The key to successful E-commerce is opening a US business bank account.
Here is a simple checklist of essential steps
The first step in business success is forming a legal corporate entity.
The essential next step an E-commerce startup must take is to open a US Business Bank Account in the name of company. It is the basis of building a solid and profitable E-commerce company, not only in the United States, but all over the globe.
This indispensable first step will help you to obtain a merchant service account. Suppliers, vendors and customers are more willing to trust a company with a business bank account. This includes major online selling platforms such as Ebay and Amazon are far more willing to deal with companies that have been approved by a US bank. Just the fact that a business has such an account means that it is reputable enough to pass the strict compliance standards of a US bank. Additionally, even if all payments to your company are made with checks, it is, by Federal law, mandatory that those checks be deposited into a Business Bank Account having the same name as the company.
Knowing that a US Bank account is a good thing, and knowing the steps to get one are two different things. What does an Entrepreneur need to provide to secure a Business Account with an American Bank? And what should avoid doing to keep your account open and healthy?
The following checklist outlines the essential requirements for a business account. Remember, this may vary from bank to bank.
Certificate of Incorporation (or Formation.) This is the legal document that evidences the registration of the company. It is filed to create its existence, and the formal recognition of the company is issued by the Secretary of State. If you maintain a business address outside the 50 US States, please review this section.
Federal EIN Number. This is an identification number unique to the company. Application is made to the IRS, which upon acceptance, issues the Employer Identification Number. Most business transactions will require that a company provide its EIN. It is absolutely essential to have when seeking a bank account.
Customized Corporate Seal (included in your Corporate Book) This heavy embossing seal acts as the corporate “signature” and makes documents issued by the company official and subject to recognition as legal and binding.
Photo Identification for Account Signers. All institutions are increasingly security conscious. The minimum identification would be two government issued identifications, for example a passport and a drivers license.
Corporate Resolution that designated the individuals who may act for the company in banking matters.
Even armed with a check list and the necessary documents it can be challenging to open a US Bank Account. Bank compliance is rigorous and banks, very correctly, want to know with whom they are dealing.
Some of the real “no-nos” to avoid are:
Nominee shareholders or directors as exclusive signers on your account. This will not work. Banks only want beneficial owners as signers on the account. Banks have a legal and fiduciary obligation to “know” their clients.
Receiving too many checks, some of which are bad. Even if it is not your fault that you are sent a bad check, a bank may quickly decide you are an undesirable account if this happens too frequently. Account closed.
Frequent movement of cash in and out of accounts. There is no quicker red flag to go up. When banks see suspicious and sudden movement they freeze, and then, close the account.
Over-drafting your account. Don’t do it.! Keep enough money in your account to cover not only the checks you write, but also bank fees. Make sure there is enough to cover unexpected fees as well. If you overdraft more than once, your account, which you worked hard to open, may be closed promptly. But your mother could have told you that!