The United States represents the largest and most important economy in the world; driving 20% of global economic output. Despite the turmoil of the global economic crisis, the US remains larger economically than their nearest economical rival, China, and still has the highest GDP per person of any large country.
The USA is an attractive place to start a business. There are 28 million small businesses in the US which account for nearly a third of all sales in the country.
If you’re looking to get in on the act, and start a business of your own, then you'll have a lot to think about. One thing to get right early on is this process is the act of opening a bank account.
Check out this guide to learn more about opening a business bank account in the United States.
US law recognises several different types of corporate entities. You may have one of the following company types:
- Sole Proprietorship
- Limited Liability Company (LLC)
- S Corporation
To open a business bank account in America, you must first have a business which is registered in the USA. You’ll be asked to present proof of registration when you open your account.
It’s normal to require new customers to visit the bank and present their paperwork before the account is fully opened. You’re likely to be asked for the following documents:
- Photo ID for the director opening the account
- Proof of personal address for the named director
- Articles of incorporation/organisation. You will have to prove that your business is properly registered, although the acceptable documents will vary according to the type of business entity you run.
- EIN (Federal Employer Identification Number) confirmation letter. This is required for tax reporting purposes.
- Proof of business address. Some banks will require you to prove a business address in the same geographic area and state as the bank branch. Others are more accommodating.
Many accounts may also ask for a minimum deposit amount to open the account. It’s worth checking with your chosen bank before you visit to confirm which specific documents are acceptable.
There’s no legal issue with opening a bank account in the US as a non-resident. However, do remember that for a company account, your business must be registered in America and have a EIN.
Most banks require you to visit and present identification. This area of law is tightly regulated, so expect stringent checks.
There are some specialist banks and agencies who may be able to help you open an account from abroad. Silicon Valley Bank, for example, specialises in helping start up businesses in certain sectors and they may be able to make arrangements with entrepreneurs from overseas.
Alternatively, there are agencies who will help for a fee. Because these agencies operate typically on a state by state basis, you'll need to search for a reputable agency in the state where you register your business.
It’s difficult to open an account online as most banks require you to present documents in the branch personally. Some specialist online banks may be able to help you, but they're not as established as the ‘Big Four’ listed below and may not have the breadth of product range.
Most banks will let you start the account application process online and then make an appointment to show your documents later.
Old-world bank accounts only work properly in one country. They hold money only in one currency. And it gets expensive when you try to use them across borders. TransferWise's new Borderless accounts solve all of this.
Now you can send, receive and organise your money internationally, without crazy fees or even-crazier exchange rates – just a small, fair charge when your money moves between currencies.
There are a huge number of banks to choose from in the US, including globally recognised brands and smaller local operations. If you already bank with an international bank who works in America, they might be able to help you transfer your account to the US more easily.
If you’re starting from scratch, then choose one of the ‘Big Four’ American banks. Some details are given below about business bank accounts for each of the following:
JP Morgan Chase is one of the largest banks in America. There are several products designed for business banking, with monthly fees from $10-95. All monthly fees can be waived if you keep a minimum deposit amount in the account. The exact products on offer may vary according to the location of your business, so you have to enter a zip code to get the final word on available products.
Bank of America offers two regular business accounts with fees, which are then waived subject to fulfilment of certain conditions. For example, if you make a minimum number of transactions or payments over a monthly cycle then the fee (of $17 or $30 depending on the account) could be avoided. There are 4,861 branches of Bank of America in the US.
Citibank has a very large range of business banking accounts; including checking accounts designed for different size of businesses. Luckily, the bank website provides a helpful comparison table so you can choose between them. There are also specialist accounts designed for different sectors and needs. There are 983 Citibank branches in the US, and more branches overseas.
Wells Fargo has business checking accounts, and accounts which are tailored to the needs of small businesses or non profit organisations. As with all American banks, the products (including fees and charges) on offer vary from state to state so you need to enter your zip code to get the full details.
Before you open your business bank account in the United States, read the terms and conditions carefully. It’s especially worth reading the section on banking fees and charges, as the fee structure might be quite different to what you’re familiar with.
It’s common to find monthly account handling charges, and fixed fees for banking transactions. Even when these fees look small, they can build up over time. Many business accounts have terms and conditions which mean that charges are waived if you meet certain conditions such as maintaining a minimum monthly or daily balance. This can help you avoid unnecessary fees and charges.
From time to time, most businesses need to make international money transfers - for example, to pay suppliers based overseas. Your bank will offer this service, but it might not be the best deal available. If you plan on making an international money transfer, then pay special attention to the fees applied.
Many banks don't offer a good deal to their customers when making international money transfers like this. Often they'll add a high initial ‘admin’ charge for processing the transaction, as well as steep transaction fees. These may be fixed fees or a percentage of the amount transferred.
But even if the listed fees look quite low, your bank will make their cut on the deal. Instead of a transparent, up-front fee, you might find that your bank’s profit is rolled into a poor exchange rate. If your bank applies an exchange rate which is worse than the real, mid-market rate, then you lose out as the true cost of your transfer is higher than it needs to be.
To make sure your bank isn’t taking an extra cut, you’ll want to use an online currency converter to check the actual value of your money before you transfer internationally. If you do make a transfer, you might consider using an alternative service like TransferWise. Not only does TransferWise already offer the true exchange rate you can find on Google, but since your international transfer is made with two local transfers in each respective country, large SWIFT transfer fees are also cut out, leaving you with more money in the end.