Business vs. Personal Checking Account: What’s the Difference?
Business checking accounts are for business revenue and expenses. Personal accounts are for your personal finances.
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Business checking accounts and personal checking accounts work more or less the same way. But business accounts are meant for your business revenue and expenses, while personal accounts are meant for your personal income and bills.
No matter how small the business is, every owner should separate their business and personal finances. You can open a business checking account at many brick-and-mortar banks, credit unions or online financial institutions.
If you're ready to compare accounts, see our list of the best business checking accounts.
What do business and personal checking accounts include?
Both business and personal accounts generally offer standard banking features, like:
Debit cards.
ACH transfers.
Checks.
ATM access.
Wire transfers.
How different are their transaction limits?
Banks generally expect businesses to spend and receive more money than individuals. For that reason, business accounts may let you withdraw more cash at ATMs or send larger ACH transfers than personal accounts do.
Chase lets users withdraw:
Businesses: $5,000 per day at ATMs.
Individuals: $2,000 per day at ATMs.
And Bank of America lets users transfer:
Businesses: $5,000 per day (more if you take certain security measures).
Individuals: $1,000 per day.
Do business accounts cost more?
Business accounts may charge monthly maintenance fees that are higher or harder to waive. Look for free business checking accounts to avoid paying those.
For example, here are Citi's account fees:
Businesses: Monthly maintenance fees start at $15 per month. Fees can be waived with a minimum average balance of $5,000.
Individuals: Some accounts have no monthly maintenance fee. Others cost $15 per month, which can be waived if you get $250 per month in direct deposits.
Other charges could be cheaper. For instance, businesses pay $17 for outgoing domestic wire transfers sent online with Citi. For its standard personal account, those are $25 apiece.
What advantages do business accounts offer?
Business accounts offer a number of advantages over personal accounts for business owners. These include:
Employee debit cards. You can issue additional debit cards so your team can make purchases on behalf of the business.
User roles and spending controls. Some business checking accounts, like Relay, let you set up accounts with different permissions for different users. For example, a staffer might be able to add payees and pay bills, but a manager has to approve those payments.
Tax-planning tools. Many business accounts can integrate directly with your accounting software. Some, like Found, let you automatically set aside money for tax payments.
Accepting credit card payments. Chase, for example, offers an integrated credit card processing tool. You can open the Chase app on your phone and customers can tap their card to pay.
Accounting software integrations. When you have a business checking account, all your revenue and expenses are recorded in your bank’s transaction logs. That can make keeping track of your spending much easier. Plus, business checking accounts can often sync with accounting software.
Separated bank statements. Lenders often request your recent bank statements when you apply for a business loan so they can evaluate your cash flow. Having a dedicated business bank account makes it easier to provide this information.
Are business checking accounts FDIC insured?
Yes, business checking accounts are insured by the Federal Deposit Insurance Corp. up to the same $250,000 limit as personal checking accounts. That means the federal government will pay up to $250,000 per account if your business bank fails.
Fintech companies like Bluevine, Found and Novo aren't FDIC-insured banks themselves. They have partner banks that hold users' funds. FDIC insurance will pay out if the partner bank fails. If the fintech company goes under, your funds should be safe with the partner bank — but recovering them may take time.
Can you use a personal checking account for your business?
You may technically be allowed to use a personal checking account for business spending, but you shouldn’t. All businesses, even very small ones, should keep these finances separate.
Why is this so important? First, some companies have rules against it. For example, financial technology company Chime says it may close your personal account if it determines you’re using it for business purposes.
Second, you may have trouble depositing checks made out to your business into your personal account. And it may look less professional to ask clients to write checks or Zelle you personally.
Are there legal reasons to not use a personal account for business?
You need to be extra diligent if your business is a limited liability company (LLC).
If you comingle your business and personal funds and your business goes under, then your creditors could argue that you’re personally on the hook for your company’s expenses. That could override the protections offered by your LLC.
Checking accounts often have low interest rates. That's true for personal and business accounts. Consider a business savings account to get a higher annual percentage yield (APY) on your company’s cash.
Should you open a business checking account?
If you have a business, yes. No matter how small your operations are, you should open a business checking account.
You can get a business bank account for any business, including a sole proprietorship or freelance work. You can apply for a business account online in just a few minutes. Applying does not impact your credit score.
Ready to start business banking?