How to Open a Business Bank Account: Online Banks vs Traditional Banks
Separating your business and personal finances is not optional once you have an LLC — it is what preserves your liability protection. The account you choose and the documents you need depend on your entity type and how you plan to use the account. Here is the practical guide.
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The Quick Answer
For most small businesses and startups: open an online business bank account with Mercury, Relay, or Novo — no fees, faster approval, and better software integrations than most traditional banks. Use a traditional bank if you need to deposit cash regularly, need in-person branch access, or require SBA loan access through your banking relationship.
Online Business Banks vs Traditional Banks
Online banks (Mercury, Relay, Novo): $0/month fees. FDIC insured through partner banks. Open in minutes online. No minimum balance requirements. Strong software integrations (accounting, payment processors). No in-person branch access. Cannot accept cash deposits.
Traditional banks (Chase, Bank of America, Wells Fargo): Monthly fees $15-$30 (often waivable). FDIC insured directly. In-person branches nationwide. Cash deposits accepted. Some offer SBA loan relationships. Less modern software. More friction to open.
Documents You Need to Open a Business Bank Account
LLC: Articles of Organization (your state-approved formation document), EIN confirmation letter from the IRS, operating agreement, government-issued ID for all members or authorized signers, and business address.
Sole proprietorship: Personal government-issued ID, Social Security Number or EIN, DBA registration certificate if operating under a different name.
Corporation: Articles of Incorporation, EIN, corporate bylaws, corporate resolution authorizing account opening, and ID for authorized signers.
Have digital copies of all documents ready before you start the application — most online banks complete the process in one session.
When to Use an Online Business Bank
Use an online business bank if: you run a digital business with no cash transactions, you want zero monthly fees and no minimum balance, you value accounting software integrations (QuickBooks, Xero, Wave), or you want to separate cash flow into multiple accounts for budgeting. Mercury, Relay, and Novo are all purpose-built for this and are free to use.
When to Use a Traditional Bank
Use a traditional bank if: you have a retail business with regular cash deposits (online banks cannot accept cash), you want a local branch relationship for merchant services, you anticipate needing an SBA loan and want to build a banking relationship first, or you need a cashier's check or wire transfer capability with in-person support.
The Verdict
Open an online business bank account first — it costs nothing and you can do it today with your EIN and formation documents. Add a traditional bank account later if your business needs require it. Many small business owners run both: an online account as their primary operating account and a credit union for cash deposits and local services.
How to Get Started
Gather your Articles of Organization, EIN letter, and government ID. Go to Mercury, Relay, or Novo and complete the online application. Most accounts open within 1-3 business days. Transfer a nominal amount from your personal account to activate the account, then route all business income and expenses through it from day one.
RECOMMENDED TOOLS
Mercury
Best business banking for startups and tech founders
Relay
Multi-account banking for small business budget management
Novo
Fast setup with Stripe, Square, and Shopify integrations
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FREQUENTLY ASKED QUESTIONS
Can I use my personal bank account for my business?
You can, but you should not. Mixing personal and business finances can pierce your LLC's liability protection, makes tax preparation significantly harder, and signals to auditors that you are not treating the business as a separate entity.
Do I need a business bank account before I get my EIN?
No — get your EIN first. Banks require your EIN as part of the account opening process. The sequence is: form LLC, get EIN, open bank account.
What is the minimum deposit to open a business bank account?
Online banks like Mercury, Relay, and Novo have no minimum deposit requirement. Traditional banks typically require $25-$100 to open. Some business checking accounts have minimum balance requirements to waive monthly fees.
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