A sole proprietorship is the appropriate business structure for many small businesses. If you’ve decided to build your business as a sole proprietor, then opening a separate bank account for your business transactions makes a lot of sense.
But not all bank accounts will fit the bill. You need to find an account that strikes a balance between low fees and convenient features that make sense for your business. In this article, we'll explore some of the best business accounts for sole proprietorship.
Why Sole Proprietors Need Specific Bank Accounts
As a sole proprietor, you are usually running a one-person operation with plenty of items on your to-do list. Although opening a separate bank account might feel like a chore, it can make your life easier in the long run.
The goal of opening a bank account for your business transactions is to separate your personal affairs from your business transactions. With this separation, it is easier to track your business income and expenses. You won’t have to dig through your personal transactions when it comes time to file your taxes or apply for a business loan.
Beyond the separation of your business expenses, many financial institutions offer banking solutions specifically for sole proprietors. These helpful perks can help you spend less time managing your business finances.
Top 5 Banks For Sole Proprietors
Many financial institutions offer business bank accounts. But sole proprietors need a bank account that combines useful features with low fees.
Novo is a fintech that offers a offers a free business checking account for sole proprietors. Business owners can deposit and send checks right in the Novo app, and spend with a virtual debit card. The account also includes invoicing features and a lengthy list of software integrations, including Stripe, Xero, Quickbooks, and Shopify.
Novo isn't a bank, so banking services provided are through Middlesex Federal Savings. Learn more about Novo in our full review.
Bluevine offers an interest-bearing checking account with no monthly fees. At the time of writing, you can earn 2.00% APY on balances of up to $250,000, if you meet the eligibility requirements.
In order to snag the interest-bearing opportunity, you must use the Bluevine Business Debit Mastercard on at least $500 in purchases per month. Or you can receive $2,500 per month in customer payments via ACH, wire transfer, mobile check deposit, or through a merchant payment processing provider.
You can also set up sub-accounts with Bluevine, which is helpful if you want to set aside funds for tax payments or payroll. Additionally, you can access a fee-free network of over 38,000 ATMs and make cash deposits through Green Dot retail locations for a $4.95 fee.
Learn more about Bluevine in our full review.
Freelancers and solopreneurs will find a lot to like about Lili’s platform. Like Bluevine, you’ll have access to an interest-bearing savings account. Lili also offers helpful tax management tools. You can set up an automatic tax savings plan and produce expense reports quickly.
Freelancers can take advantage of the Emergency Bucket, which gives you an opportunity to build an emergency fund for your business. Each time you get paid, you can have some money transferred into the emergency fund.
Unfortunately, Lili does charge a monthly fee for most features. Plans range from $0 to $55 per month.
Learn more about Lili in our full review.
U.S. Bank Silver Business Checking
Sole proprietors who prefer to bank with a traditional financial institution may like what they see in U.S. Bank’s Silver Business Checking account.
There are no monthly maintenance fee and accountholders can access to a U.S. Bank Visa debit card. Other features include mobile check deposit, online banking, and more. Each month, you can incur 125 transactions. Above the threshold, there is a $0.50 fee per transaction.
If you are a business owner with limited transactional needs, this account might suit your needs. It’s especially helpful for business owners who want the option to work with a physical bank branch.
Learn more about U.S. Bank in our full review.
Chase Business Complete Banking
The Chase Business Complete Banking is a popular small business bank account. The account includes a $15 monthly fee, but the fee is waived if you keep a minimum daily balance of at least $2,000, receive $2,000 in deposits from Quick Accept transactions in a month, make at least $2,000 in purchases with your Chase Ink Business credit card, or provide proof of your military status.
Chase's large branch network means you can get in-person service when you want it. Of course, Chase also offers robust online banking tools. If your business deals with cash regularly, access to a physical branch can come in handy.
Learn more about Chase in our full review.
How To Choose The Right Bank Account For Your Sole Proprietorship
When considering your banking options, it's easy to become overwhelmed. The right bank account offers a combination of factors that suit your needs. Here are some of the factors to keep in mind:
- Business-related account perks: Business banking perks can streamline your financial operations. But not every bank account offers these key features.
- Fees: A no-fee account is ideal. Read the fine print of a bank account to understand the fees attached before signing up.
- Access: Decide if you want in-person access to banking services or if online service will work.
Weigh all of these factors to find the best sole proprietor bank account for your needs.
The Bottom Line
The top small business banks offer a wide range of options for sole proprietors in need of an account. As a business owner, you’ll have to choose which one works best for you.
If you don’t see one that fits on the list above, check out these other top business bank accounts.
Sarah Sharkey is a personal finance writer covering banking, insurance, credit cards, mortgages and student loans. She has written for numerous finance publications, including MagnifyMoney, Business Insider and ChooseFI. Her blog, Adventurous Adulting, helps young adults get a handle on their finances.