When you’re first starting your business, it’s not uncommon for personal and business funds and expenses to mix and mingle a bit. As your business grows, though, keeping those finances separate becomes increasingly important. If you want to manage your cash flow while simplifying tax time, your routine accounting, and your day-to-day financial knowledge, it might be time to open a separate online business bank account.
Setting up a new account doesn’t have to be cumbersome—it doesn’t even require a trip to the bank. Depending on your needs, you can open an online business bank account in as little as ten minutes.
Why should I choose an online bank account for my business?
Unless you’ve been in business for a long time and have a lengthy and healthy financial history, working with a traditional bank to set up a new account might prove to be cumbersome. Many brick-and-mortar banks typically want to see proof of your well-established financial history, including monthly credit card receipts and deposits, which can be hard to provide if you’re starting a new business and setting up your first business bank account.
The barriers to entry are much different when it comes to online-only banking. When you open a business bank account online, the process is more straightforward, and so are the initial requirements. Online banks have removed many of the more complex requirements of traditional banks.
Digital or online banks are relatively new to the financial marketplace, but are very popular with small business owners for several reasons:
Online banks offer all of the traditional banking services you’d expect from a brick-and-mortar bank. Their services include checks, ACH and wire payments, invoicing, bill pay, and debit cards.
Your funds in most online banks are federally protected up to $250,000. Like brick-and-mortar banks, most online banks are FDIC insured.
Online interest rates are typically higher than brick-and-mortar rates.
Many online business bank accounts are free with no monthly fees or service charges. Without brick-and-mortar locations, digital banks are responsible for much less overhead—meaning they don’t need to charge fees to help cover these expenses.
Thanks to streamlined paperwork and processes, an online business bank account often has faster processing and approval times.
Digital banks typically have seamless integration with other digital services like payment processors and financial apps.
Simplicity is a beautiful thing in business, and an online business bank account has it in spades.
How to choose an online bank based on your business needs
Though it may be tempting to open an account with the first online bank you find, it helps to spend a bit of time exploring your options. If your goal is to simplify your business and personal life by separating your finances, evaluating banks should not complicate this goal.
As you assess your best online banking options, consider which key elements your business may require. What are your unique banking needs?
What are the minimum balance requirements? Keep an eye out for banks that charge fees if you fail to maintain a large balance. Some online business checking accounts offer no monthly service fees and no minimum account balance requirements. Why pay to use your own money when you don’t have to?
Are there limits on deposits or transactions? Consider how often you deposit money and how many transactions you need to make from the account on a regular basis. Business accounts are known to limit these transactions and can charge fees if you exceed the limit. Choose an account that works for your transaction frequency.
Do you need a debit card or interest for savings? Extra account features can be fun, but only if you actually need them. Don’t pay fees for a debit card you never will use, and skip that interest-bearing account if you have a cash-in/cash-out system that rarely holds much of a balance.
Do you need merchant services? In addition to checking and savings accounts, many business bank accounts will include a business credit card account and a merchant services account. You’ll need a merchant services account if you plan to accept credit and debit transactions from your customers.
Does the bank offer robust online and mobile banking platforms? Check out their reviews in the app store and visit the mobile banking site from your phone. If you’re working with an online bank, it’s more than fair to expect a seamless online experience.
Does the bank also have in-person branches? Some online banks offer storefront locations as well. If there are some transactions you’d rather conduct in person, make sure to weigh which banks operate both online and in person.
Is it easy to find an ATM? Some online banks offer ATM access across a wide network and others will even reimburse you for out-of-network ATM fees. If you want to make sure you have easy access to cash without worrying about costs, this should be an important consideration on your list.
Banks have to make money to stay in business. But that doesn’t mean you have to subsidize their business with yours. Understand that there will be costs involved with a business bank account, but make your choices based on your company’s needs and avoid paying for services or fees that don’t benefit you.
Top options for online business bank accounts
There are dozens of online banks to choose from, and even more when you factor in banks like Capital One and Wells Fargo with both traditional and online platforms. Finding the best bank for your small business can feel tricky, but it doesn’t have to be. If you’re looking for a streamlined and straightforward online business bank account with minimum fees, it’s hard to beat these online-only banking options.
After you move in a $50 minimum opening deposit, almost everything is free with Bank NOVO. There are no monthly maintenance fees, no minimum balance requirements, no ATM fees, and no fees for transfers or mailed checks. ACH payments and incoming wires are free too, but you need to pay for outgoing wire transfers. Bank NOVO is completely online and is primarily run through a fully integrated mobile app. Bank NOVO does not have its own network of ATMs, but does refund fees from other ATMs, including those located internationally. Learn more.
Pros: No monthly fees or balance requirements. No fees for incoming wire transfers.
Cons: No dedicated ATM network.
Best for: Companies looking for streamlined online banking.
If you are running a freelance business, Lili keeps your banking and bookkeeping simple. With no fees on debit cards, checking accounts, mobile deposits, or cash withdrawals, Lili has all of the basics of a business account plus tools for linking to digital wallets and business management tools. Lili helps freelancers track spending for tax reporting as well. Lili also offers 32,000 ATMs in the United States and Puerto Rico. Learn more.
Pros: No fees for most transactions and business management tools.
Cons: Designed for individuals, not companies.
Best for: Sole proprietors looking to track spending and linking to other apps.
What started as peer-to-peer lending has blossomed into a company with a variety of banking services. LendingClub offers business loans as well as essential banking services, including business debit cards and bank accounts. You can even bundle LendingClub services with Bench’s full-service platform for small business financials to gain access to bookkeeping, tax filing, advisory, and banking. With LendingClub’s recent acquisition of Radius Bank, LendingClub customers now have access to more than 20,000 ATMs nationwide. Learn more.
Pros: Comprehensive financial packages including loans and lines of credit.
Cons: Multiple platforms required for the full bundled services, and no credit cards.
Best for: Companies looking to scale up into full accounting and banking services.
A NorthOne business checking account includes easy online transfers, unlimited debit card transactions, and mobile check deposits, as well as a well-designed mobile app and online banking. In both the app and their website, NorthOne allows business owners to create sub-accounts within their main account to keep track of spending for payroll or tax purposes. NorthOne charges qualifying accounts a flat fee of $10 for unlimited transactions and no hidden fees. NorthOne has more than 37,000 ATM locations available for customers as well. Learn more.
Pros: Predictable, flat fee, sub-accounts available.
Cons: Mobile platform only for online banking.
Best for: Businesses already on mobile devices, businesses with multiple users and spending categories.
A free online business bank designed for start-ups and tech businesses, Mercury offers a business checking and savings account with no monthly fees. There are no transaction fees or minimum monthly deposits for accounts, but you can scale up to more features and perks in the Mercury Tea Room if you hold $250,000 in your Mercury accounts. The Mercury Tea Room includes perks like free domestic and international wires, exclusive partner discounts, and a Mercury Treasury cash management account. All Mercury customers can use more than 55,000 ATMs nationwide. Learn more.
Pros: Single platform for savings and checking, no minimum monthly deposit, ability to join Mercury Tea Room.
Cons: Can’t deposit cash, no Android app available, not available to sole proprietors.
Best for: Companies that can use electronic deposits instead of cash deposits.
The Axos Basic Business Checking account is free for customers with a minimum deposit of $1,000. Axos allows 200 transactions per month without any fees, and customers can also make mobile deposits up to 60 times without fees. Axos also allows free ATM withdrawals. Keep an eye out for welcome bonuses for new account holders as well—Axos has been known to offer these. The Axos network also includes more than 91,000 ATMs nationwide. Learn more.
Pros: Expansive ATM network, Sign-up bonus, multiple account options.
Cons: Can’t deposit cash, limited number of fee-free transactions every month.
Best for: Businesses who don’t handle cash and make less than 50 or 200 transactions per month.
How Bench can help
If you’re looking to streamline your online business banking and financials, we can help. As a complete small business financial solution, Bench offers more than banking—we handle your bookkeeping and tax filing too. Our core services package includes a free business bank account and debit card. You’ll have real-time accounting and financial insights at your fingertips, tax assistance, payroll, and more through our partnerships with LendingClub, TaxFyle, Gusto, and other financial services. Maintain all your business financial needs through a single platform. Bench handles the back office of your business so you can focus on running your business. Learn more about our services.
How can I open a business bank account online?
Opening your online business bank account is an extremely straightforward process.
Once you’ve settled on the right bank to suit your needs, just fill out the online application for a new account. Be sure to have the following necessary documents at hand when you complete the application:
Your personal Social Security number
Two means of personal identification, like a driver’s license or passport
Your Employer Identification Number (Don’t have one yet? You can apply for one quickly online.)
If your business name is different from your own, make sure you have a “doing business as” or DBA certificate
If your business structure is a more complicated entity like a corporation or partnership, you may also need additional documents like:
- Your articles of organization or charter
- A partnership agreement
- Relevant business license
- Any tax-exempt information, like a 501C letter.
Further reading: How to Open a Business Bank Account
Once you have your documents in hand, complete the online business bank account application on the bank’s website. The process may take only a few minutes of inputting information and uploading digital copies of the necessary documentation before you’re approved for your bank account.
The process for applying for a business account online is very similar to opening a new personal bank account or a new credit card. Fill out the online application, submit the documents required, get approved, and start using your new account right away.
There may be a slight wait for funding in your account before you can write checks or send payments, of course, but online transfers of funds are quick and painless.