How to open a business bank account

Every business bank account application requires identity verification and proof that your business legally exists. Banks verify these details under federal Bank Secrecy Act and Know Your Customer regulations. These are legal mandates that protect both the financial institution and your business from fraud.

The specific formation documents you’ll need depend on your business structure. The guide below will tell you exactly what to prepare for your application depending on your entity type:

• Sole proprietorship: EIN or SSN, business license, DBA certificate (if using a trade name). Often same-day approval.
• LLC: Articles of Organization, Operating Agreement, EIN. Typically 1–3 business days.
• Corporation: Articles of Incorporation, Bylaws, Board Resolution, EIN. Typically 2–5 business days.
• Partnership: Partnership Agreement, EIN, state registration (for LP/LLP). Typically 2–5 business days.

Many founders ask whether they need an EIN to open a business bank account. The answer depends on your entity type and the bank’s requirements.

For entities with multiple owners, federal law requires identity verification for anyone holding 25% or more ownership. This has been mandatory since 2018 under beneficial ownership rules. You’ll also need to designate one controlling officer, typically the CEO or a founder, who takes responsibility for the account.

The most common cause of delays is missing documentation. LLCs often forget to bring their Operating Agreement. Corporations skip the Board Resolution authorizing specific individuals to open accounts. Gather everything before you start the application.

Before comparing specific banks, decide what type of banking relationship fits your business.

Traditional bank vs. modern platform

• Approval timeline: Traditional banks typically take 1–2 weeks, while modern platforms can approve accounts in 1–3 days.
• Credit requirements: Banks often require business credit history; modern platforms may underwrite based on cash position instead.
• Branch access: Banks offer full branch networks, whereas modern platforms have limited or no physical locations.
• Integrations: Traditional banks vary widely and often rely on legacy systems, while modern platforms tend to integrate natively with accounting tools.
• Fees: Bank fee structures can be complex with hidden costs; modern platforms are typically more transparent.
• Yield on deposits: Traditional banks offer 0.01–0.5%, compared to 3–4%+ from many modern platforms.

Traditional banking makes sense when you need SBA loans or relationship-based lending. It’s also the right choice if your business handles significant cash deposits or operates in an industry requiring specific banking relationships, like real estate escrow or legal trust accounts.

Modern platforms fit better when you’re pre-revenue or early-stage without established business credit. They’re also worth considering if you need native integrations with accounting software, want yield on idle cash, or expect to scale quickly and need flexible credit limits.

LLCs have additional considerations when selecting a provider. Compare the best business banking accounts for LLCs to find the right fit for your entity structure.

Questions to ask before you choose

Before committing to any bank, get clear answers on these points:

• What’s the complete fee schedule for ACH transfers, wires, and transactions?
• Does the platform integrate directly with QuickBooks, Xero, or NetSuite?
• How do credit limits increase as my business grows?
• How quickly can I access funds? Is same-day ACH available?
• What’s the minimum balance before penalties apply?

Many banks market “free” business checking while recovering revenue through fees buried in the fine print. These hidden business banking fees add up faster than most founders realize:

• Monthly maintenance: Up to $15/month
• Domestic wire transfer: $35–95 each
• International wire transfer: $50–135 each
• ACH transfer (after free tier): $0.25–0.50 each
• Low balance penalty: $10–25/month

Sources: Bankrate (January 2025); Alliant Credit Union (February 2025)

The 2023 NFIB Banking Survey found that 62% of small business owners rank low fees as “very important” when selecting a bank. Yet many don’t calculate true costs until after they’ve committed.

Consider a startup processing 10 domestic wires and 50 ACH payments monthly. The account might advertise $0 monthly maintenance, but transaction fees alone could hit $300 or more per month. That’s $3,600 per year that never appears in marketing materials.

Fee transparency should be a primary selection criterion. Ask for the complete fee schedule before opening any account, and calculate your expected monthly costs based on your actual transaction patterns.

If minimizing costs is your priority, business bank accounts with no fees do exist, though feature sets and minimum balance requirements vary.

Step 1: Gather your documents

Collect all required documents before starting your application.

Incomplete applications are the leading cause of delays. Banks can’t proceed until they verify your business exists and you’re authorized to act on its behalf. Having everything ready upfront can mean the difference between same-day approval and a two-week wait.

For an LLC, you’d gather:

• Your Articles of Organization from your state filing
• Operating Agreement
• EIN confirmation letter from the IRS
• Government-issued ID for all owners with 25%+ ownership
• A utility bill or lease agreement showing your business address

Save digital copies as PDFs for online applications.

Step 2: Choose your banking partner

Narrow your options to two or three candidates based on your business stage, then compare fee schedules and features.

This decision has long-term consequences. Once you’ve set up payroll, connected vendors, and integrated your accounting software, switching banks becomes disruptive. You’ll need to update payment methods, notify vendors, and migrate transaction history. Choose a partner that fits where your business will be in two years, not just where it is today.

A venture-backed startup might compare Brex, Mercury, and a traditional bank. The evaluation would focus on approval requirements for companies without business credit history, fee structures for expected transaction volume, integration quality with their accounting software, and yield on raised capital sitting in the account.

Companies that already have a banking relationship but need to switch their business bank account face a specific migration process worth understanding before you commit.

Step 3: Complete the application

Submit your application with accurate business details, ownership information, and supporting documents.

Accuracy matters here. Discrepancies between your application and documents trigger additional review cycles. A name that appears differently on your Articles of Organization versus your application, or an address that doesn’t match your proof of business address, will delay approval.

You’ll provide your legal business name, EIN, business address, industry classification, and formation date. For ownership, you’ll identify all beneficial owners holding 25% or more, plus one controlling officer. For instance, a two-founder startup with equal ownership would require both founders to complete identity verification.

Online applications typically take 15 to 30 minutes, with approval following in one to five business days depending on business complexity.

Step 4: Fund and activate your account

Make your initial deposit and configure security settings.

Your account isn’t fully functional until it’s funded, and security setup on day one protects against fraud before it becomes a problem. Some banks require minimum opening deposits, while others let you start with any amount.

Transfer your opening deposit via ACH from an existing account, wire, or check. Immediately enable two-factor authentication. Set up transaction alerts for any activity over $100 to catch unusual charges without overwhelming your notifications. Download the mobile app and verify you can access all account functions remotely.

Step 5: Set up integrations

Connect your bank account to your accounting software and other financial tools. Businesses using at least eight digital tools are nearly 2x more likely to report revenue growth.

Manual transaction entry creates reconciliation errors and wastes hours every month. Automated bank feeds keep your books accurate without the busywork. Finance teams that skip this step end up downloading CSV files and manually importing transactions, turning a five-minute automated process into hours of monthly work.

Here’s an example of how to do this in QuickBooks Online. First, navigate to Banking, then Link Account, and authenticate with your bank credentials. Transactions will import automatically. Set up categorization rules for recurring charges. For example, configure all AWS charges to automatically code to Software and Hosting. This eliminates manual categorization and keeps your books consistently accurate.

Proper integration setup is the foundation for tracking business expenses accurately without manual data entry.

Opening before your entity is properly formed: Don’t rush the timeline. Wait for state confirmation of your business registration before applying. Accounts opened under the wrong structure, or under your personal name because your LLC paperwork wasn’t ready, create legal and tax complications that are painful to unwind later.

Choosing based on convenience instead of fit: Your personal bank isn’t automatically right for your business. Evaluate where you’ll be in two years when it comes to transaction volume, credit needs, international payments, and integration requirements. Switching banks mid-operation means updating every vendor, payment method, and accounting connection.

Ignoring integration and growth capabilities: If your bank doesn’t connect to your accounting software, you’ll spend hours on manual reconciliation every month. And if transaction limits are restrictive, you’ll hit ceilings during growth spurts. Ask about integrations, API access, and how limits scale before committing to any provider.

As transaction volume increases, you may also need business lines of credit for startups to manage cash flow gaps between invoicing and payment.

Once your account is open, these practices keep your finances organized:

• Enable transaction alerts for charges over $100. You’ll catch unusual activity immediately without notification overload.
• Schedule weekly transaction reviews while charges are fresh. This prevents month-end scrambling and catches errors early.
• Maintain a cash buffer of at least one month’s operating expenses plus 20% in your checking account.
• Automate recurring payments for predictable expenses like rent, software, and insurance. This eliminates late fees and reduces manual work.
• Set spending limits on employee cards with merchant category restrictions to prevent unauthorized purchases before they happen.
• Reconcile monthly even with automated integrations. Verify transactions match your records before closing the books.

Vendor payment automation can further streamline recurring payments and reduce the manual work of managing multiple vendor relationships.

From choosing the right banking partner to managing your account effectively, the steps outlined in this guide will help you establish professional banking practices that support your growth. Remember, the right business account does more than just hold your money — it provides tools and features that can help streamline your operations, upgrade your cash flow management, and scale your business efficiently.

The traditional banking landscape is evolving, and innovative solutions like Brex are leading the way. Instead of lengthy applications and complex requirements, modern banking platforms understand what today's businesses really need: quick approval, powerful digital tools, and flexibility to grow. With features designed specifically for growth-focused companies, these new platforms are transforming how businesses manage their finances, improve working capital, and stay on top of their money.

A Brex business account* combines checking, treasury, and vault solutions for a powerful cash management tool for your business. With Brex, startups can:

• Access a full-featured checking account through Column N.A., Member FDIC
• Get FDIC insurance up to $6M through our program banks
• Earn industry-leading yield from your first dollar
• Access 100% of their funds anytime
• Send and receive fast payments in almost every currency

Richard Mensah, founder and CEO of Salley, says, “Brex is our main solution for everything finance-related. We use it for credit cards and to manage our banking. We love the points and perks that come along with being a customer. And I do believe that Brex is one of the only solutions out there focusing on solving the problem in its entirety.”

Adam Kaczmarek, co-founder and CTO at Loops, agrees: “Brex gives us a simple place to put all of our money. We know that we're getting decent yield off of the sort of rainy day funds as well as having easy access to the funds that we need to run payroll and manage the day-to-day business.”

Why wait weeks for a bank account when you could be up and running in minutes? Brex offers startup banking solutions with a streamlined application process, startup-friendly approval criteria, and a comprehensive digital banking platform. Plus, with built-in expense management tools, you'll have everything you need to manage your finances effectively from day one.

Sign up for Brex today and start building your business faster.

* Brex is a financial technology company, not a bank. Checking accounts and banking services provided by Column N.A., Member FDIC. Treasury and Vault accounts are provided by Brex Treasury LLC, Member FINRA/SIPC.