How to Open a Corporate Bank Account

Opening a corporate bank account has more requirements than other business bank accounts. Read on to learn about what you need to open one.

Not having a corporate bank account can put the business at risk. Without it, you'll be mixing business funds with personal funds. This can lead to reduced transparency or trustworthiness of your business. And risk personal funds and assets.

Fortunately, opening a corporate bank account isn't as hard as it seems. You'll be reaping its benefits in just a few minutes.

In bite-sized pieces, learn about how to open one, what documents are needed, and how much you need to prepare for it.

What is a Corporate Bank Account?

A corporate bank account is a type of account opened by corporations. It holds your business' finances to ensure they are separate from your personal funds.

Applying for a corporate account is necessary because a corporation is a separate legal entity.

However, before you can open an account, you'll first need board approval. This is a requirement by law for corporations.

Even if you're a single-owner corporation, your "board" needs to vote on the account's details, features, access options, and purpose. This is written through a corporate resolution.

Draft a Corporate Resolution

A corporate resolution indicates the major decisions involving the corporation. This includes opening a corporate bank account. The corporation's board of directors writes this resolution.

The corporate resolution indicates the purpose of the bank account and who can access it. These persons have the authority regarding the account on behalf of the company.

In detail, the corporate resolution for opening an account can include:

• Legal name and address of your corporation
  
• Name and address of your chosen bank
  
• State where your business is formed
  
• Names of people who are authorized to access account
  
• Date of the agreement to open the account
  
• Date of signing of the agreement
  
• Signature and date of signing the resolution
  
• Corporate seal

Even if you're a corporation of one, you still need to write the resolutions as a formality. You'll also need to state how the voting was done. Not doing these formalities can risk the liability protection of your corporation.

Not all banks will require you to present a corporate resolution. However, some will. If so, you'll need to supply them with a photo ID card of the authorized persons. This may be through a driver's license or a state identification card.

Who Can Open a Corporate Bank Account?

The primary applicant should have the executive authority or a majority stake in the business.

Generally, you can expect the following requirements. The primary applicant should:

• Hold ownership of the company. The percentage of ownership requirements varies per bank. Some banks allow persons with 10% ownership to apply for the account, while some require at least 25%.

• Or be a high-level representative. This usually means the president, secretary, assistant secretary, acting secretary, or treasurer.

• And have a credit report. This helps the bank validate the application.

What is Required to Open a Corporate Bank Account?

There are three sets of documents needed to open a corporate bank account. These are:

• Personal Identification
  
• Tax Identification Number (Employee Identification Number, or EIN)
  
• Business Documentation

Personal Identification

For Personal Identification, two IDs are required, and one of them must be a government-issued ID.

The primary IDs you can use include:

• State-Issued Driver's License
  
• State-Issued ID Card
  
• Passport

Secondary IDs you can use include:

• Credit card or debit card with embossed name
  
• Employer ID
  
• Utility Bill

Tax Identification Number

Corporations must have a TIN or EIN. This is a 9-digit number issued by the Internal Revenue Service (IRS). It is used to identify your company for tax purposes.

Business Documentation

The business documentation must be filed with the appropriate state agency, including State Filing Stamp. These include:

• Certified Articles of Incorporation or Certificate of Formation
  
• Corporate Bylaws
  
• Active Status Verification
  
• DBA (Doing Business As) if your corporation operates under another name

You may also be asked to provide:

• Website Validation
  
• Certificate of Good Standing
  
• Status Report
  
• Long Form Standing
  
• Short Form Standing

Supplemental Documents

Some banks may also ask for additional documents such as:

• Corporate Resolution
  
• Annual Report or Statement of Information
  
• Certified Amendment to the Articles of Incorporation or Certificate of Formation
  
• Meeting Minutes
  
• Corporation's Seal

Company Information

Banks may also request the following information about your company during account opening:

• Nature of the business
  
• Phone number
  
• Business address
  
• Number of business locations
  
• Where products and services are sold
  
• Location of suppliers and vendors
  
• Number of employees
  
• Annual sales
  
• Types of transactions and expected volume for the new account

Information About Owners & Users

For persons with ownership of 10% or more:

• Full name (as it appears on the Government Issued ID)
  
• Legal Business Name
  
• Residential Address or Business Address (for an owner who is a business)
  
• Percentage of Ownership
  
• Birthdate
  
• TIN (may be SSN, FTIN, or ITIN)
  
• Country of Citizenship
  
• Passport or Matricula Consular Card for non-green card holders

For persons with key positions in the company:

These persons could be anyone with influence over the company. This could be anyone from the board of directors or senior managers. You may be asked for the following information:

• Full name (as it appears on the Government Issued ID)
  
• Residential Address
  
• For Senior Managers:
  
  • Birthdate
    
  • TIN (may be SSN, FTIN, or ITIN)
    
  • Country of Citizenship

For authorized non-signers, the following information is needed:

• Full name (as it appears on the Government Issued ID)
  
• Residential address
  
• Birthdate

Open a Bank Account In-Person or Online

Opening a bank account in-person and online have the same document requirements. However, there are some differences and pros and cons to the process.

Requirements for Online Application

Applying for a business banking account online is convenient because you can do it on your own time. You can even save your application and return to it later if you're not ready to submit. But note that most banks have a deadline.

There are many online business banks that let you submit your application completely online. Most traditional brick-and-mortar banks let you apply online too. But some may require a physical signature at a branch.

Pros

• You're not limited to banking business hours.
  
• You can submit the documents digitally.
  
• You can save time by applying from your home or office.
  
• You can apply in only a couple of minutes.

Cons

• It can take several days to process the application.
  
• If the bank requires a physical signature, you will still have to visit the branch. Or wait for them to deliver the documents.

Requirements for In-Person Application

If you're applying in person, it's best to make an appointment with the bank first. Have all your documents and initial deposit (if required) prepared beforehand, so you don't need to go back. The authorized representative(s) stated in your board resolution will need to be present for account opening.

With in-person application you get to develop a relationship with your banker, making it more personal. This makes customer support way easier as they can easily answer your questions regarding the account.

Pros

• You can open an account in a day if you have all the necessary documents.
  
• You can make your opening deposit quickly through physical cash.

Cons

• You'll have to look for the closest physical branch.
  
• You're limited to business hours.
  
• It can take hours to apply if you don't have an appointment.

Generally, you'll want to prepare all required documents and the needed capital. Whether you open online or in person, completing all requirements makes the process more painless.

How Much Money Do You Need to Open a Corporate Bank Account?

This would depend on the bank of your choice. Some banks ask for $5, $25, $50, and even a $1,000 opening deposit. Other banks don't require a minimum deposit at all. However, they may require monthly fees.

For more specific info, you can consult your bank for account opening fees.

Benefits of a Corporate Bank Account

Having a corporate bank account will give your business many benefits. The most important are liability protection, having a clear financial record, and the ability to take loans for your business.

Financial Protection

With a separate business account, you are protected from being personally liable for any business debts or legal claims. Without this protection, your personal funds and assets can be taken if you're sued.

If you choose not to have a business account, you end up mixing your personal and business funds. You can lose your liability protection with this. This is called "piercing the corporate veil."

Organized Bookkeeping

A business bank account will separate the business funds from your personal funds. All business transactions are easily and clearly visible.

This makes it more convenient when you:

• Purchase from contractors or suppliers. As a business, you'll likely contact multiple suppliers or contractors. A business bank account will make it easier for you to process payments. Your business will also seem more trustworthy to them and your customers.

• Submit your tax returns. You'll have a clean record of business expenses and income for your tax returns.

• Partner with other businesses. Partnering or doing business with other companies will often require you to show your company's finances.

Get Business Loans

You'll be needing a business bank account to apply for a business loan. Whether you're a startup or have years in the business, it's better to be prepared for a loan.

By opening a corporate bank account, you have the option to apply for a term loan, business line of credit, SBA loan, or other loans provided by the bank.

What to Look for in a Corporate Bank Account

Opening the "right" business account can seem daunting. We've listed some of the main things you'll want to consider when opening a corporate bank account.

Bank Fees

Banks have many fees. Deciding on a bank can impact how much you can save, transact, and earn through interest. This is especially important in running a business.

Some of these fees include:

• Account opening fees. Typically, banks don't have an account opening fee. But some do have a minimum opening deposit requirement.

• Monthly fees. There are banks with $0 monthly fees. Some may offer ways for you to waive the fee. For example, they could waive it if you can maintain a certain balance or make a certain amount of monthly purchases.

• Minimum balance requirement. Some banks may waive your monthly fees if you keep a minimum balance. See if it's reasonable for your corporation to maintain.

• Out-of-network ATM fee. By withdrawing funds from ATMs of other banks, you'll typically be charged a flat fee.

• Deposit fees. Banks have a set limit on the number of deposits you can perform daily, weekly, or monthly. Deposit fees are there if you exceed that limit.

• Overdraft fees. Most banks charge fees if you overdraw your account. But there are banks like Bluevine that have no overdraft fees.

• Wire transfer fees. On average, wire transfers can cost up to $26 for domestic and $42 for international. If your business sends or receives a lot of wires, compare the fees across banks. Some banks even have free wire transfers.

In choosing a bank for your business account, you'll want to take note of those with minimum fees. However, you should also consider if there's a trade-off regarding other features or services.

If you're an online business and don't need physical branches, online banks may work better for you. Unlike traditional banks, they are more flexible and have fewer fees.

Interests & Rewards

Do you want to earn interest or other rewards? If so, look for a bank that offers that. For example, Bluevine offers 4.25% APY on balances up to $3M for Premier customers; 3.0% APY on balances up to $250,000 for Plus customers; 1.5% APY on balances up to $250,000 for Standard tier customers that meet monthly eligibility requirements.^[2] Other banks offer high-interest rates up to a certain amount.

Transaction Limits

Some banks allow you to have unlimited transactions. But others do not. Other banks give you a maximum number of free transactions per month. If you exceed that number, you'll be charged a fee.

Also, take note of the dollar limits for ACH transactions, check and cash deposits, wire transfers, etc.

As a business owner, it's best to know beforehand how much money you could be spending and receiving. This will help you gauge which bank would work best for you.

ATM and Branch Locations

Online banks can definitely save you time and money. They partner with large ATM networks throughout the country. But note that depositing cash is more difficult.

If you opt for a traditional bank, you'll want to ensure that branches and ATMs are nearby where you operate. Traditional banks usually have a wider range of business services.

Financial Products or Services Available

Banks offer more than just holding and lending you money. You may want to consider what other products and services they offer, such as:

• Merchant services for credit and debit card payments
  
• Small business loans and/or lines of credit
  
• Payroll services
  
• Treasury management services
  
• Investment services
  
• Automatic budgeting or scheduling
  
• Fraud protection services

With all of these considerations, the best options are always those that cater to your business. What is it that your business needs? How does your company operate? How do you accept payments? Your company should personalize the decision to choose a bank for your account.

Frequently Asked Questions

What's the difference between a business and a corporate account?
Opening a corporate bank account has stricter requirements. Corporations need a corporate resolution to open an account. The board will have to clearly state who can access the account and how the vote was done.

Can I open a corporate bank account online?
Yes, some banks allow you to open an account online. You just have to complete the necessary forms and present the required documents electronically.

They will typically have deadlines for you to submit the supplemental documents.

How much does it cost to open a corporate bank account?
Many banks don't require a minimum deposit to open an account. Some may have a monthly fee, but it can often be waived by maintaining a minimum balance.

How long does it take to open a corporate bank account?
Applying for an account online can take about 15 minutes, but the actual processing time may vary per bank. If you're applying in person and have all the necessary documents, it can be done in a day.

Bottom Line

A corporate bank account is especially important for corporate businesses. To open an account, you'll be asked for documentation about your business. Individuals with access to the organization's account must also provide information for identification and verification purposes.

Also, only a select few can become authorized individuals to access the account. These are typically the owners with a specific percentage of ownership, be it 10% - 25%.

You can make the application in person or online. If you are opening an account in person, some banks require the presence of specific individuals. As long as you can provide the needed documents, you'll be able to easily open a corporate account.

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