The Basics of Small Business Checking Accounts 

Small business checking accounts are necessary and valuable tools for businesses looking to increase efficiency in cash flow, minimize risk, and increase their profit margins. There are many benefits and factors to consider when opening a small business checking account in addition to your personal account, but if it seems overwhelming- let us outline the basics!


What’s the difference between a business and personal checking account?


Small business owners opening their business account for the first time will be happy to see that they are structured very similarly to what they are used to seeing in their personal checking account. However, there are a few key differences between the two including limits on the number of free transactions your account can process, limited free cash counting by your providing institution, and probably the most salient- the opportunity to use more advanced payment methods, like merchant services, to better serve clients who prefer to pay electronically. In fact, you must open a small business checking account for a customer to pay the company, and not you individually, with a credit card!

What are the benefits to opening a business checking account?

There are many benefits for small business owners when they open a small business checking account, and some of the most technical of these include the following: 

  • Entitlements (where a trusted business partner can access the account as well)
  • Extra Debit Cards (which can be lent to employees taking potential clients to dinner, for example)
  • Positive Pay (a fraud prevention system verifying checks made out to your business)
  • Personal Liability Protection (thanks to your business’ funds being separated from personal funds) 

Moreover, when your personal accounts are separate thanks to a small business checking account, your personal credit ranking is unaffected, your funds are protected from liability related to your business, and your clientele will view your business as more professional. 

Did You Know? 

Over 91% of small businesses in the USA 

use a business checking account! source

What to look for when deciding on a business checking account

Deciding where to acquire your small business checking account and what factors to consider when looking at different account providers is an important first step. Most accounts share characteristics like a minimum operating and opening balance, monthly service fees higher than those of a personal checking account, limits on the number of free transactions and cash counting possible, and whether or not the account could integrate with your preferred accounting software. [maybe plug bumgardner here?] Since a small business checking account is an important investment and tool for your business, let Bumgardner help make it as seamless and successful as possible!

How to open a business checking account

Once you have decided to open a small business checking account, the requirements needed to open said account may vary slightly depending on who you decide to bank with- but here is a list of the common requirements and documentation needed: 

  • Cash for an Initial Deposit
  • Your Business Plan
  • Two forms of identification (usually a government issued photo ID and a statement with your name listed will suffice)
  • Your tax ID number (aka: your Employee ID Number. Visit the IRS to acquire your EIN)
  • Business documentation (often a “Certificate of Good Standing” supplied by a Secretary of State’s Office or your state’s Division of Corporations )
  • Assumed name certificate (supplied by your county clerk’s office– this applies to sole proprietors who use their given name as part of their assumed name, eg. John Smith Roofing)
  • Beneficial owner information (these are people who own 25% or more of the business, and your provider will provide a simple form)

A small business checking account is a very necessary next step for any business owner looking to reach more clientele, create a more streamlined process for their finances, and minimize the risk they may be liable for. Here at Bumgardner Morrison, our staff is ready to help your business succeed- so we invite you to book a meeting with us to discuss your accounting needs.