to keep careful track of every dollar the business takes in and every dollar it pays out, and it can be difficult to gather that information if you comingle your personal and business funds. Fortunately, setting up a bank account is one of the easiest things you will do as a business owner.

Step 1
Check your local newspaper for business account specials run by local banks. Many commercial banks are eager to attract business customers, and they are often willing to provide some attractive incentives to do so. Depending on the bank, you might be able to get a cash bonus, a free credit card merchant account and more.

Step 2
Contact the bank where you have your personal accounts if you are unable to find any suitable specials. Keeping your personal and business accounts in the same institution is more convenient than using two different banks. In addition, many banks offer discounts on fees and expenses for customers who keep a sufficient balance in their accounts, and your business account might qualify under those balance requirements.

Step 3

Check the terms and conditions of each business account the bank offers. Consider the balance requirements of each account, as well as any charges and expenses. Keeping your expenses low will give you more money to invest in your business. If your own bank does not offer a suitable account, it will be worth your while to shop around for a better deal.

Step 4
Complete the business bank account application carefully. If your business uses an Employer Identification Number, or EIN, be sure to put it on the application. If you use your personal Social Security number for your business and pass the income through to your personal tax return, use your SSN instead.

Things Needed

Newspaper
Bank account application
Employer Identification or Social Security Number

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Easy Tips and Ideas to Start Business

Although anyone can start a business, many people fail because of a bad product or improper research. If you want to start your own business, you can improve your chances for success before you even begin. In order to make your business successful, start strong and make sure that your idea will hold out for the long haul.

Have a Good Product

Ensure that you plan to sell something useful. Although you may think that your product is important or special, that doesn't mean the general public will agree. Ask friends, family and strangers what they think of your product. If they don't seem that interested, ask them why. With their suggestions, you can either improve the product or scrap the idea completely. According to Brad Sugars of Entrepreneur magazine, most small businesses fail because they sold a product that didn't have an adequate market. This also applies to small businesses that provide a service. A lawn-care business might be useful for part of the year in a northern state, but it is in-demand year-round in the south. Consider whether people will actually want to use your service and get constructive advice from those not afraid to give their opinion.

Research Local Businesses

Research local companies before starting up your own business. This will not only give you an idea of the amount of competition you will have, but it will also help you price your product or service. If you're looking to start a wedding photography business, you may find during your research that the market is over-saturated in your area. If not over-saturated, you should contact each business and ask them for a price list. Alter your prices so you can stay competitive with the competition in town. Researching similar local businesses will also help you decide where to locate your business location. Try not to start up a store or office close to another business of your type. If your small business is located away from similar business types, this will cause locals to choose you over businesses that are farther away from where they live.

Get Professional Advice

You may know someone who has started their own successful business. Ask him for advice and listen to his stories of how he started his company. You may gain useful advice on the good and bad ways to start a business. Local entrepreneurs can also introduce you to local product providers or advertisers that you may not have met without their help. Accept any advice with open arms, especially if the advice is coming from someone successful in the area.

How to Calculate Business Start Up Costs

Starting a business in no easy endeavor. It takes a great deal of research, perseverance and hard work. While sweat equity will make your small business more successful, you will most likely need real capital to get the business started. Before you start raising capital and/or investing your own funds, the first thing you need to do is determine the total start-up costs.

Step 1

Determine your costs of sales. For most small businesses this means inventory, the cost of raw materials, manufacturing equipment, shipping, packaging, and warehousing. However, not all businesses sell products. In this case, the cost of sales is primarily the direct labor involved in making the sale. For example, to open a small shoe business entails purchasing enough inventory ($10,000) to stock the store.

Step 2

Determine professional fees. Planning your business structure, i.e., limited liability corporation or general partnership, means hiring an attorney. There may also be the need to pay an attorney for help with establishing trademarks, copyrights, and patents. In this scenario, that puts total professional fees at an estimated $20,000.

Step 3

Determine technology costs. Technology can greatly reduce the cost of labor for small business if used effectively. Most small businesses require computers, printers, cell phones, website development, Internet access, software applications, information security, data storage, and outsourced information technology (IT) consulting. If the cost of technology is $10,000 to start, add an additional $5,000 a year for maintenance (hint: maintenance is not included in start-up costs).

Step 4

Determine administrative costs. This varies with business types and may include items such as business insurance, office supplies, product packaging, parking, rent, express shipping, desks, chairs, fax machines, phones, or anything else necessary to operate the business daily. A good estimate for start-up administrative costs would be $5,000 for the first six months.

Step 5

Determine initial sales and marketing costs. Now that you have your product, you need to let folks know about it. Sales and marketing costs generally include marketing materials for presentations, printing stationery, business cards, advertising, trade show events, and public relations. These initial sales and marketing costs can add up to $3,000.

Step 6

Determine the wages and benefits needed to secure a staff. This includes employee salaries, benefits, workers compensation, and payroll taxes. Let's put the cost of wages and benefits estimated at $20,000 for the first three months of business.

Step 7

Add all costs associated with starting the business for a total. Be sure to only include business start-up costs that will be incurred in the first three to six months of operations. For this example, the calculation is: $10,000 + $20,000 + $10,000 + $5,000 + $3,000 + $20,000 = $68,000.

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