How to set up a business bank account (2026)

Last updated October 2026

Why you need a separate business bank account

Legal protection starts with separation

Mixing personal and business finances is one of the fastest ways to lose liability protection. If you operate as an LLC or corporation, commingling funds can pierce the corporate veil, meaning a court could hold you personally liable for business debts. This is not a theoretical risk. It happens regularly in small business litigation, and it is entirely preventable.

A dedicated business account also makes tax season dramatically simpler. When every business transaction flows through a single account, your bookkeeper or accountant can reconcile your books without sorting through grocery runs and Netflix subscriptions. The time saved compounds over months and years, and cleaner books mean fewer questions if you ever face an audit.

Beyond compliance, a separate account gives you clarity. You can see at a glance whether your business is profitable this month, how your cash reserves are trending, and whether you can afford that new hire. Running everything through a personal account makes this kind of visibility almost impossible without manual tracking.

When you should open one

The right time to open a business bank account is as soon as you have any form of business entity. Whether you have just filed your LLC, received your EIN, or incorporated, your next step should be setting up a dedicated account. Some sole proprietors delay this step, reasoning that their business is too small to bother. But even freelancers billing a few thousand pounds a month benefit from the separation. The earlier you establish clean financial habits, the less painful the transition becomes as your business grows.

What you need before you apply

Essential documents

Every bank will ask for a core set of documents, though the specifics vary by institution and business type. Gathering these before you start the application process will save you from half-completed forms and follow-up emails requesting additional paperwork.

Your Employer Identification Number (EIN) is the most important document to have ready. You can obtain one from the IRS for free, and the process takes minutes online. Sole proprietors can sometimes use their Social Security Number instead, but an EIN is preferable even in that case because it reduces the exposure of your personal information.

Formation documents prove your business exists as a legal entity. For LLCs, this is your Articles of Organization. For corporations, it is your Articles of Incorporation. Partnerships need their partnership agreement. These documents should match the business name you plan to use on the account.

You will also need government-issued photo identification for all account signers. Most banks require a driver's licence or passport. If your business has multiple owners, each person with signing authority typically needs to provide identification.

Additional items some banks require

An Operating Agreement is not always mandatory, but many banks request it for LLCs. This document outlines ownership percentages and management structure. Even if your bank does not require one, having an Operating Agreement is good practice for any multi-member LLC.

Some traditional banks ask for a business licence or proof of your physical business address. Online-first banks tend to be less strict about this, which is one reason many founders prefer them. If you operate from home, a virtual mailbox address or registered agent address usually satisfies this requirement.

Proof of address for the business, such as a utility bill or lease agreement, may also be requested. Again, this is more common with traditional banks. If you are just starting out and working from a home office, a utility bill in your name at your home address is typically sufficient.

Types of business bank accounts

Checking accounts

A business checking account is the foundation of your business banking setup. This is where your revenue lands, where your expenses are paid from, and where your day-to-day financial activity occurs. Most businesses need at least one checking account, and many benefit from having two: one for operations and one for taxes or reserves.

The features that matter most in a checking account are fee structure, transaction limits, and integration with your accounting software. Some accounts charge monthly fees that can be waived with a minimum balance. Others are entirely free. Transaction limits matter if your business processes a high volume of payments, as exceeding the limit often triggers per-transaction fees.

Savings accounts

A business savings account is useful for setting aside tax reserves, building an emergency fund, or saving for planned expenditures. Interest rates on business savings accounts have improved considerably in recent years, particularly at online banks. Some accounts now offer yields above 4%, which makes parking idle cash in a savings account a reasonable financial decision rather than a negligible one.

Specialised accounts

Treasury management and cash management accounts blur the line between banking and investment. Products from companies like Mercury and Brex offer features that were previously available only to large corporations, including automated sweeps, higher FDIC coverage through partner bank networks, and competitive yield on idle balances. For startups holding significant cash reserves, these accounts can meaningfully improve your financial position.

Online-first banks vs traditional banks

The case for online-first

Online-first banks have become the default choice for most new businesses, and for good reason. They typically offer lower fees (often zero), faster account opening, better software integrations, and more modern user interfaces. If your business does not require regular cash deposits, an online bank will likely serve you better than a branch-based institution.

Account opening speed is one of the most noticeable differences. Traditional banks can take days or even weeks to open a business account, often requiring an in-person visit. Online banks like Mercury and Brex can approve applications in minutes and have your account functional the same day.

API access and integrations are another major advantage. Modern business banking platforms connect directly to accounting software, payment processors, and expense management tools. This level of automation simply is not available at most traditional banks, where you might still be downloading CSV files and manually importing them.

When a traditional bank makes sense

Businesses that handle significant cash need a traditional bank with physical branches. Restaurants, retail shops, and service businesses that receive cash payments cannot easily deposit physical currency at an online bank. In these cases, a traditional bank with convenient branch locations remains the practical choice.

Some businesses also benefit from the relationship banking that traditional institutions offer. If you anticipate needing a business line of credit, an SBA loan, or merchant services, having an established relationship with a bank can smooth the process. Large traditional banks also tend to have more robust international wire transfer capabilities, though fintech options have narrowed this gap considerably.

A reasonable approach for many businesses is to maintain both. Use an online bank as your primary operating account for its superior software and lower fees, and keep a traditional bank account for cash deposits or credit relationships.

Mercury: best for startups and tech companies

Why Mercury stands out

Mercury has become the default banking choice for venture-backed startups and technology companies, and it has earned that position through a combination of thoughtful product design and startup-friendly features. The platform offers free business checking and savings accounts with no minimum balance requirements, no monthly fees, and no transaction fees. For a new company watching every pound, this fee structure is meaningful.

The user interface is where Mercury distinguishes itself most clearly from traditional banks. The dashboard provides real-time visibility into cash position, burn rate, and runway, metrics that matter enormously to startup founders. You can create multiple accounts for different purposes, set up approval workflows for large transactions, and manage team permissions with granularity that most banks do not offer.

Key features

Mercury's Treasury product deserages idle cash across a network of partner banks, extending FDIC coverage up to $5 million and earning competitive yields. For companies holding significant cash reserves, whether from fundraising or revenue, this feature provides both safety and return without requiring any active management on your part.

The platform integrates natively with QuickBooks, Xero, and most major accounting platforms. Transaction data flows automatically, reducing the manual work involved in bookkeeping. Mercury also offers a robust API for companies that want to build custom integrations or automate financial workflows.

Mercury's corporate cards come with no personal guarantee requirement, which is a significant advantage for founders. The cards include built-in expense management features, receipt capture, and customisable spending limits per card. You can issue virtual cards instantly for specific vendors or subscriptions, making it easy to track and control spending.

Who Mercury is best for

Mercury is the strongest choice for technology startups, SaaS companies, e-commerce businesses, and any company that operates primarily online. If you do not need to deposit cash regularly and you value a modern banking experience with strong integrations, Mercury should be at the top of your list. The combination of zero fees, excellent software, and startup-specific features makes it difficult to justify choosing a traditional bank unless you have specific needs that Mercury cannot address.

Brex: best for integrated spend management

Why Brex is different

Brex approaches business banking from a different angle than most competitors. Rather than building a standalone bank account, Brex has created a comprehensive financial platform that combines banking, corporate cards, expense management, travel booking, and bill pay into a single system. If your priority is consolidating your financial operations rather than maintaining separate tools for each function, Brex deserves serious consideration.

The Brex business account offers FDIC insurance up to $6 million through its partner bank network, which is among the highest in the industry. The account has no monthly fees, no minimum balance requirements, and includes same-day ACH transfers. International wire transfers are also available, with support for sending funds in multiple currencies.

Key features

Brex's corporate card programme is its flagship product, and it remains one of the best in the market. Cards require no personal guarantee and no credit check against your personal credit score. Instead, Brex underwrites based on your company's cash balance and financial health. Rewards are competitive, with points earned on categories that matter to businesses: software subscriptions, travel, dining, and rideshare.

The expense management system built into Brex eliminates the need for a separate tool like Expensify or Ramp. Employees can submit receipts through the mobile app, managers can approve expenses with a tap, and everything syncs to your accounting software automatically. Policy controls let you set spending rules that are enforced at the point of sale, rather than discovered after the fact.

Brex also includes bill pay functionality, allowing you to manage vendor payments directly from the platform. You can schedule payments, set up recurring transfers, and track payment status without logging into a separate system. For companies that want to reduce the number of financial tools they manage, this consolidation is valuable.

Who Brex is best for

Brex is the strongest choice for companies that want a unified financial platform rather than a collection of point solutions. It works particularly well for companies with 10 or more employees, where expense management and spending controls become operationally important. Venture-backed startups, mid-stage companies, and businesses with significant travel or software spending will get the most value from Brex's integrated approach.

Other options worth considering

Relay

Relay is a solid choice for small businesses and freelancers who want free banking with strong budgeting features. The platform allows you to create up to 20 individual checking accounts, making it easy to allocate funds for specific purposes like taxes, payroll, or marketing spend. Relay also supports profit-first banking methodologies, which appeals to small business owners who follow that framework. There are no monthly fees, no minimum balances, and no hidden charges.

Novo

Novo positions itself as the bank for small business owners, with a clean interface and a growing list of integrations. The account is free with no minimum balance, and Novo offers a curated marketplace of discounts on business tools like Stripe, HubSpot, and Gusto. The platform is straightforward without being simplistic, making it a good fit for business owners who want modern banking without the complexity of enterprise-focused platforms.

Bluevine

Bluevine is notable for offering interest on business checking balances, which most competitors do not. The account earns up to 2.0% APY on balances up to $250,000, effectively serving as a combined checking and savings vehicle. There are no monthly fees, and Bluevine includes features like sub-accounts and automated transfers. For businesses that maintain significant checking balances, the interest alone can make Bluevine an attractive option.

Chase Ink Business

Chase Ink remains one of the most widely used business banking products, backed by the infrastructure and branch network of JPMorgan Chase. The Chase Ink Business Complete account offers a combination of online and in-branch banking, which suits businesses that need both. Chase also offers a strong ecosystem of credit cards, lines of credit, and merchant services. The main drawback is fees: Chase charges monthly maintenance fees that can be waived with minimum balances, but those minimums are higher than what most small businesses comfortably maintain.

Wise Business

Wise Business (formerly TransferWise) is purpose-built for companies that send or receive international payments. The platform offers multi-currency accounts, allowing you to hold and receive funds in dozens of currencies without conversion. When you do convert, Wise uses the mid-market exchange rate with a transparent fee, which is dramatically cheaper than the rates offered by traditional banks. If your business regularly deals with international clients, contractors, or suppliers, Wise is almost certainly worth opening alongside your primary domestic account.

How to choose the right account

Start with your actual needs

The best business bank account is the one that fits your specific situation, not the one with the most features or the highest rating on a review site. Before comparing products, spend a few minutes listing what you need from a bank account. Consider how many transactions you process monthly, whether you need to deposit cash, how important integrations with accounting software are, and whether you anticipate needing credit products.

Fee sensitivity should be high on your list of considerations. For many small businesses and startups, the difference between a free account and one that charges $15 to $30 per month is not trivial. Over a year, those fees add up, and they provide very little in return compared to what free accounts offer. Unless a paid account provides specific features you cannot get elsewhere, default to a free option.

Consider your growth trajectory

Choose a bank that can grow with you rather than one you will outgrow in a year. If you are a solo founder today but plan to hire a team, look for accounts with strong multi-user features and expense management. If you are currently domestic but plan to expand internationally, consider platforms with multi-currency support. Switching banks is not difficult, but it is tedious enough that you want to avoid doing it unnecessarily.

For most startups and online businesses, Mercury or Brex will cover your needs from day one through significant scale. Both platforms are designed to serve companies from formation through growth stages, and neither will force you to switch as your needs evolve. If you are a freelancer or very small business, Relay or Novo may be simpler starting points that still offer room to grow.

Do not overthink it

Opening a business bank account is an important step, but it is not an irreversible one. If you spend too long comparing options, you delay the more important task of separating your business and personal finances. Pick the option that best matches your current needs, open the account, and move forward. You can always open a second account or switch primary banks later if your needs change.

Setting up integrations

Payment processing

Once your bank account is open, connecting it to your payment infrastructure should be your next step. If you accept payments from customers, your payment processor needs to deposit funds into your business account. Most processors, including Stripe, Square, and PayPal, make this connection straightforward, requiring only your routing and account numbers.

For businesses that need to accept payments across multiple channels, Weav provides a unified connection layer that simplifies integrating with various payment platforms. Rather than managing separate configurations for each payment method, Weav helps consolidate your payment data flows, which is particularly useful for e-commerce businesses or companies that operate across multiple sales channels.

Payroll and contractor payments

Setting up payroll is another critical integration, and getting it right from the start saves considerable headaches later. Your payroll provider will pull funds from your business account to pay employees and remit taxes. Ensuring this connection is established before your first payroll run prevents delays in paying your team.

For companies with international contractors or remote employees, Deel handles the complexity of cross-border payments, tax compliance, and local employment law. Deel connects to your business bank account and manages payments in local currencies, handles tax withholding where required, and provides compliant employment contracts. If you are hiring internationally, integrating Deel early avoids the compliance risks of paying foreign contractors through informal channels.

Accounting software

Connecting your bank account to your accounting software should happen on day one. QuickBooks, Xero, FreshBooks, and Wave all support direct bank feeds from major business banking platforms. This connection automates transaction import, reduces manual data entry, and keeps your books closer to real-time. Both Mercury and Brex offer native integrations with all major accounting platforms, and the setup process takes only a few minutes.

Organising your financial documents

Why document management matters from day one

Opening a bank account generates paperwork, and running a business generates far more. Receipts, invoices, contracts, tax forms, incorporation documents, bank statements, and insurance policies accumulate quickly. Establishing a system for organising these documents early prevents the frantic search for a specific receipt that inevitably occurs during tax season or an audit.

Fabric works well as a home for your business financial documents once your accounts are set up. The cloud drive gives you a single place to store receipts, invoices, contracts, and statements. When you need to find something months later, the AI-powered search can locate documents by their contents rather than just their file names, which is useful when you cannot remember exactly what you named that Q2 expense report. You can also use Fabric's notes to maintain running financial checklists or document your bookkeeping processes.

Fabric offers a free tier, with paid plans at $8 per month on an annual plan or $10 per month billed monthly. The company also plants trees for its users, which is a modest but pleasant detail.

Common mistakes to avoid

Waiting too long to separate finances

The most common mistake is continuing to use a personal bank account for business transactions. Every month you delay makes the eventual separation more complex. You will need to go back through mixed transactions, categorise each one, and potentially reclassify entries in your accounting software. Open a business account as soon as your entity is formed, and start using it immediately for all business transactions.

Choosing based on sign-up bonuses alone

Some banks offer attractive sign-up bonuses, and those bonuses are worth capturing if the account is otherwise a good fit. But choosing a bank primarily for a one-time bonus of a few hundred pounds is short-sighted if the account charges monthly fees, lacks integrations you need, or does not support your business type. Evaluate the ongoing relationship first, and treat any bonus as a pleasant extra.

Not setting up multiple accounts

A single checking account is a start, but most businesses benefit from at least two or three accounts. A common setup includes an operating account for day-to-day transactions, a tax reserve account where you set aside estimated tax payments, and a savings account for emergency reserves or planned expenditures. Platforms like Mercury and Relay make it easy to create multiple accounts at no additional cost.

Ignoring international capabilities

If there is any chance your business will send or receive international payments, consider this during your initial bank selection. Adding international payment capability after the fact often means opening a separate account with Wise Business or a similar platform. If you anticipate international transactions, choosing a primary bank with strong multi-currency support, or opening a Wise Business account alongside your domestic account, saves time and money later.

Skipping the integration setup

Opening the account and then forgetting to connect it to your accounting software, payment processor, and payroll system is surprisingly common. Each week that passes without these integrations means more manual work reconciling transactions later. Block an hour after your account is approved to set up all critical integrations. Both Mercury and Brex provide guided setup flows that walk you through connecting your most important tools.

Frequently asked questions

Do I need an LLC or corporation to open a business bank account?

No. Sole proprietors can open a business bank account using their Social Security Number or an EIN. Having a formal business entity is not a requirement at most banks, though the application process is typically smoother if you have one. Some online banks, including Mercury, do require an LLC or corporation.

How long does it take to open a business bank account?

At online banks like Mercury and Brex, the process can take as little as 10 minutes, and your account may be approved the same day. Traditional banks typically take one to two weeks, and some require an in-person visit to a branch.

Can I open a business bank account online?

Yes. Most modern business banks allow you to complete the entire application online. You will upload your documents digitally and verify your identity through the platform. Traditional banks increasingly offer online applications as well, though some still require an in-branch visit to finalise the account.

What is the minimum deposit to open a business bank account?

Many online business banks, including Mercury and Brex, require no minimum deposit. Traditional banks vary, with some requiring initial deposits of $25 to $100 and others requiring minimum balances of $1,500 or more to waive monthly fees.

Do I need an EIN to open a business bank account?

It depends on your business structure. Sole proprietors without employees can use their Social Security Number, but an EIN is recommended for better privacy and professionalism. All other business types, including LLCs, corporations, and partnerships, need an EIN. You can obtain one from the IRS for free in minutes.

Can I have multiple business bank accounts?

Yes, and it is often a good idea. Many business owners maintain separate accounts for operations, tax reserves, and savings. Platforms like Mercury and Relay allow you to create multiple sub-accounts at no extra cost, making this approach easy to implement.

What fees should I watch out for?

Common fees include monthly maintenance fees, transaction fees for exceeding a set number of monthly transactions, wire transfer fees, and cash deposit fees. Online banks generally charge fewer fees than traditional banks. Read the fee schedule carefully before opening any account, paying particular attention to fees for services you use frequently.

Can I switch business bank accounts later?

Yes. Switching is straightforward but requires updating your payment processor, payroll system, accounting software, and any automatic transfers or debits. Plan for the transition to take two to four weeks to complete fully, as some recurring payments and deposits may take a billing cycle to update.

What is FDIC insurance, and how much coverage do I get?

FDIC insurance protects your deposits if your bank fails. The standard coverage is $250,000 per depositor, per bank. Some platforms, like Mercury and Brex, extend this coverage significantly by spreading your funds across multiple partner banks, offering coverage of $5 million or more.

Do business bank accounts earn interest?

Some do. Bluevine offers interest on checking balances, and both Mercury and Brex offer yield on funds held in their treasury or cash management products. Dedicated business savings accounts at various banks also earn interest. Rates vary, so compare current offerings when you are ready to open an account.

What is the difference between a business debit card and a business credit card?

A business debit card draws directly from your checking balance, while a business credit card extends a line of credit that you repay monthly. Debit cards are simpler and involve no credit risk, but credit cards typically offer rewards, purchase protection, and can help build your business credit profile. Many businesses use both.

Can a non-US resident open a US business bank account?

It is possible but more challenging. Some online banks, including Mercury, accept applications from non-US residents who have formed a US business entity. You will need a US EIN and your foreign passport. Traditional banks generally require in-person visits and may have stricter residency requirements.

Is Fabric free?

Fabric offers a free tier that lets you get started with document storage and organisation. Paid plans are $8 per month on an annual plan or $10 per month billed monthly, which unlocks the full set of features including expanded cloud storage, AI-powered search, and notes.

Should I use a personal credit card for business expenses while setting up my business account?

Avoid this if possible. Using a personal card for business expenses creates the same commingling problems as using a personal bank account. If you must use a personal card temporarily, keep meticulous records of every business transaction so you can properly categorise and reimburse yourself once your business account is active.

Looking for more guidance on business banking? Read our comparisons of the best business bank accounts for startups, best business banks for freelancers, and Mercury vs Brex. If you are just getting started, our guides to tools you need when starting a company, best tools for startup founders, and best tools for solopreneurs cover the full picture beyond banking.