Demand for small business banking is soaring, with 99% of American companies classified as small businesses, and 88% of those employing fewer than 20 people according to JP Morgan Chase Institute.
If you're a one-person business, you need access to some of the same business checking, savings, credit cards, funding and merchant services as larger businesses.
We have compiled a list of the best business banking options for sole proprietors based on common services most small business owners require.
Best Small Business Bank Accounts For Sole Proprietors
Live Oak's 4.00% APY easily beats other business savings accounts and is well above the 0.45% APY national average savings rate. Plus, customers can access up to $10 million in FDIC coverage through the bank’s network of FDIC-insured banks to maximize protection.
Novo is not a bank, it's a fintech company. Your deposits are insured up to $250,000 through our partner bank, Middlesex Federal Savings, Member FDIC.
Customers benefit from innovative features and a user-friendly experience. NorthOne seamlessly integrates with popular accounting and business tools, simplifying your financial management and saving you time. The Envelopes feature allows customers to set aside money for specific purposes, like taxes or savings, helping to manage cash flow and budget effectively.
Both virtual and physical debit cards are available to give customers the flexibility and control over spending.
Found is a financial app designed specifically for self-employed individuals. Found's core strength is the tax-focused features. Found automatically tracks expenses, categorizes them, identifies potential tax write-offs, and provides real-time estimates of your tax liability. You can even set aside money for taxes automatically.
Found offers the Found Free Business Checking Account or the Found Plus to receive a up to 1.50% APY on balances up to $20,000 but with a $20 per month fee.
Found is not a bank, it's a fintech company that is FDIC insured through Piermont Bank. Deposits are insured up to $250,000 per depositor, per ownership category.
Multiple virtual cards with custom limits.
What most small business banks require to open new accounts
It's convenient it is to open a business account online, you'll only need basic information that may include the following:
Personal information. Name, address, date of birth, Social Security number, and driver’s license or government-issued photo identification.
Business information. Business name, address, phone number and website, as well as your tax identification number (EIN or SSN for sole proprietors), business structure, industry, annual revenue, number of employees and years in business.
Business documentation. Articles of incorporation or other relevant business formation documents.
Six-Digit NAICS Code. This code is a unique identifier assigned to specific industries in North America under the North American Industry Classification System (NAICS).
Final takeaway
Having a separate business bank account is essential for small business owners to help streamline financial operations, enhances professional image, and protect personal assets.
A business bank account offers several benefits including:
Credibility. Small businesses appear more established when they have a business bank account. This can be crucial when interacting with clients, vendors, and partners.
Simplified Accounting and Tax Preparation. Separating your business finances makes it much easier to track income and expenses. This simplifies bookkeeping, tax preparation, and provides a clearer picture of your business's financial health. It can also help maximize tax deductions and avoid potential audits.
Liability Protection. Keeping your business finances separate can help protect your personal assets if your business faces legal or financial difficulties.
Building Business Credit. Establishing a business credit history is easier when you have a separate bank account. This can help you secure loans, credit lines, and better terms with vendors.
Expense Tracking. It becomes easier to identify deductible business expenses and accurately track your spending patterns. This can lead to significant savings during tax season.
Easier Financial Management. A separate account allows you to easily monitor cash flow, manage payroll, and track payments from clients. It helps you maintain a clear overview of your business finances.
Acceptance of Payments. Many clients and vendors prefer working with businesses that have a dedicated bank account. It provides a level of assurance and professionalism.
Avoiding Commingling Funds. Mixing personal and business expenses can lead to confusion and potential legal issues. A separate account prevents this and maintains a clear distinction between your personal and business finances.
