In the same way that technology has changed the way we book a flight, hail a cab (or Uber), order takeout, or even buy a car, technology is changing the way we interact with the bank. For example, my mortgage payment is automatically deducted from my paycheck every month and my paycheck is even automatically deposited into my personal bank account. In reality, there are very few banking services I use on a regular basis that require me to go inside a bank. Even if I need cash, I can do that through an ATM, and if I need to deposit a check, I can do it at an ATM or on my phone through a mobile app.
In much the same way, many small businesses are finding they don’t need to go into their bank’s physical location either. And many other business owners are finding they can do all of their business banking online with a bank that doesn’t even have a physical branch, thanks to mobile banking.
Online Banking for Business Accounts
Just like with personal banking, online banking for business accounts can make life easier for your business and your customers.
Online Business Banking vs. a Traditional Bank
Depending on your business needs, you may find that online banking is a better choice for your small business than a purely physical bank. For instance, many online business banking options don’t require a minimum deposit at account opening, and may not have a monthly service fee or maintenance fees like in-person banks. business savings accounts or business checking accounts, free invoicing services, and a virtual business debit card, so you don’t have to wait for your physical card to arrive in the mail to start using your business checking account.
Benefits of Online Business Banking For Your Small Business
Online banking can free up a lot of time for your business. Mobile deposits can make it easy for you to put income directly into your account, and wire transfers and electronic deposits can generally be handled through the mobile app or online. You can monitor their progress from your phone, so you don’t have to spend time talking to service representatives to track down whether payments went through or not.
Online bill pay can be a game changer, allowing you to automate payments or send payments with the click of a button rather than having to hunt down your business checkbook. Automated Clearing House (ACH) services can also manage your direct deposits from sales or vendors, as well as your payroll.
You can also check all of your business accounts, like your business checking, business savings, or business credit card, in one place. Additionally, many online business banking services provide merchant services, which can protect both your business and your customers. And thanks to evolving security policies, online banking is safer for you and your customers day by day.
Benefits of a Business Bank Account
As a small business owner or startup founder, you need a business checking account. Wondering why you shouldn’t just use your personal checking account for business expenses? Here’s why having a separate business account is imperative:
- It will make accounting a lot easier and give you greater visibility into whether or not your business is profitable
- It will help you better manage your business cash flow
- It will make it easier to account for business expenses at tax time
- It will make the transition to an LLC or corporation much easier should you decide to formalize your business entity down the road
- It will help you maintain the corporate veil
If you anticipate the need to take out a loan or line of credit, there are many small business lenders like the SBA that won’t even consider your loan application unless you have a business banking account, making it much harder to find small business loans to fuel growth or otherwise fund business initiatives.
In other words, a business checking account just makes sense for most small businesses. It’s a good idea to make signing up for one a step in your business formation process.
Today, you can find a variety of business checking accounts that are fee-free, or that offer a certain number of free transactions before fees kick in. Some offer perks like cash back or discounts on business products.
What Are the Disadvantages of Opening an Online Business Checking Account?
There are a few disadvantages to opening a business checking account online. For starters, if you select a bank that doesn’t have a physical location, you won’t have the benefits of a brick-and-mortar banking experience. You may also have a harder time depositing or withdrawing cash, even if the online bank has a strong ATM network. The online bank may charge you a fee for depositing cash over a certain amount or for going over a set limit of monthly transactions.
While most solely online banks have customer service support in place, especially via chat or text, if you want in-person help, a physical bank may be your best option. Also, some online banks also don’t offer the same services that more traditional banks do, like small business loans or other financing.
It’s most important to make sure that any bank you use is a Member FDIC (Federal Deposit Insurance Corporation), which means that your deposit account is insured by the federal government. Most physical banks and online banks are definitely part of this independent agency, but not all financial institutions are.
Can I Open up a Business Bank Account Online?
The great news is: you don’t even have to drive to a branch to open a business bank account, especially with banks that are 100% online. By filling out a short application on the bank’s website, you can be up and running with your new bank account in minutes.
Top 5 Options to Open a Business Checking Account Online
Advertiser & Editorial Disclosure
If you’re considering an online business checking account, these five options are all worth considering:
1.: Best for Earning 1% Interest; No-Fee Account
If you’d like to earn interest on your business checking account,could be a good choice. What’s more, this is a free checking account, a rarity in the industry.
2. OZK: Best Overdraft Protection
Bank OZK offers many of the same services that other banks offer, but also includes common-sense overdraft protection they call Bounce Proof Security which will, if you maintain a positive account balance for at least 30 days on a new account, cover any overdrafts up to your limit, with a maximum overdraft of $500 (there’s a $35 fee for every overdraft regardless of whether it’s caused by a check, an in-person withdrawal, or electronic transaction).
If you’re looking for great overdraft protection, Bank OZK is our choice for online checking accounts. The bank also offers business savings and money market accounts.
*All information about Bank OZK has been collected independently by Nav. This account is not currently available through Nav.
3.: Best Long-Term Banking Services
Bank of America is one of those brick-and-mortar banks that also offers a lot of online banking services. If yours is a relatively young business and you are looking for a bank can grow with your business, you might consider, you should consider Bank of America. With accounts that are designed to meet a variety of small business banking needs, you’ll likely find an account that fits.
4.: Best Free Business Checking Account
Axos Bank has gotten rave reviews online. We agree.
Axos designed its Basic Business Checking account with small business owners in mind. Open a 100% online account and enjoy unlimited domestic ATM fee reimbursements, no monthly maintenance fees, and no minimum balance requirements. Axos prides itself on its simple, convenient, no-fuss approach to a free small business checking account.
5.: Best If You Occasionally Need to Go to a Branch
Chase Bank is another brick-and-mortar bank with branches all across the country for those times when you do need to visit the inside of a bank since there are nearly 4,900 branches and 16,000 ATMs across the country. Chase has business specialists at your local branch for those times when you need to sit down and have a person-to-person conversation with a banker.
Chase allows you to have your digital cake and eat it too with a convenient online checking account and other banking services, along with the option to visit Chase Bank branches all across the country.
Where to Go to Open a Business Checking Account Online
If you’re on a bank’s website, look for its business services. If it offers business checking accounts, there will be a page of details about different account options, included services, and fees. There will also be a button inviting you to apply now.
If there are details about what you need to open the account, read those before proceeding, or use the list in the next section.
What Do You Need to Open a Checking Account Online?
As a general rule, you’ll need the following documents to open a business checking account with most online or brick-and-mortar banks:
- Your Social Security number or Employer Identification Number (EIN)
- A current driver’s license or passport as personal identification
- Your business license with the name of the business and the owner’s or owners’ names
- Certificate of assumed name (DBA) if you are a sole proprietor
- Partnership agreement with the name of the business and its partners (if there are multiple owners)
- A copy of your organization documents that are filed with the state if you run a corporation or LLC
How to Open a Business Checking Account Online
Some banks that have physical branches may require you to apply in person locally, while others give you the option to open an account online. Obviously, banks that are 100% online give you that option as well!
Opening an account is usually fast and easy. You’ll be asked to input personal details (contact info, date of birth, address, Social Security number) and details about your business (your business structure, address, industry, how long you’ve been in business, annual revenue, number of employees).
Select the type of account you want. You may be required to fund it to open an account, as there may be a minimum daily balance requirement. Your application may be approved instantly, allowing you to access your account online right away, though you’ll have to wait around 10 business days to get your debit card and checks.
How to Choose the Right Business Checking Account Online
Don’t automatically choose to open a business checking account with the same bank you have your personal account at without determining whether or not it is the best bank for your business needs.
Some banks specialize in certain types of businesses or industries. This could also apply to an online bank. If a bank has experience in your industry or similar small businesses, they may even offer additional services or custom offerings designed to benefit you and other businesses like yours.
Before you choose an online bank for your business, make sure you know:
- If there are monthly account fees and if there are requirements to have those fees waived
- If your checking account will earn interest and what the expected interest rate may be
- Whether there are transaction fees for writing checks, accepting credit cards, etc.
- If there are any introductory offers
You want to make sure the online bank offers services to meet your needs. For example, if you accept a lot of cash transactions, is there a way to make cash deposits? Are there branch locations in your area? If not and you feel you need a local branch, it may not be the bank best suited for the way you do business.
You may also want features like mobile check deposit or ATM fee reimbursement, or even the ability to make mobile debit card purchases, so look for banks that offer those features.
Why You Should Open a Business Checking Account Online
Although most banks have some kind of digital presence, online banking services are relatively new. In other words, just because your neighborhood bank has a website, it doesn’t mean it offers all its banking services online.
Online banks are capable of offering most of the banking services you’ll find at the bank branch around the corner, without the expense of a physical location, or locations. As a result, there are some pretty compelling benefits most small business owners might appreciate.
- Your business savings account will earn higher interest rates—sometimes as much as 1%; significantly higher than a conventional bank
- An online bank’s lower overhead means you pay less in fees than a conventional bank
- It’s easier to establish an online bank account with applications that are designed to be completed quickly and easily
- Online bank accounts can connect seamlessly to payment processing accounts and other digital banking services
- Most online banks are FDIC-insured like a brick-and-mortar bank
Nevertheless, if you make a lot of cash deposits, write a lot of checks, or want ATM access anywhere and everywhere, an online bank might not be the best choice for you. With that being said, if you do the lion’s share of your business digitally already, an online bank account may be just up your alley.
Online Business Account FAQ
Now let’s address questions you may have about online business bank accounts.
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