Establishing a separate business bank account is an essential step in running your small business. While you may only have one personal bank account, your business likely needs multiple accounts. According to the U.S. Small Business Administration, most business bank accounts offer benefits and perks that personal bank accounts do not. Here are four reasons why you need a business bank account.

Business Checking Accounts vs. Personal Checking Accounts

At first glance, a business checking account doesn’t seem that different from a personal checking account. Both allow you to make deposits and withdrawals, draft checks, make ACH payments and make purchases and cash withdrawals with a debit card. Both can offer overdraft protection. And both are FDIC (Federal Deposit Insurance Corporation) insured, meaning your money is safe in the event of bank failure.

In terms of how checking accounts work, the main difference between a personal and a business checking account is the cost. Many personal checking accounts don’t charge a monthly fee or have easily waivable fees. Business checking accounts, on the other hand, almost always have associated fees.

While many banks waive their business checking account monthly fees if you meet certain requirements—maintain a minimum daily balance, have a minimum number of direct deposits per month or spend a minimum amount with your associated debit card each month—these minimum requirements tend to be higher than similar waivers offered for personal checking accounts.

What Do I Need to Open a Business Checking Account?

While you can open a personal checking account with an ID, Social Security number and initial deposit, the requirements to open a business checking account can be a little more demanding. To open a business checking account, you may have to provide the following documentation:

  • Social Security number if you are a sole proprietor or Employee Identification Number (EIN) if your business is a corporation, partnership or limited liability company (LLC)
  • Government-issued ID, such as a driver’s license or passport
  • Business license and Articles of Organization (for LLCs) or Articles of Incorporation (for corporations)
  • Organizing documents filed with the state
  • Partnership agreement with the name of the business and its partners (for a business with multiple owners)
  • Certificate of assumed name/Doing Business As (DBA) name (if you are operating your business under a name different from your legal name, e.g., legal name Li Wei Zhang/ DBA Zhang Consulting)

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