How to open a startup business bank account

When starting a business, one of the most crucial financial decisions you'll make is opening a dedicated business bank account. While it might seem tempting to use your personal account for business transactions, establishing a separate business account offers numerous advantages that can protect your interests and foster growth.

Keeping your personal and business finances separate

The separation of personal and business finances helps give you more clarity and control. When your business transactions flow through a dedicated account, you can easily track your company's cash flow, monitor expenses, and understand your true profitability. This separation makes tax season significantly more manageable, as you won't need to sift through personal purchases to identify business expenses.

Moreover, maintaining separate accounts helps you establish accurate business budgets and make informed financial decisions. You'll have a clear picture of your business's financial health without personal spending muddying the waters. This clarity becomes invaluable when seeking investment opportunities or making strategic growth decisions.

Building trust and credibility

Would you trust a vendor using a Hotmail or Yahoo! email address? The same principle applies to banking. A business bank account instantly elevates your professional image. When clients see your company name on invoices and payment methods, it instills confidence in your business. Vendors and suppliers also tend to view businesses with dedicated accounts as more established and reliable partners.

This professional banking presence does more than boost your image — it helps build your business credit profile. As you establish a banking history, you create a foundation for future financing opportunities. Lenders look favorably upon businesses with well-maintained business accounts when considering loan applications or business lines of credit.

Meeting legal and tax requirements

For many business structures, particularly LLCs and corporations, maintaining a separate business account isn't just good practice — it's essential for liability protection. The IRS strongly recommends separate accounts to ensure clean financial records and proper tax reporting.

Different states may have specific requirements regarding business banking, especially for regulated industries or certain business structures. Meeting these requirements from the start helps avoid legal complications and maintains your business's good standing with regulatory authorities.

A business bank account isn't just a convenience — it's a fundamental tool for professional growth, legal compliance, and financial success. By establishing this separation early, you're setting your business up for sustainable growth and professional credibility in your industry.

Setting up a dedicated business bank account is a key milestone in your entrepreneurial journey. While the process might seem complex, breaking it down into manageable steps can help you navigate it smoothly. Here's everything you need to know to get started.

Step 1: Get your required documents ready

When it comes to opening a business bank account, preparation is key. The specific documents you'll need depend on your business structure. Sole proprietors should gather their EIN (or Social Security Number), business license, and DBA certificate if using a trade name. For LLCs, you'll need your Articles of Organization and Operating Agreement. Corporations must provide Articles of Incorporation and corporate bylaws. Everyone needs a government-issued photo ID and proof of business address.

Step 2: Choose your bank

Take time to explore your banking options. Local banks often provide personalized service and understand your market's unique needs, while national banks typically offer extensive online features and wider ATM networks. Neobanks and other digital-only banks often can offer better interest rates and a faster accounting opening. Compare monthly fees, minimum balance requirements, and transaction limits. Consider whether you need specialized services like merchant accounts or international wire transfers, and make sure your chosen bank's technology integrates with your accounting software.

Step 3: Apply for your account

Decide whether to apply online or in person. While online applications offer convenience, meeting with a banking professional can help you understand additional services that might benefit your business. During the application, you'll provide details about your business structure, ownership, and expected account activity. Be prepared to explain your business model and projected transaction volumes. The bank will verify all owners' identities and may conduct credit checks.

Step 4: Complete the verification process

The bank will review your application and documentation, verifying your business's legal status and the identity of all owners. This process typically takes 2-5 business days for online applications, though in-person applications might receive same-day approval. Be ready to provide additional documentation if requested.

Step 5: Make your initial deposit

Once approved, you'll need to fund your account. Banks usually require a minimum initial deposit to activate the account, and that will vary by institution. You can typically make this deposit via wire transfer, check, or cash. Confirm the minimum amount with your bank before proceeding.

Step 6: Set up your banking tools

After your account is active, set up your online and mobile banking access. Create secure login credentials, download the mobile app, and enable features like account alerts and bill pay. You’ll want to implement security measures such as two-factor authentication to protect your account. Then you can connect your accounting software, establish recurring payments, and set up any needed merchant services.

Step 7: Manage your account

Create clear procedures for managing your new account. Set up systems for tracking transactions, reconciling statements, and maintaining minimum balances, and establish protocols for authorized signers and keep your banking documents organized.

Looking to open a business banking account? Brex has streamlined the traditional banking process, making it surprisingly simple to get your startup finances up and running. Here's your step-by-step guide to joining the modern banking platform designed for companies like yours.

Step 1: Online application

Getting started with Brex takes just minutes. Create your Brex business account on the website by entering a few key details about your startup. You'll provide your business name, registration details (EIN, incorporation state, year, and type), business address, indicate your industry, and identify all beneficial owners (including an ID check). Brex is here to support startups at every stage of the journey, even those just getting started.

Step 2: Document upload

Next, Brex keeps documentation simple and straightforward. You'll need to upload personal identification for beneficial owners and one controlling officer. Depending on the nature of your business, we may also request an articles of incorporation document. No complex financial history or extensive paperwork is required — just the basics that matter for getting your startup banking established.

Step 3: Quick verification

Brex's verification process is refreshingly fast compared to traditional banks. That’s because Brex uses modern technology to verify both your identity and business information efficiently. This streamlined approach means less waiting and more time focused on growing your business.

Step 4: Rapid approval

Unlike traditional banks that can take weeks to approve startup accounts, Brex aims to provide quick decisions. Most approved applicants can start banking within just a few business days. Their startup-friendly approval process means you may be more likely to get approved, even without an extensive business history.

Step 5: Digital account access

Once approved, you'll get immediate access to your Brex account online. Brex’s platform lets you manage all your finances in one place — from issuing corporate cards to tracking expenses. Everything is designed to work seamlessly through their online dashboard, so you can manage your startup's finances from anywhere.

Remember, whether you're pre-revenue or already generating sales, Brex's startup-friendly approach means you may be more likely to get approved quickly. Brex has even partnered with Stripe Atlas to make it incredibly easy to apply for a Brex account at the moment of incorporation, so you can launch your startup faster.

Pangea, a marketplace for contract-to-hire marketing and design talent, uses Brex for cards, expense management, and banking. Pangea co-founder Adam Alpert said Brex made it incredibly easy to get started and earn high yields from day one: “Other banking products required $500,000 minimums to access money market and yield accounts. Brex’s banking product is very competitive on its own, but not requiring a minimum balance to earn yield was incredibly appealing.”

Opening a business bank account comes with various fees that can impact your bottom line. But there are already a ton of startup costs you have to worry about; banking fees shouldn’t be one of them. Most banks charge a monthly maintenance fee, typically ranging from $10 to $50, though this can often be waived if you maintain a minimum balance or meet certain transaction requirements. You might also encounter transaction fees for activities like cash deposits exceeding a certain amount, wire transfers, or ATM withdrawals outside your bank's network. Initial setup fees are less common but worth asking about, and some banks require a minimum opening deposit ranging from $25 to $1,000.

Beyond the basic fees, be on the lookout for charges that might affect your day-to-day operations. Many banks limit the number of free transactions (deposits, withdrawals, and transfers) per month, charging for each additional transaction. Overdraft fees can be steep, often around $35 per occurrence, though some banks offer overdraft protection for an additional monthly fee. International transaction fees typically run between 1% to 3% of the transaction amount, and wire transfer fees can range from $15 for domestic transfers to $50 for international. Be sure to read the fee schedule carefully and ask your banker about ways to reduce or eliminate fees based on your business's typical banking patterns.

Effective management of your business bank account is the key to maintaining healthy finances and ensuring your company's growth. Here are four essential tips to help you track business expenses, maximize your business banking experience, and avoid common pitfalls.

Tip #1: Turn on smart alerts

Enable instant notifications for any transaction over $100 to catch unusual activity immediately. Set up daily balance alerts to know exactly when your account dips below your minimum threshold. This keeps you informed without overwhelming your phone with notifications.

Pro tip: Create different notification groups in your phone — mark banking alerts as “urgent” to make them stand out from other notifications. Or try setting custom sounds for different alert types so you can identify important notifications without looking at your screen.

Tip #2: Schedule weekly reviews

Block 30 minutes every Monday morning to review all transactions from the previous week. Match receipts, flag any unusual charges, and categorize expenses while they're still fresh in your mind. This prevents month-end scrambling and helps catch accounting errors quickly.

Pro tip: Create a simple spreadsheet to track recurring charges. When reviewing transactions, quickly cross-reference this list against it to spot duplicate charges or price increases from vendors immediately.

Tip #3: Create a buffer system

It’s not always easy, but try to keep one month's worth of expenses plus 20% in your checking account. Set up automatic transfers to move anything above this amount into a business savings account each Friday. Brex makes it easy to set up automatic transfer rules, ensuring you're earning interest while maintaining enough operating cash.

Pro tip: Track your three highest expense months from the previous year and use that average (plus 20%) as your buffer amount during those seasonal peaks. This prevents cash flow issues during busier periods.

Tip #4: Use card controls

Set specific spending limits on any business credit cards for employees — for example, $500 daily for regular expenses. Enable merchant category restrictions to prevent unauthorized purchases. Turn cards on/off instantly through your mobile app when not in use.

Pro tip: Create a shared calendar event for regular vendor payments. Schedule card limits to automatically increase on specific dates when you know larger purchases need to be made, then return to normal limits the next day. Vendor payment automation can also help simplify this process.

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.