Yes, businesses can open savings accounts, and most should
Businesses of all sizes—sole proprietorships, partnerships, LLCs, and corporations—can open savings accounts at banks and credit unions. A business savings account works much like a personal one, except the account is registered to the business entity rather than an individual, and the money belongs to the business, not to you personally.
The main reason to open one is separation. Money in a business savings account is legally distinct from your personal funds. This matters for taxes, because the IRS expects business income to flow through a business account. It also matters if something goes wrong: if your business gets sued, creditors generally cannot touch money in a personal account, and vice versa. That legal boundary is called piercing the corporate veil, and keeping business and personal money separate is one of the strongest defenses against it.
A business savings account also gives you a clear record of what the business owns versus what you own personally, which makes tax filing, loan applications, and financial audits much simpler.
Key Takeaways
- Business savings accounts are separate from personal accounts and help protect your personal assets if the business faces legal trouble.
- You will need an Employer Identification Number (EIN) from the IRS, a business license or registration document, and proof of your business address to open one.
- Most banks offer business savings accounts, but credit unions, online banks, and community banks often have lower fees and higher interest rates.
- Interest rates on business savings accounts are typically lower than rates on money market accounts or certificates of deposit, so compare options before choosing.
- Sole proprietors can sometimes open a business savings account under their Social Security number instead of an EIN, though an EIN is recommended.
What documents you need to open a business savings account
The bank will ask for proof that your business exists and that you have the authority to open an account on its behalf. The exact documents vary by bank and by business structure, but most banks require the same core set.
You will need an Employer Identification Number (EIN), which is a nine-digit tax ID issued by the IRS. You can get one free at irs.gov by filling out Form SS-4 online; it takes about 15 minutes and you receive the number immediately. If you are a sole proprietor with no employees, you can sometimes use your Social Security number instead, but the IRS recommends getting an EIN anyway because it keeps your personal and business finances separate on tax records.
You will also need a document that proves your business is registered. This might be a Certificate of Good Standing from your state, a business license, articles of incorporation, articles of organization, or a DBA (Doing Business As) certificate—whatever your state issues when you register the business. If you have not registered your business formally, most banks will not open an account for you.
Bring a government-issued photo ID (your driver's license or passport) and proof of your business address, such as a lease, utility bill, or mail from a government agency. Some banks also ask for a recent business tax return or a statement of business purpose, especially for new businesses.
How business savings accounts differ from personal ones
The most important difference is ownership and liability. Money in a personal savings account is yours; money in a business savings account belongs to the business entity. If you are sued personally, your business savings account is generally off-limits to creditors. If the business is sued, your personal savings account is generally protected.
Interest rates are usually lower on business savings accounts than on personal ones, because banks assume businesses will move money in and out more frequently and keep larger balances. If you want higher returns, a money market account or certificate of deposit (CD) designed for businesses may pay more, though they come with restrictions on how often you can withdraw.
Fees are also different. Business savings accounts often charge monthly maintenance fees ($5 to $25 per month is common), per-transaction fees if you exceed a certain number of withdrawals, and fees for services like wire transfers or stop payments. Personal savings accounts at the same bank may have no monthly fee. Online banks and credit unions tend to charge lower fees than traditional banks.
Some banks require a minimum balance to open a business savings account—often $500 to $2,500—and charge a fee if the balance falls below that threshold. Ask about this before you open the account, because it affects how much cash you need to keep on hand.
Where to open a business savings account
You have several options, and the best choice depends on how much you value convenience, customer service, and fees.
Traditional banks (Chase, Bank of America, Wells Fargo, and regional banks) offer business savings accounts at most branches. They have physical locations, which is useful if you need to deposit cash or speak to someone in person. Interest rates are usually low, and fees are higher than at online banks, but the service is straightforward.
Credit unions often offer lower fees and higher interest rates than traditional banks, and they may be more flexible about documentation if you are a new business. You have to be a member to open an account, but membership is usually free or very cheap. Search for credit unions in your area at co-opsharedbranch.org or your state's credit union league website.
Online banks (Ally, Marcus, Axos, and others) typically have no monthly fees, no minimum balance requirements, and higher interest rates than traditional banks. The tradeoff is that you cannot deposit cash in person and customer service is by phone or chat only. This works well if your business is mostly digital or if you can deposit checks by phone camera.
Community banks are smaller, local institutions that often know their customers by name and may offer personalized service. Fees and rates vary widely, so compare before opening an account.
Interest rates and how they compare to other business accounts
Business savings accounts pay interest, but the rate is usually lower than what you would get from a money market account or a CD. As of late 2024, online banks pay between 4% and 5% annual interest on business savings accounts, while traditional banks often pay less than 1%. Rates change frequently, so check the bank's website for the current rate before you open an account.
If you have money you do not need to touch for a set period, a business CD typically pays more than a savings account. For example, a one-year CD might pay 4.5% to 5.5%, while a savings account pays 4% to 5%. The catch is that you cannot withdraw the money without paying a penalty, usually equal to a few months of interest.
A business money market account is a hybrid: it pays more interest than a savings account (often 4.5% to 5.5%) but allows a limited number of withdrawals per month (usually three to six). If you need to access your money more often, a savings account is more practical even if the rate is slightly lower.
Compare rates across at least three banks before you decide. The difference between 1% and 4.5% on a $50,000 balance is $1,750 per year—money worth shopping for.
Sole proprietors and when you can use your personal account
If you are a sole proprietor (self-employed and have not formed an LLC or corporation), you have more flexibility than other business structures. The IRS allows sole proprietors to deposit business income into a personal savings account and still deduct business expenses on their tax return. Legally, there is no separation between you and your business.
However, this does not mean you should. Using a personal account for business makes it harder to track income and expenses at tax time, and it weakens your legal protection if someone sues your business. If you get sued, a lawyer could argue that your business and personal finances are so mixed that creditors should be able to reach your personal account—the piercing the corporate veil scenario.
The safest approach is to open a business savings account even as a sole proprietor. You can use your Social Security number instead of an EIN if you want to avoid the extra step, though an EIN is still recommended. The cost is minimal, and the protection is real.
Frequently Asked Questions
Do I need a business license to open a business savings account?
Most banks require some proof that your business is registered with your state, which usually means a business license, Certificate of Good Standing, or articles of incorporation. If you have not registered your business formally, register it first, then open the account. The process varies by state but usually takes a few days to a few weeks.
Can I open a business savings account online?
Yes, many online banks and some traditional banks allow you to open a business savings account entirely online. You will upload photos of your documents (EIN letter, business license, ID, and proof of address) and sign electronically. The account usually opens within one to three business days. If the bank needs to verify anything, they may call you.
What is the difference between a business savings account and a business checking account?
A savings account earns interest but limits how often you can withdraw (usually six times per month). A checking account allows unlimited withdrawals and deposits but earns little or no interest. Most businesses use both: a checking account for daily operations and a savings account to hold reserves and earn interest.
Can I have multiple business savings accounts?
Yes. Some businesses open one account for operating cash and another for taxes or savings goals. There is no legal limit, though each account may have its own monthly fee. Make sure you can track which account is which so you do not accidentally spend money set aside for taxes or payroll.
What happens to a business savings account if the business closes?
The money in the account belongs to the business, not to you personally. If you close the business, you can withdraw the money and keep it, but you may owe taxes on it depending on your business structure and how much profit the business made. Talk to a tax professional or accountant before closing the business so you understand the tax consequences.