Open a business account in the USA

Are you looking to tap into the bustling US market and are about to make the big move across the pond, or simply want to start receiving payments in USD?

Navigating the labyrinth of international finance can seem like a daunting and never-ending task - especially when you want to expand your business abroad. But don't worry – we've got you covered.

We'll guide you step-by-step through the process of opening an account with the leading US banks, ensuring you're well-equipped with all the details you need. We'll also explore popular alternatives like Wise and Revolut - digital platforms that offer account details tailored to your chosen country.

America's Internal Revenue Service (IRS) strongly encourages separate bank accounts for all business owners. However, this isn't a legal requirement for everyone.

If you're a sole trader or freelancer (who are typically considered sole proprietors), there's no legal obligation to have a business bank account. However, this changes for corporations and LLCs, which, upon registration, become separate legal entities with their own responsibilities and income. Owners of corporations or LLCs are therefore legally required to keep their business and personal finances separate.

While sole proprietors aren’t legally required to have a business account, many financial experts still recommend it for better financial organisation, enhanced professionalism, and access to business services.

When preparing to open a business account in the USA, having the necessary details readily available can streamline the process considerably. Here's an overview of the most common requirements:

1. Personal identification: This could be a driver's licence, passport, or other valid document.

2. Proof of personal address: Documented evidence of the director's current address is required as a supplementary security step.

3. Articles of incorporation/organisation: These official documents validate your business's legal registration and operations.

4. Employer Identification Number (EIN) confirmation letter: This critical document helps accurate tax tracking of your business by the IRS.

5. Proof of business address: Some banks may require proof of a business address within the bank's operational region, though there can be flexibility depending on the bank.

Opening a business account in the US might seem like a tough nut to crack if you're not a US citizen. But you don't need to hold a US passport to open a business account in America. Non-citizens, with the correct paperwork, can also set up a bank account in the US.

Even without a Social Security number, you can open a business account using an Individual Taxpayer Identification Number (ITIN). Having a foreign government ID, a passport, or a resident alien number from a green card will also help with the process.

Residency isn't a barrier to opening a business bank account in the US. Legally speaking, non-residents are allowed to establish a business account in the country. However, it's essential to note that if you intend to open a company account, your business must be registered in the United States and possess a valid Employer Identification Number (EIN).

Regardless of whether you are a US citizen or a permanent resident, the door is open for you to set up a business account in the US, provided you meet the essential business registration and identification requirements.

To open a business account in the US, your business needs to be registered within the country. American banks don’t allow foreign entities to open business accounts, which is why local registration is essential. You’ll need to establish your Limited Liability Company (LLC) or other business entity in the US before opening a business bank account.

During the account opening process, you’ll be asked to provide proof of your US business registration. So, if your plans involve opening a business account in America, the first step is ensuring that your business is officially and legally registered.

The timeline for opening a US business account can vary considerably. In an ideal scenario, the actual account opening process may take as little as 15 to 30 minutes.

However, considering the time taken to process your account details, you should be prepared for a waiting period ranging from five days to four weeks before your new business bank account is fully up and running.

Digital alternatives such as Wise, Airwallex, or Revolut often provide a faster route to account activation, and your business account could be up and running in a matter of hours or a few days.

Opening and maintaining a US business bank account comes with various costs and fees. The following are some of the most common ones you might encounter (remember, these costs can vary widely between banks):

• Initial deposit: Banks usually require an opening deposit ranging from as little as $5 to as much as $1,000. However, you can find some banks that don't need an initial deposit.

• Monthly maintenance fees: These are charged to cover extra benefits such as overdraft coverage programs, cash back on spending, and non-system ATM usage. Some banks waive these fees if you maintain a minimum daily balance, although some banks offer accounts with no monthly maintenance fee.

• Transaction fees: These apply when your business processes a customer's payment. You might receive a certain number of free transactions per month before a fee is applied per transaction.

• Cash handling fees: These are charged for processing cash deposits above a certain limit.

• Early termination fees: You could incur a fee if you cancel a contract before it ends.

• Foreign transaction fees: Many banks will exchange USD for foreign currencies for a fee. For international transactions, the foreign transaction fee is typically around 3% of the transaction amount.

• Credit card processing fees: The cost of processing credit card transactions typically ranges from 1.70% to 2.05% for card-present transactions and from 2.25% to 2.50% for card-not-present transactions.

There are a number of agencies you can turn to for help with setting up your business account in the USA. These agencies, typically operating on a state-by-state basis, extend their services to help you navigate the nuances of the process, and it's crucial to identify a reputable agency in the state where you register your business.

Healy Consultant Group PLC provides an end-to-end service to help international clients open multi-currency corporate bank accounts in the USA.

They undertake the responsibility of project managing the corporate bank account opening process. This includes contacting multiple banking institutions to secure their interest in your business, organising necessary meetings at the bank's branch office, and compiling a comprehensive corporate bank account application package. Post application, they ensure you receive a business bank account number and aid in activating Internet banking if needed.

It's worth mentioning that these agencies' services extend beyond just business accounts.

They can facilitate the entire business registration process, providing a complete solution to establishing your business footprint in the USA. The US Small Business Administration is also a great resource for information about opening a business.

Bank of America

Bank of America offers two distinct business accounts designed to cater to the unique needs of businesses.

• Business Advantage Fundamentals Banking: This account provides essential tools for business operations with a monthly fee of $16.

• Business Advantage Relationship Banking: This account offers more comprehensive financial solutions for your business. The monthly fee is $29.95.

JP Morgan Chase

JP Morgan Chase provides three different business accounts to support businesses of varying sizes:

• Chase Business Complete Banking: For small businesses. The $15 monthly fee is waived by maintaining a $2,000 balance. Includes unlimited ATM transactions, 20 teller transactions, and fee-free deposits up to $5,000 per cycle.

• Chase Performance Business Checking: Ideal for mid-sized businesses, featuring a $30 monthly fee waived with a $35,000 balance. Offers 250 free monthly transactions, unlimited electronic deposits, and $20,000 in cash deposits per cycle without fees.

• Chase Platinum Business Checking: Tailored for larger businesses, with a $95 monthly fee waived with a $100,000 balance. Provides 500 free transactions per month, unlimited electronic deposits, and fee-free cash deposits up to $25,000 per cycle.

Citigroup

Citigroup offers several accounts for businesses in the USA:

• CitiBusiness Streamlined Checking Account: Ideal for small businesses with up to 250 monthly transactions. The monthly fee of $15 is waived with a $5,000 balance.

• CitiBusiness Flexible Checking Account: Suitable for businesses processing up to 500 transactions monthly. Waives its variable rate 2 fee with a $10,000 balance.

• CitiBusiness Analysed Checking Account: Non-interest-bearing, designed for large businesses with high average balances. Features a $24 monthly fee and offers earnings credits.

• CitiBusiness Interest Checking Account: For businesses with fewer than 25 monthly transactions, offering interest on balance. Waives its variable rate 3 fee with a $10,000 balance.

So far, we've discussed traditional business account options with well-established, high-street banks.

However, there are also innovative digital alternatives to consider, such as Wise, Airwallex, Revolut, and Starling.

These platforms offer multi-currency accounts, which allow you to open an account from the UK and receive USA account details, essentially providing you with a functional US bank account.

These digital alternatives can be a strategic choice for businesses operating globally, as they support transactions in multiple currencies, making them efficient and versatile for handling international payments.

Wise's Business Account offers flexibility and excellent features, especially for businesses dealing with multiple currencies.

Its features include:

• USD Handling: Send, receive, convert, and hold USD funds with your own USD account details.

• Mid-market exchange rates with no markup

• Multi-currency: Add money in 20 different currencies, including USD, CAD, EUR, GBP, etc. Plus, keep over 40 currencies in your account.

• Receiving payments: Simply open a balance in the currency you're being paid in and share your account details for easy transactions.

• Interest: Earn 4.13% interest on your USD balances.

Regarding fees, Wise operates with clear, minimal charges:

• Sending money: Fees start from 0.43%, varying by currency.

• Currency conversion: Fees begin at 0.43%.

• Withdrawals: Free for up to $100 per month per account, after which a 2% fee and $1.50 per withdrawal apply.

The Airwallex USD Global Account offers a robust and cost-efficient solution for managing USD payments. Its primary features include:

• Local USD Account: Open a USD account online from the UK, equipped with local USD account details and a debit card. This simplifies transactions for your US customers.

• Instant activation: Get your account up and running quickly and start receiving payments in USD immediately.

• Cost-efficiency: Airwallex doesn't charge sign-up or monthly account fees, and there are no minimum transaction requirements.

• Currency management: Hold, collect, and spend in the same currency, avoiding unnecessary conversion fees.

In terms of fees, Airwallex has a clear structure:

• International transfers: Free.

• Batch transfers: Free.

• Currency accounts: Free for USD, EUR, CNY, and HKD, with availability in 11 currencies.

• International card transactions: Free.

Revolut Business Account offers a comprehensive set of features for efficient USD transactions:

• Free-tier business account: Ideal for startups or simple banking needs. No monthly fees - you only pay for what you use.

• Subscription plans: For more features and higher allowances, consider the Grow ($39.99/month), Scale ($149.99/month), or Enterprise (custom pricing) plans.

• Transfers: Free transfers to Revolut accounts and global IBANs. Fee-free international payments within your monthly allowance on selected plans.

• Team management: Invite unlimited team members and configure permissions as needed.

• Local payments: Make fee-free local payments within your plan's allowance. A $0.20 fee per transaction applies for going over your allowance.

Starling's USD Business Account offers versatile features for businesses dealing significantly in USD.

• Basic fee: A modest £5 monthly fee to hold, send, and receive USD. You get a free one-month trial period to determine if it fits your needs.

• Easy conversion: Convert your USD into GBP (or vice versa) with a tap at the current exchange rate plus a 0.4% conversion fee.

• Account features: Unique US account number, instant payment notifications, tools for tax and overhead management, and 24/7 support.

• One debit card: A single debit card manages both your USD and GBP accounts, with adjustable settings in the app.

• Hold currency locally: Opt to hold and deal mainly in USD without the need for constant conversions.

• Weekend transfers: Transfer money between your GBP, EUR, and USD accounts anytime, including weekends. You always see the exchange rate before conversion.

• Payments: Make and receive unlimited ACH payments free of charge. Note: SWIFT payments aren't supported.

• Speedy transfers: Send up to $25,000 on the same day via ACH.

Deciding how to open a business account in the USA is ultimately up to you and your business needs. While many companies still lean towards the traditional high-street bank route, digital alternatives like Wise or Revolut offer compelling options that might align more closely with your business model and operational convenience.

These digital platforms provide alternative approaches that can be useful for businesses with international transactions or those looking for modern, streamlined banking features. Plus, they can offer cost savings, flexibility, and a level of convenience that traditional banks can't match.

Each provider will have their own set of entrance requirements, so conducting thorough research and speaking to them directly is crucial. Don't hesitate to ask questions or seek clarity - after all, you're entrusting them with your business's financial health.