How to Open a Business Bank Account as a Freelancer (20-Minute Guide)

Opening a business bank account was the single most important financial step I took as a freelancer. More important than choosing accounting software. More important than finding a CPA. It took 20 minutes and cost $0, and it eliminated the biggest source of financial chaos in my first year.

Here’s exactly how to do it.

Why It Matters (The 2-Minute Pitch)

Everything good about freelance finances starts with a separate business account:

• Tax tracking becomes automatic — every transaction in the account is business-related
• Deductions become obvious — no sorting through personal purchases at tax time
• Tax savings become possible — set up auto-transfer to a tax sub-account
• LLC protection works — commingled funds can pierce your LLC’s liability shield
• You look professional — payments come from a business account, not “John’s personal checking”

I went 12 months without one. Cost me ~$1,850 in missed deductions and hours of tax-time misery. Don’t repeat my mistake.

What You Need to Open an Account

As a sole proprietor (no LLC):

• Government-issued ID (driver’s license, passport)
• Social Security Number (or EIN if you have one)
• Your legal name as business name
• Business address (your home address is fine)
• Estimated annual revenue (your best guess)

As an LLC:

• Everything above, plus:
• EIN (required for LLC accounts)
• Articles of Organization (from your state filing)
• LLC Operating Agreement (some banks require this)

That’s it. No business plan, no minimum deposit (at online banks), no credit check (for basic checking).

Step-by-Step: Opening the Account

Step 1: Get an EIN (5 minutes, free)

Even as a sole proprietor, get an EIN:

1. Go to irs.gov/EIN
2. Select “Apply Online Now”
3. Answer questions about your business type (sole proprietor or LLC)
4. Receive your EIN immediately

You’ll use this for business banking, client W-9 forms, and eventual LLC filing. It protects your SSN.

Step 2: Choose a Bank (5 minutes)

My top picks:

• Relay Financial — Free, sub-accounts, auto-transfer rules. My choice.
• Mercury — Free, beautiful app, high-yield treasury option.
• Novo — Free, best accounting software integrations.

All three are free, online, and designed for small businesses.

Step 3: Apply Online (10 minutes)

Visit your chosen bank’s website and click “Open Account.” You’ll enter:

• Personal info + ID verification
• Business info (name, type, address, EIN)
• Estimated annual revenue
• How you’ll use the account

Approval is usually instant for sole proprietors. LLCs may take 1-2 business days for document verification.

Step 4: Set Up Sub-Accounts

Once approved, create sub-accounts:

• Operating — main checking for income and expenses
• Tax Savings — 28% auto-transfer from operating
• Business Emergency — build to 2-3 months expenses over time

Step 5: Update Your Payment Info

• Tell clients to pay to your new business account
• Update your invoicing software (FreshBooks, Wave) bank details
• Move business subscriptions to the new account
• Get a business debit card (included with the account)

After Opening: The Setup Checklist

• Auto-transfer 28% of incoming deposits to Tax Savings
• Connect bank to accounting software
• Apply for a business credit card (Chase Ink, Amex Blue Business)
• Update W-9 with EIN for new clients
• Set up monthly salary transfer to personal checking
• Notify existing clients of new payment details

The Bottom Line

Opening a business bank account takes 20 minutes and costs $0. It’s the foundation for everything else — tax savings, expense tracking, professional invoicing, and LLC protection.

If you’re freelancing without one, stop reading and open one now. Relay, Mercury, or Novo — any of them will work. You’ll thank yourself at tax time.