Many start-up business owners ask, “What do I need to open a business bank account?” A more important first question might be, “Do I need a business bank account in the first place?”

Corporations and sole-proprietorships have different requirements for receiving payments, as well as for reporting them for sales tax, corporate and personal income taxes, etc.

Most corporations require a business checking account, primarily for use in depositing checks made out to the business, as well as for submitting payment to vendors and employees.

One important function of a business bank account is the ability to receive certain deposits via ACH and Wire Transfer, as well as for receiving deposits from credit card transactions via the business’s merchant account.


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Are you a Sole Proprietor?

Sole Proprietors may be doing business under their personal name; and therefore, are permitted to use a personal checking account to receive payments for their products and services. They may be able to obtain a business bank account using a business license.

However, sole proprietors are not required to have a business bank account in order to receive deposits from credit card transactions. Sole Proprietors may apply for a merchant account without the requirement of having a business license or business checking account.

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When Getting Approved is Difficult

Regardless of whether your business is incorporated or a sole-proprietorship, simply having a business bank account will not guarantee that you will be approved by a credit card processor or a standard bank.

Many business types fall into categories considered high-risk and have a much more difficult time securing a high-risk merchant account.

In this story below, we are going to follow Tanner’s mom, Olivia, on her journey of getting a business bank account set up. [See Tanner’s story in the previous post, Do I Need a Business License to Sell Online?]


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How to Accept Plastic Cards for Plastic Pots

Olivia looked out the window from her terrace to see a humpback whale swimming in the water. She lived in Port Lions which is situated in Settlers Cove at the north-most edge of Kodiak Island.

Port Lions is in a fairly temperate zone of Alaska, so she opted to grow a garden on her terrace. The Alaskan breeze was still somewhat chilly, and Olivia needed to find a solution to keep her plants safe from this wind.

Olivia kept finding that most flower pots contained traces of lead and other heavy metals. She needed to find a solution so that she could build the flowering terrace of her dreams.

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The Oil Industry Saves The Day?

One night, she was talking to her husband, Gary, about the heavy-metal free planting container challenge. Gary works hard as a roustabout in the oil fields in the north-end of Alaska; a roustabout is like a jack-of-all trades that is constantly working to keep the oil field running efficiently.

Gary mentioned that they have a lot of scrap oil-well tubes that were not used for the oil lines.

One of his roustabout duties was to fix broken oil lines which resulted in the ends of the plastic tubes to be cut to fit, creating scrap pieces. These tubes were made of high-density polyethylene (HDPE), and considered to be food safe.

Also, this type of plastic is easy to mold with some heat applied it.

When Gary returned on the weekend, his truck was full of HDPE pipe scrap pieces that were perfect for planters. The plastic was light and sturdy.

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Making a Terrace Garden Worthy of a Fashionista

Olivia took on this challenge and started hand-making her own flower pots. A year later, she had a terrific terrace to overlook the sea with the perfect flower pots to block out the ocean chill.

She still had a garage full of tube ends, and decided that she should start making flower pots to sell online for some extra income. Olivia created a blog, giving terrace gardening tips and even started to write a mini-book titled, “How to do Terrace Gardening“.

After consulting with potential investors, Olivia found out that she needed to officially start her business first.

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You Need a Business License to Sell to Make A Real Profit

Olivia’s lawyer advised her that if she was planning on making and selling flower pots online that she should get her State of Alaska Business License started right away. One of the first things she needed to do was to choose a business name.

Next, she needed to consult the Alaska Business License Search online form to make sure that her chosen business name was not already taken by someone else.

Imagine the frustration of having promotional materials made up just to find out you cannot use a particular business name you really wanted!

After doing her market research, Olivia pressed forward..obtaining her first Alaska State Business License  – and this made her very proud.


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Federal EIN Tax ID Number or SSN

In the United States, you are expected to get an identification number that can be used for tax purposes.

Some people choose to just go on with business as a “sole proprietor”, and therefore can use either the federal EIN tax identification number or their current social security number.

Olivia took the time to get her tax ID number, which was far easier than she expected it to be.

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Picture Identification

When setting up a new bank account, the bank will require some form of official picture identification. Olivia’s driver’s license had expired, so she needed to get a legal picture ID. After she got her new license completed, Olivia went to the bank to set up her business bank account.

The paperwork to set up a business bank account was way more than she was expecting. There were lots of forms to fill out, and she was surprised how much the bank seemed to be concerned about the viability of her business model.

Olivia was so certain that gardeners would buy her flower pots that it didn’t even cross her mind that the bank would be hesitant to take on the risk.

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People who are Going to be Signators

Olivia has planned on opening the business bank account with her husband. But to open the account with his name on it, he also needed to be there to sign the paperwork.

It is a good idea to bring all of the people who are going to sign business checks to the bank with picture IDs to become “signators” to the account. Olivia opted to go at this alone to expedite getting her account set up.

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Denied Credit Card Transaction Account

Olivia was surprised to find out (with all the paperwork she had just completed), that her account was limited to writing checks and a separate banking account for savings.

The bank denied her the ability to take credit cards for her online business as her business model was considered to be “high-risk”.

It did not matter that her product filled a need that a large number of people were looking for, the bank would not take the risk.

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There are Fees to Open a Business Merchant Account at a Bank

The last thing that Olivia did not expect is that there were fees just to get the account open. After all of the paperwork was completed, she still needed to take $100 out of her own pocket to get the business account set up.

She was taken aback by this step, because she clearly had not sold a single flower pot yet, and she was being asked for money to get things started.

Olivia felt that the bank was not upfront with her, and she felt pressured to pay for the business account after all of  the work was finished. She left that standard bank feeling taken advantage of.

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High-Risk Merchant Account Solution

Her son, Tanner (who owns a Hookah Bar in Philadelphia), told her about High Risk Solutions, and how they found a terrific merchant account payment gateway for his business.

Tanner is able to accept credit cards without a problem to sell goods online and offline, and felt that High Risk Solutions offered terrific customer service.

Olivia was so thankful to Tanner for the information, she sent him a couple of her flower pots for his hookah bar as a gift.


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You Need to Open a Business Bank Account and a Separate Merchant Account

There are a lot of steps to setting up a business. When it comes to opening a business bank account, you are going to need:

  • a business license
  • a tax id number
  • picture identification
  • all the signers to the account
  • fees

When the standard banks deny you the ability to accept credit cards for your business because your business is deemed to be high-risk, High Risk Solutions can provide the right merchant account set up for you.

You can see the difference for yourself by starting the application today.

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