Resource Center / Business Banking

Why Every Small Business Owner Needs a Business Checking Account

Written by Live Oak Bank

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No matter how small your business is or what kind of entrepreneur you are, you should strongly consider opening a small business checking account. Separating your business and personal financial activities is essential to help you stay organized, as well as remain legally compliant and protected. A small business checking account also offers many benefits such as giving your business credibility, offering tax benefits, and laying the groundwork for future growth—ultimately benefiting, you, your employees, and your customers.



A small business checking account will give credibility to your business by adding legitimacy and professionalism. Customers and clients will take your business more seriously if you accept payments and checks made out to your business name rather than your personal name. Having a dedicated business account shows that you are committed to the future of the business, and customers are more likely to have confidence in your products and services. Opening a business checking account also helps legitimize your business in the eyes of lenders should you pursue business loans and credit cards in the future.


Liability protection

Opening a small business checking account offers additional liability protection for your business. Keeping your business finances separate can help protect your personal finances in case your company falls into debt or faces other liabilities such as being sued. Maintaining that separation will help protect your personal assets from creditors and lawsuits.

Even if your business is registered as a separate entity, it’s important to keep your expenses separate. If your business funds are combined with your personal assets, your business might not appear to be a truly separate entity in a court of law, which could open the door for your personal assets to be targeted.



Opening a small business checking account also gives you several additional tools to keep your business organized—from payments to deposits to bookkeeping.

A business checking account can offer you the capability to move money around easily, giving you the ability to make payments and deposit checks at your convenience. A business account can also give you the use of a debit card, allowing you to make purchases and withdrawals at ATMs as needed.

If you have employees, you can also process your payroll through your business account. Online banking will give you the ability to set up employee permissions and customize alerts for your account. You also have the option to link to your business checking account through Quickbooks, giving you the capability to better manage your business finances.


Tax benefits

Organization is especially key when it comes to tax time. Keeping your personal account separate from your business account allows you to file taxes more quickly and accurately. In fact, while not required, the IRS recommends that small businesses such as sole proprietors maintain a separate business checking account to aid in tax preparation.

If you are paying quarterly taxes, keeping your personal account separate from your business account will make things simpler throughout the year. If your finances are mixed together, it will be tedious to sort through all the transactions to identify which are personal and which are business. Furthermore, it will be easier to identify any tax deductions that might be available to your business.

In the event of an audit of your business, it’s ideal to have your accounts separated. If your personal and business finances are combined, then your personal finances could be included in the audit, further complicating the process.


Future success

Opening a small business checking account lays the groundwork for the future expansion and success of your business. A checking account establishes you as a legitimate business and gives you increased options as you grow and expand. This legitimacy will be especially helpful when you approach lenders if you choose to apply for business loans and credit cards down the road.


Small business banks

While personal checking accounts and business checking accounts are fairly similar, business accounts are designed specifically for business owners while personal accounts are aimed more at helping individuals manage their finances. There are major differences between the two when it comes to fees and minimum balances.

When choosing a bank to establish your business checking account, look for one that concentrates on serving small businesses—a small business bank like Live Oak Bank that specializes in products and services geared toward your needs.


Live Oak Bank

Live Oak is a fully digital bank based in North Carolina that specifically serves small businesses. Live Oak is unique in that it does not have branches and doesn’t work on commission, so that it can concentrate entirely on its customers.

For small businesses, Live Oak Bank business checking offers three tiers of checking accounts, all with waivable monthly service fees, the ability to move money easily, and flexible debit card use. The accounts also offer enhanced online banking and the ability to connect with Quickbooks.

The three options are Business Essential, Business Plus, and Business Plus Analysis. Deciding which type to open will depend on your business income level, as well as your financial service needs.

Live Oak Bank’s Business Essential account is ideal for your key, everyday business checking needs. The fee is $10 per month, which is waivable with an average daily balance of $1,000.

The Business Plus account is best for businesses requiring ACH, online wire services or more robust features. The fee is $25 per month, waivable with an average daily balance of $25,000.

Live Oak Bank’s Business Plus Analysis account is ideal for businesses with high daily balances in need of statement aggregation and broader capabilities. The fee is $100 per month, but earnings credit can offset fees.

All accounts offer FDIC insurance coverage as well as safety and security with fraud protection among other safeguards. Most importantly, Live Oak Bank business checking offers you dedicated service. You will receive personalized support from the North Carolina-based team. Whatever small business checking account you decide to open, your bank should help you identify which account best suits your business and support you in every way possible.


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