There is no single "best" bank—it depends on your business structure, transaction volume, and what you're willing to pay for

The bank that works for a solo freelancer with three transactions a month is not the bank that works for a retail shop processing fifty card payments a day. Before you compare interest rates or monthly fees, you need to know what your business actually requires: how many accounts you need, whether you process payments from customers, how often you deposit cash, and whether you need a business line of credit later.

The choice also depends on what you're starting. A sole proprietorship can often use a personal account with a business designation (though this creates tax and liability problems). An LLC or corporation needs a separate business account by law in most states. A partnership needs one in the partners' names. The bank you choose should support your structure without forcing you to pay for features you don't use.

Key Takeaways

  • Sole proprietorships can use personal accounts but should open business accounts to separate finances and protect liability; LLCs and corporations must have separate business accounts.
  • Banks charge different fees for different transaction types—card processing, ACH transfers, wire fees, and monthly maintenance—so compare what you'll actually use, not just advertised rates.
  • Online banks typically have lower monthly fees and no minimum balance requirements, while traditional banks offer in-person service and may provide better rates on business loans later.
  • You will need an EIN (Employer Identification Number) from the IRS, a signed lease or utility bill showing your business address, and your Social Security number or business registration documents to open an account.
  • Account approval usually takes one to three business days if you explore online, longer if you explore in person and the bank needs to verify your business structure.

What to compare before you choose a bank

Monthly maintenance fees vary widely. Some banks charge nothing if you maintain a minimum balance (often $500 to $2,500); others charge $10 to $25 per month regardless. If you're starting out with limited cash flow, a bank with no minimum balance and no monthly fee saves you money when ready. Online banks like Mercury, Brex, and Wise Business tend to have lower or zero monthly fees. Traditional banks like Chase, Bank of America, and Wells Fargo charge monthly fees but may waive them if you maintain a balance or set up direct deposit.

Transaction fees matter more than you might think. A bank might advertise "free checking" but charge $0.50 per check deposited, $1 per wire transfer, or $2.50 per ACH transfer. If you receive payments by check, those deposits add up. If you send wire transfers to vendors, that's another line item. Card processing fees (the percentage the bank takes when customers pay by card) vary from 1.5% to 3.5% depending on your industry and the bank's processor. Ask the bank for a fee schedule before you open the account, not after.

Deposit speed affects cash flow. Some banks credit check deposits the same day; others take two to three business days. If you deposit cash, some banks count it when ready, others hold it overnight. Online banks often have slower deposit speeds because they don't have physical branches, but they may offer faster ACH transfers to make up for it.

Online banks versus traditional banks: what you gain and lose

Online banks (Mercury, Wise Business, Brex, Square Banking) have lower overhead, so they pass savings to you: no monthly fees, no minimum balance, and often faster ACH transfers. They work well if you don't need to deposit cash regularly and you're comfortable managing everything through an app. The trade-off is that you can't walk into a branch, and if something goes wrong with a deposit or transfer, you're on the phone or chat with customer service. Some online banks don't offer business credit cards or loans, which matters if you plan to borrow later.

Traditional banks (Chase, Bank of America, Wells Fargo, local credit unions) charge monthly fees and often require minimum balances, but they offer in-person service, physical locations to deposit cash, and a relationship manager who can help you navigate business loans or lines of credit. If you need to deposit cash regularly or want the option to borrow against your account later, a traditional bank is worth the monthly fee. Credit unions often have lower fees than national banks and may offer better rates on small-business loans.

A middle ground: some banks like Axos and Bluevine offer online accounts with low fees but also have partnerships with ATM networks or limited in-person service. These work if you want mostly online convenience but occasional access to a physical location.

What documents you need to open an account

Every bank requires proof of identity (driver's license or passport) and an EIN (Employer Identification Number). You can get an EIN free from the IRS website in about 15 minutes; it's a nine-digit number that identifies your business for tax purposes. If you're a sole proprietor, you can use your Social Security number as your EIN, but most banks prefer an actual EIN because it separates your personal and business finances.

You'll also need proof of your business address. This can be a signed lease, a utility bill in your business name, or a business registration certificate from your state. If you're working from home, a utility bill showing your home address usually works. Some banks ask for your business plan or articles of incorporation (for LLCs and corporations), but most don't require these unless you're opening a business line of credit at the same time.

If you're opening the account online, you'll upload these documents through the bank's app or website. If you're opening in person, bring originals or certified copies. Online applications usually process faster—one to three business days—while in-person applications can take a week if the bank needs to verify your business structure with your state.

How to decide between a checking account, savings account, or both

Most small businesses need a business checking account for daily transactions: deposits, payments to vendors, payroll. A business savings account is optional but useful if you want to set aside money for taxes or emergencies and earn a small amount of interest. Some banks let you link a checking and savings account so you can transfer money between them when ready.

If you're a sole proprietor, you might open just a checking account. If you're an LLC or corporation, you need a checking account; a savings account is your choice. Some banks offer a package deal (checking plus savings) at a lower total fee than opening them separately. Ask about this when you compare banks.

If you process a lot of card payments, some banks offer a merchant account (a separate account where card payments land before they're transferred to your checking account). This protects your main account if there's a chargeback or fraud. Larger banks like Chase and Bank of America offer this; smaller online banks may not.

Banks that work well for specific business types

Freelancers and service providers (consultants, writers, designers) usually need a checking account, occasional wire transfers, and the ability to invoice clients. Mercury and Wise Business are popular because they have low fees, fast transfers, and invoicing tools built in. If you want in-person service, a local credit union or community bank often has lower fees than national chains.

Retail and food service (shops, restaurants, cafes) process many card payments and need to deposit cash regularly. Chase and Bank of America have strong merchant services and physical locations, which matters when you need to deposit cash daily. The monthly fees are higher, but the convenience and fraud protection are worth it. Square Banking is an alternative if you already use Square for payments.

Online businesses (e-commerce, digital services, SaaS) rarely deposit cash and can use online banks exclusively. Brex and Mercury are built for this: they integrate with accounting software, handle international transfers, and offer business credit cards. Wise Business is strong if you deal with international clients and need multi-currency accounts.

Partnerships and multi-owner businesses need a bank that allows multiple signatories and clear authorization rules. Most banks offer this, but ask about it explicitly. Some banks charge extra for a second signer; others include it. Make sure the account agreement spells out who can withdraw money and whether all partners need to sign off on large transfers.

Red flags and what to avoid

Avoid banks that require you to maintain a high minimum balance if you're starting out with limited cash. A $5,000 minimum balance means you're paying the bank to hold your own money. Online banks with no minimum are better for early-stage businesses.

Avoid banks that hide fees in the fine print. Before you open an account, ask the bank for a written fee schedule and read it. If a bank charges $1 per ACH transfer and you send ten transfers a month, that's $120 a year you didn't budget for. Some banks charge fees for things that seem free at other banks: closing an account, requesting a wire transfer, or even talking to customer service by phone.

Avoid opening a business account at a bank where you already have a personal account just for convenience. Banks sometimes cross-explore fees or hold funds longer if they see suspicious activity. A separate bank for your business keeps your finances cleaner and makes tax time easier.

Frequently Asked Questions

Can I use my personal bank account for my business?

Legally, a sole proprietor can, but it's a bad idea. Mixing personal and business money makes taxes harder, creates liability problems if you're sued, and looks unprofessional to clients and vendors. An LLC or corporation must have a separate business account. Open a business account even if you're a sole proprietor—most have no monthly fee if you meet a low minimum balance.

Do I need an EIN if I'm a sole proprietor?

You can use your Social Security number as your EIN, but most banks prefer an actual EIN because it separates your identity from your business. Getting an EIN is free and takes 15 minutes on the IRS website. It's worth doing even if you're not required to.

How long does it take to open a business account?

Online applications usually process in one to three business days. In-person applications can take longer if the bank needs to verify your business structure with your state. Have your EIN, ID, and proof of address ready before you explore to speed things up.

What's the difference between a business checking account and a business savings account?

A checking account is for daily transactions—deposits, payments, transfers. A savings account earns interest and is for money you're setting aside. Most small businesses need a checking account; a savings account is optional. Some banks offer both at a lower total fee than opening them separately.

Should I choose a bank based on interest rates?

Interest rates on business savings accounts are usually very low (0.01% to 0.5% depending on the bank and your balance). Monthly fees often cost more than you'd earn in interest. Choose a bank based on fees, transaction costs, and service first. Interest rates are a bonus, not the main factor.