Opening a business bank account may seem straightforward on the surface, but the process involves several layers of verification designed to protect both business owners and the financial system. Banks are required to confirm who is opening the account, how the business is structured, and how the account is expected to be used. Understanding these requirements upfront can help you prepare the right documentation, move through the application process more smoothly, and avoid common delays—especially for LLCs, corporations, and multi-owner businesses.
Beyond these basics, having a dedicated business account allows you to build a financial history for your company. This becomes especially important as you grow. Lenders, partners, and even vendors often look for a track record of responsible business banking when evaluating credibility.
Whether you’re running a side hustle, formalizing an existing small business or launching a startup, understanding what’s required before opening an account can help you move through the process smoothly and avoid unnecessary delays.
What Personal Information Is Required?
Opening a business bank account doesn’t just involve verifying your company—it also requires confirming the identity of the individual applying on the business’s behalf. This step is required by federal Know Your Customer (KYC) regulations, which exist to protect businesses, banks, and the broader financial system from fraud, identity theft, and other financial crimes. Even though the account is for your business, banks must first establish who is responsible for opening and managing it. Providing accurate personal information helps ensure the account is opened securely, reduces the risk of unauthorized access, and allows your business to begin banking without unnecessary delays.
You will need to provide your:
- Full legal name
- Date of birth
- Residential address
- Email address
- Phone number
- Social Security Number (SSN)
These requirements help the bank confirm that you are who you say you are, ensure the account isn’t being opened under a stolen or false identity, and keep the broader financial system secure. Even for business bank accounts, verifying the individual applying is an important step in protecting both you and your company.
Pro Tip: While some banks may allow a P.O. Box for certain purposes, it can’t be used to open a business bank account at Grasshopper. You’ll need to provide a physical address so we can complete the required verification.
What Business Information Is Required?
Once your personal identity is verified, the next step is confirming the legitimacy of the business itself. Banks are required to understand not only who is opening the account, but also the structure, purpose, and registration status of the company they are onboarding. This business-level verification ensures the entity is legally formed, operating within permitted guidelines, and eligible for business banking services. It also allows the bank to apply the correct compliance standards, account features, and risk controls—setting your business up for a smoother onboarding experience and ongoing support as you grow.
To verify your business, you’ll be asked to provide:
- Legal business name
- Business entity type (LLC, Corporation, Partnership, Sole Proprietor)
- Employee Identification Number (EIN) or SSN (depending on structure)
- North American Industry Classification System (NAICS) code
- Business address
- Email address
- Phone number
- Date established
- Doing Business As (DBA), if applicable
- Website or online presence (optional)
These details ensure that your business is properly registered, operating within permitted industry guidelines, and eligible for the products and services offered. The better the bank understands your business, the more accurately it can support your financial needs.
Pro Tip: Not all banks allow business accounts to be opened using a P.O. Box. Grasshopper requires a physical address for verification, so be prepared to provide one during the application process.
What LLCs and Corporations Should Expect
When opening a business bank account, the bank will require documentation to verify your business’s legal formation and ownership structure. The exact documents depend on your business type and may require further verification.
Required Formation Documents
LLCs
- Articles of Organization
- Operating Agreement
Corporations
- Articles of Incorporation
- Bylaws
Partnerships
These documents confirm your business registration, clarify ownership, and identify who is authorized to make decisions on behalf of the company. Having these documents ready can help the account opening process go smoothly and prevent delays.
Multi-Owner Verification
Federal regulations require banks to verify certain individuals associated with a business to maintain transparency and prevent financial crimes. This process, often referred to as Beneficial Ownership Information (BOI) collection, applies to all U.S. financial institutions and is not specific to any one bank.
Under these rules, banks must verify:
- Each individual who owns 25% or more of the business
- At least one individual with significant responsibility or control, such as a CEO, managing partner, or other officer
These individuals may need to provide identification and personal information, even if they will not transact on the account, even if they will not personally transact on the account. Typical information requested includes: full legal name, date of birth, residential address, and Social Security Number.
The purpose of BOI verification is to ensure that the business account is not being used for fraud, money laundering, or other illicit activity. Collecting this information helps protect both the business and the financial system as a whole while ensuring regulatory compliance.
Pro Tip: This is a federal requirement for all U.S. financial institutions—not a Grasshopper-specific policy. Collecting this information protects both your business and the broader financial system, so having these details ready before you apply can help prevent delays during the account opening process.
Adding Authorized Users
After opening your account, you can grant access to team members who need to manage certain financial tasks. Common authorized users include:
- Bookkeepers
- Office managers
- Finance team members
Adding an authorized user usually requires:
- A simple authorization or corporate resolution confirming their access
- Valid identification for the added the added individual
Granting access this way ensures that the right team members can perform necessary banking activities, such as reviewing transactions, making payments, or managing funds, while keeping your account secure. Having a clear process for adding users helps maintain accountability and prevents unauthorized access.
Funding Your Business Bank Account
After providing the required personal and business information, most banks require a minimum deposit to activate the business bank account. There are several common ways to fund an account:
- Plaid Integration: Many banks now support funding via Plaid, which securely connects your existing bank account to your new business account. This allows for a quick and verified transfer of funds without manually entering bank details.
- ACH Transfer: Move funds electronically from an existing bank account by entering the ur bank details. This is a secure and widely used method, though it can take a few business days to process.
- Debit or Credit Card: Some banks allow an initial deposit via a debit or credit card linked to another account. This method is usually faster than an ACH transfer.
- Check Deposit: You can fund an account with a personal or business check. While check deposits are common at many banks, digital-first accounts may not support them directly. Processing times vary, and funds may be held until the check clears.
- Wire Transfer: A direct bank-to-bank wire can fund your account quickly, often the same day, but not all banks support wires for initial deposits and fees may apply.
- Cash Deposit: While some banks accept cash for business accounts, many digital-first banks do not. If your business handles cash regularly, you may need a bank branch that supports cash deposits.
Selecting the right funding method can help you get your account operational quickly, reduce delays in business operations, and ensure that your cash flow is ready to support payments, payroll, and other day-to-day financial needs from the start.
Pro Tip: Grasshopper requires a minimum opening deposit of $100, funded via Plaid or ACH. Deposits typically post within 2–3 business days, and funds are available within 5 business days. Once the funds are available, your business bank account becomes fully active for transfers, payments, and debit card activity.
Account Functionality & Fees
After opening a business bank account, the real test is how well it supports your day-to-day operations. While many business owners choose digital banking for speed and convenience, understanding how an account actually functions behind the scenes is essential to avoiding friction as your business grows. Factors like how fees are assessed, how quickly funds become available, and how easily the account integrates with your existing tools can directly impact cash flow, accounting accuracy, and operational efficiency.
Not all business bank accounts are structured the same way. Some prioritize low fees but limit functionality, while others offer robust features with more complex cost structures. Taking the time to understand these details before committing helps ensure the account aligns with how your business actually operates — whether that includes frequent payments, integrations with accounting software, or managing multiple users and transactions. By reviewing functionality and fees upfront, you can make a more informed decision, reduce surprises, and choose a banking partner that supports your business both now and as it scales.
Fee Structure
Understanding the fee structure of a business bank account is critical before applying. While many digital business accounts aim to minimize fees to simplify banking, there are a few common charges depending on how you use the account. Key fees to review include:
- Monthly maintenance fees: Some banks charge a flat monthly fee for account upkeep, while others waive this if certain criteria are met, such as maintaining a minimum balance.
- Transaction fees: These can apply to deposits, withdrawals, or transfers above a set limit. Some accounts have unlimited transactions, while others charge per item.
- Wire transfer fees: Incoming wires are often free, but outgoing wires—both domestic and international—may incur standard fees.
- ACH fees: Automated Clearing House (ACH) transfers are generally low-cost or free, but some banks may charge for expedited ACH transfers or returned payments.
- ATM and debit card fees: Depending on the bank, using ATMs outside of a network or making certain debit card transactions may carry fees.
- Overdraft and insufficient funds fees: Some accounts allow overdrafts with fees, while others automatically decline transactions to avoid charges.
- Cash handling fees: If your account accepts cash deposits (not all do), there may be fees for deposits over a certain amount.
Familiarizing these built-in features before you apply can help you plan your cash flow and make the most of your account from day one. Beyond fees and functionality, choosing the right banking partner is just as important. Look for a bank that aligns with your operations and growth goals to save time, reduce frustration, and help your business run smoothly.
Pro Tip: Grasshopper’s business bank accounts are designed for simplicity and transparency. In addition to no monthly maintenance fees, no minimum balance requirements, and no fees for incoming domestic wires, our accounts include free ACH transfers, credits for outgoing domestic wires, and no overdraft fees. Plus, fee-free withdrawals at thousands of ATMs nationwide.
Cash Deposits
Cash deposits are a common need for many businesses, particularly those that handle in-person sales, tips, or payments from clients. Traditional banks typically allow businesses to deposit cash in two main ways:
- At a Branch: You can bring cash directly to a bank branch, where a teller counts and credits it to your account. This is the most straightforward method but requires physical access to a branch.
- Via Deposit-Enabled ATMs: Many banks provide ATMs that can accept cash deposits directly into a business bank account. These ATMs count the cash, issue a receipt, and post the deposit—sometimes immediately, or within a few business days depending on the bank’s processing policies.
Digital-first or cashless banks, in contrast, generally do not accept physical cash and rely on electronic transfers and payments instead. While this allows them to offer faster account setup, lower fees, and robust online tools, it also means:
- Businesses that rely on cash must find alternative ways to deposit it, such as using third-party cash deposit networks or a separate branch-based bank.
- Daily cash operations may require extra planning to convert cash into electronic transfers.
- Certain cash-intensive business models (like restaurants, retail, or service businesses that collect cash payments) may face limitations.
Pro Tip: Grasshopper is currently a cashless digital bank and does not support cash deposits. Businesses that handle frequent cash may need to plan ahead, either by using a branch-based solution for those deposits or converting cash into electronic payments, to ensure smooth cash management and uninterrupted operations.
Account Integrations
Modern business bank accounts often integrate with accounting, bookkeeping, and payment platforms to streamline financial management. These integrations save time, reduce errors, and give businesses a clearer picture of their finances. Some of the most commonly used integrations include:
- Plaid: Enables secure connections between your bank account and third-party financial apps, allowing fast, verified transfers and syncing data across platforms.
- QuickBooks: Automatically sync transactions, categorize expenses, and reconcile accounts in real time. QuickBooks is widely used by small businesses and accountants for bookkeeping and tax preparation.
- Autobooks: Provides automated bookkeeping and invoicing features that integrate with your bank account, helping businesses stay organized and compliant.
- Xero: Offers cloud-based accounting tools that connect directly to your business account, helping manage invoices, payroll, and cash flow without manual entry.
- Other Accounting or Payment Platforms: Many banks support integrations with additional tools for payroll, expense management, or e-commerce platforms.
Business banking goes beyond just holding funds—it’s about connecting your financial ecosystem. Banks that support robust integrations make it easier to manage transactions, track cash flow, and automate routine tasks. By choosing a bank with the right integrations for your business, you can reduce manual work, gain real-time financial insights, and focus more on growth rather than administrative tasks.
Pro Tip: Grasshopper’s Xero integration is currently in beta. Businesses interested in connecting their accounts for streamlined bookkeeping and real-time transaction syncing can sign up early to gain access and provide feedback as the feature is refined.
Holds & Limits
When opening a new business bank account, it’s common for banks to implement temporary holds or limits. These measures are designed to protect both the business and the financial system, and they are particularly important for new accounts that do not yet have a transaction history. Being aware of these policies can help you plan cash flow and avoid surprises.
Common Types of Holds and Limits
- Deposit Holds: Banks may place temporary holds on incoming deposits—especially checks or large transfers—until the funds clear. Hold times vary depending on the deposit type, amount, and bank policies.
- Verification Holds: Some deposits or transfers may be temporarily held until the bank completes required verification checks, such as identity verification or BOI reviews.
- Transaction Limits: New accounts may have daily or monthly caps on ACH transfers, wire transfers, debit card purchases, or outgoing payments until the account establishes a transaction history.
- Spending Limits: Debit card transactions may be capped at a certain amount per day or per transaction to reduce risk for new accounts.
Why These Limits Exist
Holds and limits are standard banking practices designed to protect both the bank and account holders. They exist for several reasons:
- Regulatory Compliance: Banks must comply with federal regulations such as KYC and Anti-Money Laundering (AML) rules, which require verification of account owners and certain transactions.
- Risk Management: New accounts have no prior history, making it harder to assess risk. Limits and holds reduce potential exposure for both the bank and the business.
- Operational Security: Holds give banks time to verify deposits, ensure funds are legitimate, and confirm that all required documentation (like business formation documents or ownership information) is accurate.
- Fraud Prevention: Temporary holds and transaction caps help prevent unauthorized or suspicious activity while the account establishes a transaction history.
- Protecting Cash Flow: While it may seem restrictive, these measures can actually help businesses avoid accidental overdrafts, returned payments, or other issues while the account is still new.
Many banks offer the option to increase limits, either temporarily or permanently, as your business establishes a transaction history and demonstrates account stability. Temporary limit increases can help cover one-time large payments or seasonal spikes in activity, while permanent increases provide more flexibility for ongoing operations.
Pro Tip: Communicating with your bank and providing any requested documentation can help ensure your account scales smoothly with your business needs.
Approval Timelines & Eligibility Considerations
Opening a business bank account is often perceived as a quick, purely administrative task—but behind the scenes, banks are required to follow a series of regulatory and risk-management steps designed to protect both the business owner and the financial system as a whole. While many business bank accounts can be opened in minutes and approved instantly, some applications require additional review. Understanding why this happens can help set realistic expectations and reduce frustration during the onboarding process.
In most cases, delays are not a reflection of the business doing anything “wrong.” Instead, they are the result of federal compliance requirements, verification standards, or industry-specific considerations that apply to all U.S. financial institutions.
Regulated & Specialized Activities
Certain industries are considered regulated or higher risk under federal and state banking laws. Businesses operating in these categories may be subject to enhanced due diligence before an account can be fully activated. This process ensures compliance with regulations such as Know Your Customer (KYC), Beneficial Ownership Information (BOI), and Anti-Money Laundering (AML) requirements.
Enhanced due diligence may involve:
- Additional documentation about business operations, contracts, or licenses
- Verification of industry-specific compliance (for example, financial services, money transmission, or other regulated activities)
- More detailed review of ownership structure and key decision-makers
Because these steps go beyond standard verification, accounts tied to regulated or specialized activities may take longer to approve. While this can feel inconvenient, the process exists to protect legitimate businesses from fraud exposure and ensure the bank can safely support the account long term.
How Banks Evaluate Applications
Most banks do not publish rigid eligibility thresholds, but every application is reviewed to ensure safe, compliant onboarding. During this process, banks typically assess several core factors:
- Ability to Verify Business Legitimacy: Banks must confirm the business is legally formed and actively operating. This may include reviewing formation documents, licenses, or proof of operations such as contracts or invoices.
- Clear Ownership Structure: Financial institutions are required to identify individuals with significant ownership or control. A transparent ownership structure helps ensure accountability and meets federal BOI requirements.
- Reasonable Expected Account Activity: Banks may review whether anticipated transaction volume and payment types align with the stated business model. This helps identify inconsistencies and reduce the risk of unauthorized or fraudulent activity.
- Alignment With Federal Regulations: All accounts must comply with KYC and AML rules, as well as any industry-specific restrictions that apply under federal law.
These reviews are standard across U.S. banks and are designed to protect both the institution and its clients. While the process may feel opaque at times, it plays an important role in maintaining secure and reliable access to financial services.
Pro Tip: At Grasshopper, most applications are reviewed quickly. If a manual review is required, approval typically takes up to three business days once all requested documentation has been received.
Common Business Scenarios
Different business situations can affect the documents you’ll need when opening a business bank account. Having the right information ready can help speed up the process and ensure your application is reviewed efficiently, reducing delays and avoiding unnecessary follow-up requests.
If You Just Formed Your Business
For newly established businesses, banks need to verify your legal formation and registration. You’ll typically need:
- Articles of Organization/Incorporation: Confirms your business is legally registered with the state.
- EIN Confirmation: Verifies your federal tax identification number
Optional: A website or online presence can help demonstrate that your business is active, but it is not strictly required.
If You Operate Under a DBA
Businesses operating under a trade name must provide proof of the DBA in addition to the legal entity documentation:
- DBA Registration: Confirms that your business is authorized to operate under a trade name.
- Legal Entity Documentation: Ensures that the DBA is linked to a legitimate, registered business entity.
If Your Business Has Multiple Owners
When multiple individuals share ownership, banks need to confirm each person’s stake and identity for regulatory compliance:
- Ownership Percentages: Should match your formation documents
- Verification of 25%+ Owners: Each individual who owns 25% or more must be available to complete identity verification, even if they won’t actively transact on the account.
If You Recently Purchased or Reorganized the Business
Changes in ownership or structure may require updated documentation to ensure regulatory compliance and accurate account records:
- Updated Ownership Documents: Reflects any changes in shareholders, partners, or members.
- EIN Confirmation: Ensures the correct responsible party is associated with the account for tax and reporting purposes.
Pro Tip: Having clear documentation about your business structure, formation, and expected activity can help streamline the application process and reduce the likelihood of additional verification requests.
Funding Your Business After Account Opening
Once your business bank account is open, it’s important to review how deposits are processed and which funding options are available. Knowing the methods, hold times, and processing rules can help you manage cash flow effectively and ensure timely access to your funds.
Funding Deposite
The initial funding deposit is typically subject to a temporary hold. For most banks, including digital-first accounts, this hold period is usually around five business days. During this time:
- The deposit is credited to your account but may not be immediately available for transactions.
- This hold ensures that the deposited funds clear and that the account is fully verified and secure before allowing full transactional access.
- Once the hold period ends, the funds are available for ACH transfers, wire payments, debit card use, and other banking activities.
Ongoing Deposits
After the account is active, subsequent deposits are generally available faster, though timing can vary depending on:
- The deposit method (ACH, wire, debit card, or check)
- The amount and source of funds
- Any verification requirements that may trigger temporary holds
Pro Tip: Planning your initial and ongoing deposits with expected hold periods in mind can help prevent cash flow interruptions. Completing all verification steps promptly and using electronic transfer methods can help speed up fund availability.
Finish Strong
Every business faces challenges, but having a banking partner that makes it easy to get up and running quickly can make navigating them much smoother. A thoughtfully chosen business bank account gives you control, security, and the freedom to focus on serving your customers and growing your business without sacrificing financial oversight or operational flexibility.
Join thousands of businesses that have streamlined their banking and take the next step toward simpler, smarter business finances today!
