How to Open a Business Checking Bank Account in Massachusetts

How to Open a Business Checking Bank Account in Massachusetts for Startups — Payroll

Starting a new business is an exciting venture, and one of the first steps in ensuring its financial health is to open a dedicated business checking account. For startups in Massachusetts, this guide offers a practical, step-by-step approach to opening a business checking account tailored to managing payroll and other business expenses.

Quick Summary

Opening a business checking account in Massachusetts involves selecting a financial institution, meeting eligibility requirements, and completing the application process. This account is essential for managing business transactions, including payroll, while keeping personal and business finances separate.

Eligibility & Requirements

To open a business checking account in Massachusetts, you typically need to meet the following eligibility criteria:

1. Business Structure: The business must be established as a legal entity, such as a sole proprietorship, partnership, LLC, or corporation.
2. Employer Identification Number (EIN): Most banks require an EIN from the IRS for tax purposes. Sole proprietors may use their Social Security number in some cases.
3. Business License: Depending on your business type and location, you may need a local or state business license.
4. Operating Agreement or Bylaws: For LLCs and corporations, banks may require documentation outlining the structure and management of the business.
5. Identification: Personal identification such as a driver’s license or passport of the account signers is usually required.

Step-by-Step Opening Process

1. Research Financial Institutions:
- Begin by researching various banks and credit unions in Massachusetts. Consider their fees, services, and customer reviews.

2. Compare Account Features:
- Look for features that best suit your business needs, such as online banking, mobile check deposit, and payment processing services.

3. Prepare Required Documentation:
- Gather all necessary documents, including your EIN, business license, operating agreement, and personal identification.

4. Visit the Bank or Apply Online:
- Many banks offer the option to open an account online. If you prefer a personal touch, visit a local branch to speak with a representative.

5. Complete the Application:
- Fill out the application form, providing details about your business and the account signers.

6. Fund Your Account:
- Most banks require an initial deposit to open the account. This amount can vary but typically ranges from $25 to $100.

7. Review and Sign:
- Carefully review the account terms and conditions, then sign the necessary documents to finalize the account opening.

8. Set Up Online Banking:
- Once your account is active, set up online banking for easy access to manage payroll and business transactions.

Typical Fees & Timelines

When opening a business checking account in Massachusetts, you may encounter the following typical fees:

- Monthly Maintenance Fees: These can range from $5 to $30, depending on the bank and the account features. Many banks waive these fees if you maintain a minimum balance.
- Transaction Fees: Some accounts may charge fees for transactions exceeding a certain limit, typically ranging from $0.10 to $0.50 per transaction.
- ATM Fees: If you use out-of-network ATMs, fees can range from $1 to $3 per transaction.
- Overdraft Fees: These fees can vary widely, often ranging from $30 to $40 per occurrence.

Timelines for account opening can vary. Generally, if all documentation is in order, you can expect the account to be opened within a few hours to a few business days.

Always verify current fees and terms with the bank’s official website or customer service.

Alternatives & Digital Banks

For startups looking for alternatives to traditional banks, digital banks and fintech companies offer business checking accounts with competitive features and lower fees. Some popular options include:

- Chime: Offers no monthly fees and easy online account management.
- Novo: Designed for small businesses, providing no monthly fees and integration with various financial tools.
- Lili: Tailored for freelancers and independent contractors, with features like expense tracking and tax savings.

Before choosing a digital bank, ensure that they offer the necessary features for payroll management and check if they are insured by the FDIC.

FAQs

Q1: Can I use my personal bank account for my startup?
A1: While it is possible, it is not advisable. Keeping personal and business finances separate helps with organization and legal protection.

Q2: What is the difference between a business checking account and a personal checking account?
A2: Business checking accounts offer features tailored for business needs, such as higher transaction limits, merchant services, and the ability to add multiple users.

Q3: How do I handle payroll with a business checking account?
A3: You can use your business checking account to pay employees via direct deposit, checks, or payroll services that integrate with your banking.

Q4: Are there any minimum balance requirements for business checking accounts?
A4: Many banks have minimum balance requirements that can range from $0 to several thousand dollars. Check with your chosen bank for specifics.

Q5: What should I do if I encounter issues with my bank account?
A5: Contact your bank’s customer service for assistance. They can help resolve any issues related to your account.

Q6: Can I open a business checking account online?
A6: Yes, many banks offer online applications for business checking accounts, making it convenient to open an account from anywhere.

Q7: Is my business checking account insured?
A7: Yes, if the bank is a member of the FDIC, your deposits are insured up to $250,000 per depositor.

Q8: What happens if I don't maintain the minimum balance?
A8: If you fail to maintain the minimum balance, the bank may charge a monthly maintenance fee.

Disclaimer

For informational purposes only; not financial/tax/legal advice.

About the Author

Marks Toms – Editor-in-Chief
Marks oversees editorial policy, compliance, and fact-checking at bankaccountsopen. Read more articles