Yes, most businesses can open a savings account, but the type of account depends on your business structure

A business savings account is a deposit account held in your company's name rather than your personal name. Sole proprietors, partnerships, LLCs, S-corporations, and C-corporations can all open them. The account earns interest on the balance, just like a personal savings account, but the money belongs to the business legally and for tax purposes.

The main difference from a personal account is that you'll need to provide your business tax ID (EIN) instead of your Social Security number, and the bank will ask for documentation proving your business exists. Some banks require a minimum deposit to open, which ranges from $0 to $2,500 depending on the institution.

If you're a sole proprietor operating under your own name with no employees, some banks let you use your Social Security number instead of an EIN, though getting an EIN is still the cleaner approach. If you operate under a business name, you'll need an EIN regardless of your structure.

Key Takeaways

  • Sole proprietors, partnerships, LLCs, and corporations can all open business savings accounts using their business tax ID (EIN).
  • Banks require proof that your business exists, such as articles of incorporation, a partnership agreement, or a business license.
  • Business savings accounts earn interest and keep business money separate from personal funds for accounting and tax purposes.
  • Minimum deposits vary by bank and account type, ranging from zero to several thousand dollars.
  • Interest rates on business savings accounts are typically lower than rates on money market accounts or CDs, so compare options before opening.

What documentation you'll need to bring

Banks require proof of your business identity and ownership. The exact documents depend on your business structure, but most banks ask for at least two of the following: a government-issued photo ID (yours, as the owner or authorized representative), your EIN assignment letter from the IRS, articles of incorporation or organization, a business license, a DBA (doing business as) certificate, or a partnership agreement.

If your business is brand new and you haven't received your EIN letter yet, you can apply for an EIN online at irs.gov and get a number immediately. Print the confirmation page or write down the number — banks accept this as proof. If you're a sole proprietor using your Social Security number, bring your ID and proof of the business name (a business license or DBA certificate).

Some banks also ask for a recent business tax return or a letter from your accountant confirming the business exists. If you're opening the account on behalf of the business but are not the owner, bring a document authorizing you to do so, such as a corporate resolution or a power of attorney.

How business savings accounts differ from personal accounts

The most important difference is legal ownership. Money in a business savings account belongs to the business, not to you personally. This matters for taxes — interest earned is business income, not personal income — and for liability. If the business is sued, creditors can reach the business account; they cannot reach your personal savings account (assuming you keep them separate).

Interest rates on business savings accounts are usually lower than rates on personal savings accounts at the same bank. This is because businesses typically hold larger balances and have more options for where to put their money. If you're comparing accounts, check the annual percentage yield (APY) carefully; a 0.01% difference matters more on a $50,000 balance than on a $5,000 balance.

Business accounts often come with higher minimum balances to earn interest or to avoid monthly fees. Some banks charge a monthly maintenance fee ($5 to $15) if your balance drops below a threshold. Personal accounts at the same bank may have no minimum or a much lower one. Read the fee schedule before opening.

Sole proprietors and whether you need an EIN

If you operate as a sole proprietor — meaning you're self-employed and have no employees — you can open a business savings account using either your Social Security number or an EIN. Many banks prefer an EIN because it clearly signals that the account is for business use, not personal use, which simplifies accounting and tax reporting.

Getting an EIN is free and takes five minutes online at irs.gov. You'll receive the number immediately and can use it to open the account the same day. If you don't have an EIN yet and the bank accepts your Social Security number, you can still open the account, but you'll need to show a business license or DBA certificate to prove you're operating under a business name.

The advantage of using an EIN is that it keeps your business finances completely separate from your personal finances in the bank's records. This makes tax time easier and makes it clearer to the IRS that you're running a business. If you plan to hire employees later, you'll need an EIN anyway, so getting one now saves a step.

Interest rates and fees to compare

Business savings accounts typically earn between 0.01% and 0.50% APY, depending on the bank and the account type. Online banks usually offer higher rates than brick-and-mortar banks. Before opening, compare the APY, the minimum balance required to earn that rate, and any monthly fees.

Common fees include a monthly maintenance fee (charged if your balance falls below a minimum), an overdraft fee (if you withdraw more than the account holds), and a wire transfer fee (if you move money to another bank). Some banks waive the monthly fee if you maintain a certain balance or set up direct deposit. Read the fee schedule on the bank's website or ask a representative to walk you through it.

If you're holding money short-term — say, for quarterly tax payments or payroll — a high-yield savings account may not be worth the effort; the interest earned on a $10,000 balance at 0.40% APY is about $40 per year. If you're holding $100,000 or more, the difference between 0.01% and 0.40% is $390 per year, which is worth shopping for. Use a calculator to estimate what you'll earn before deciding.

Where to open a business savings account

You can open a business savings account at a traditional bank, a credit union, or an online bank. Traditional banks (Chase, Bank of America, Wells Fargo) offer in-person service and multiple branches, but usually have lower interest rates and higher minimum balances. Credit unions often have lower fees and competitive rates if you meet membership requirements. Online banks (Marcus, Ally, Discover) typically offer the highest interest rates but no physical branches.

If you need to deposit cash regularly or speak to someone in person, a traditional bank or credit union makes sense. If you deposit by check or ACH transfer and rarely need to visit a branch, an online bank can save you money through higher interest rates and lower fees. Many business owners use both — a checking account at a traditional bank for daily operations and a savings account at an online bank for money they're setting aside.

Before opening, check whether the bank reports to business credit bureaus. Some banks report account history to Dun & Bradstreet or Experian Business, which helps build your business credit score. Others don't report at all. If you're trying to build business credit, ask the bank whether they report before opening.

What happens if you mix personal and business money

Keeping personal and business money in separate accounts is important for taxes and liability protection. If you operate as an LLC or corporation, mixing money can "pierce the corporate veil" — a legal term meaning a court might hold you personally liable for business debts or lawsuits. The IRS also scrutinizes businesses that don't maintain separate accounts, which can trigger an audit.

From a practical standpoint, separate accounts make tax time much simpler. Your accountant can pull a business bank statement and know exactly what business income and expenses you had. If personal and business money are mixed, you'll have to sort through transactions manually, which costs more in accounting fees and increases the chance of errors.

If you're just starting out and don't have much money, it's still worth opening a business account even if the minimum balance is low or zero. The cost is usually nothing, and the benefit — clear records and liability protection — is real.

Frequently Asked Questions

Do I need a business license to open a business savings account?

Not always, but most banks ask for one. If you're a sole proprietor operating under your own name, some banks will open an account with just your ID and Social Security number. If you operate under a business name, you'll need a DBA certificate or business license. An EIN also works as proof that your business exists.

Can I open a business savings account online?

Yes, many online banks and some traditional banks let you open a business savings account entirely online. You'll upload photos of your ID and business documents, and the bank verifies them electronically. The process usually takes one to three business days. Some banks still require you to visit a branch or mail in original documents.

What's the difference between a business savings account and a business money market account?

A money market account usually earns a higher interest rate than a savings account but requires a larger minimum balance and limits how many withdrawals you can make per month. A savings account has lower minimums and no withdrawal limits. If you need to access the money regularly, a savings account is simpler.

Can I use a business savings account for personal expenses?

Legally, no — the money belongs to the business. Using business funds for personal expenses can trigger tax problems and, if you're an LLC or corporation, can expose you to personal liability. If you need personal money, pay yourself a salary or take a distribution, which your accountant can help you set up properly.

Do business savings accounts have FDIC protection?

Yes, business savings accounts at FDIC-insured banks are covered up to $250,000 per account. If you have more than $250,000, you can open multiple accounts at different banks or use a sweep service that moves money to multiple banks automatically to keep all deposits insured.