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What Bank Should I Use For My Freelance Business?

Christine C. Renee | Sep 29, 2020

Banking and bookkeeping are probably the last things on your mind when first starting out as a freelancer.

But seasoned freelancers know how important it is to have a business banking system in place, so the rest of their financial record keeping process stays on track – especially when it comes time to pay business taxes.

They do this by opening a separate bank account, ensuring their business transactions never mix with personal transactions.

But finding the right bank and bank account for your freelance business can get confusing, where do you start?

You’re constantly think, “What bank should I use?”

When looking for a bank that fits your needs, don’t dismiss inquiring with your local community bank or credit union.

Freelancers have a lot more choices in the way of financial services than they did just a few years ago! And it’s because of the rise in the freelancing and gig economy.

Here’s what you need to know about finding the right bank and bank account for your business.

Do I Need a Business Bank Account as a Freelancer?

As a freelancer – or sole proprietor in the U.S. – you are not legally required to open and maintain a business bank account.

Note: Limited Liability Companies (LLCs), however, are required to separate business, and personal finances since the business is considered a legal entity separate from the owner.

However, I highly recommended you consider opening a separate checking and savings account specifically for business transactions.

You may use a regular bank account for this purpose, but your personal and business money should never mix.

But, it’s probably a good idea to think about the best banks for business accounts for your freelance business.

The reason for this is so you can make accounting and bookkeeping tasks easier – especially when it comes time to estimate quarterly taxes and reconcile annual taxes.

3 reasons why freelancers should consider a business checking account

A business checking account offers much more flexibility than a regular checking account, but you are not required to use one.

New freelancers tend to shy away from business accounts because they traditionally come with high fees. However, there are free or low-fee business bank accounts available online for freelancers! The best banks for business accounts will have these attributes:

  1. It’s professional: A business bank account is one of the first steps to legitimizing your business; having one makes you look more professional and organized. You’ll have full banking privileges under your business name with a Doing-Business-As (DBA) license or as an LLC (if applicable). Regular accounts can only be opened in your legal name and subject to certain transfer and deposit restrictions.
  2. Grow your business: You also get to build a business banking relationship, thus opening the opportunity to later build a commercial credit score.
  3. Accept more payments: A business checking account lets you write and accept checks in your business name, accept credit card payments, collect receipts, and create and send invoices in your business name.

As a freelancer, while it’s ultimately your choice which form of payment you want to accept, it’s good to have the option to be able to accept all the ways a client might want to pay you:

  • PayPal, Stripe or Square
  • Online money transfer service (Payoneer, Transferwise, etc.)
  • ACH bank transfer
  • Paper check
  • Credit Card
  • Electronic Funds Transfer (EFT)

A regular checking account won’t let you accept credit card payments, certain types of transfers or deposit paper checks unless it is made out to your legal name.

How many bank accounts should I have as a freelancer?

Once your accounts are open, you should allocate these types of accounts:

  • Checking account: All incoming and outgoing business transactions funnel through a checking account.
  • Savings account: Put money away for future business travel, future business expenses (annual subscriptions, memberships fees, etc.).
  • Tax savings account: (Optional second savings account) In the US, freelancers have to estimate their taxes and pay quarterly. Many freelancers set money aside into a separate savings account.

How to choose the right bank account for my freelance business?

Learning to figure out what bank should I use is that never ending question.

As a freelancer, your time is valuable – and so is your money!

With so many financial services and banks offering low and no-fee business checking and savings accounts, you’re bound to find one that fits your budget.

Look for these features in a business bank account:

  • Free to open, or low minimum deposit to open an account
  • No monthly fee
  • No minimum balance requirements
  • Free ACH transfers
  • Free ATM use
  • Free Checks
  • Free savings account
  • Unlimited transactions (checking)
  • Mobile app available
  • Accounting, bookkeeping, invoicing and payroll integration (Freshbooks, QuickBooks, etc.)

What Bank Should I Use for My Freelance Business?

Freelancers have multiple options when it comes to finding a place to put their money. You can choose a bank or an online financial platform that provides banking services.

Here are some of the different types of banks and banking services available today:

Online-only banks: Online-only banks like Ally, Bank5 Connect and Axos (formerly Bofi) are FDIC-insured banks with no physical branches. Online banks have less overhead so they can offer low fees, higher interest rates and better benefits to freelancers looking for a business checking account.

Online payment platforms: These are not banks, but financial platforms that can be used to receive/accept payments, send out money and store money – PayPal, Due and Stripe are popular examples of payment platforms. Freelancers often use these apps together with a bank account.

Neobanks: These are digital-only (aka mobile-only) financial services that offer checking, savings and debit cards with little to no fees. Neobanks are not banks and do not have a banking license, so they partner with actual banks to offer customers FDIC insurance. Freelancers can get the best business accounts through a neobank because they typically have no fees. Azlo, Novo, Chime and Simple are all examples of a neobank.

Credit Unions: Local credit unions typically offer banking services for small and medium-sized businesses, but access may be limited to a physical location and membership requirements.

Large multinational/national banks: FDIC-insured banks with physical locations don’t typically offer affordable business accounts for solo business owners and may offer limited access based on your physical location. However, Chase and U.S. Bank both have affordable business accounts online with some restrictions.

Fees will vary depending on the type of bank and the structure of your business.

For example, online-only banks typically offer free business checking for small businesses with low to moderate account activity, while physical banks tend to charge higher fees.

When looking for a bank that fits your needs, don’t dismiss inquiring with your local community bank or credit union about opening a small business account. They may offer unique features, discounts and services for someone doing business within the community.

To get your research started, here is a list of U.S. national banks and online financial services that have low-fee and no-fee business accounts for freelancers.

Best Banks to Use for Freelancers

Best digital-only business checking accounts for freelancers

PayPal Business: While not a bank, PayPal Business is the one payment platform that’s robust enough to use like a business checking. A PayPal business account lets you operate under your company name, accept payments and store money like a checking account. You can also create invoices and quickly pay merchants and other business expenses straight from the account. However, there is no savings account. Most freelancers use a PayPal business account along with a business bank account.

Azlo: Based in San Francisco, CA, Azlo is a neobank and is partnered with BBVA USA, so your money is FDIC insured. Azlo offers business banking to freelancers entirely online. Transfers, invoicing and payments are free, and there are no minimum balance requirements. You also get bookkeeping and payment tool integrations.

Novo: Novo is another neobank. They are partnered with Middlesex Federal Savings, so your money is FDIC insured. Novo caters directly to freelancers and small business owners providing business banking services online. It’s only $50 to open an account, and there are generally no other fees. There are multiple tool integrations with bookkeeping and accounting apps like Xero, QuickBooks, Stripe and more.

Best online-only bank offering business accounts for freelancers

Axos Bank for Business: Formerly known as Bank of Internet USA (Bofi), Axos is one of the oldest online banks and is a real bank. It offers affordable business checking with no monthly fees, multiple digital business tools, a low minimum opening deposit, free ATM access and interest-bearing savings and money market accounts.

Best national banks offering business accounts to small businesses

U.S. Bank: U.S. Bank has more than 3,000 physical branches and 5,000 ATMs throughout the Midwest and West Coast. But it offers business checking and savings accounts that you can sign up for and use online. Freelancers can benefit from their no-fee checking as long as you have less than 125 transactions per month.

Chase Business: Chase has low-fee affordable business accounts if you maintain a minimum daily balance and stay under a certain amount of transactions per month.

Navy Federal Credit Union Business: If you are part of the U.S. armed forces, the DoD, a veteran or a family member, you may be able to take advantage of NFCU’s affordable small business checking and savings accounts.

Keep things simple

The best bank account for your freelance business is one that makes it easy for you to manage your money.

Find a bank account with low to no fees, one that lets you add a savings account and that allows you to integrate it with other financial apps to make accounting and bookkeeping easier (QuickBooks, Xero, Freshbooks, etc.).

Your turn –

With all the banking options available today, how are you going to set up your business bank accounts?

Are there any banks not listed here that have worked for you?

I’d love to hear about them, especially those that have worked outside the U.S.

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Christine C. Renee

  • @christinecrenee

Christine is a freelance writer for hire specializing in personal finance and small business management topics. She has worked with Bankrate, Investor Junkie, NextAdvisor, and has ghostwritten for multiple other finance blogs. When not crafting well-researched blog posts for clients, she enjoys reading the latest tech news.

Reader Interactions

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Comments

  1. Kris Taylor

    June 5, 2020

    Hey, Christine, thanks for the great article! I’m just starting out as a freelance writer, and your post helped me answer several important questions. I feel a lot more confident about setting up my business finances after reading your advice. I’ll check out your blog since you specialize in most of the business questions I have. Thanks!

    Reply to Kris
    • Christine

      June 9, 2020

      Hi Kris! Thanks, glad this post helped. The world of finance keeps changing – especially how the banking system works. Hope I can answer some of your questions from the blog.

      Reply to Christine
  2. martina

    March 26, 2019

    Hi, do I need to have a business account as a freelancer, or I can have a simple checking account? thank you.

    Reply to martina
    • Christine

      June 9, 2020

      Hi Martina,
      When first starting out as a freelancer, it’s more important to be able to keep business transactions and personal transactions separate by using completely separate checking accounts. So, to save money, if you can’t find a free business checking account that fits your freelancing needs, you can use a simple checking account to funnel only business transactions.

      Reply to Christine
  3. Sydney Bair

    October 14, 2018

    Thank you for this article! As a new freelance writer, this is an area I’m still trying to figure out. And as someone who’s niche is not finances – this was a huge help for me.

    Thanks again!

    Reply to Sydney
  4. Ida Darmawan

    February 5, 2018

    Great article, thanks for sharing this awesome info! I’ve looked into several brick and mortar banks for my freelancing account and most of them charge fees for business account (or you have to maintain minimum balance). It’s good to know there are free options out there 🙂

    Reply to Ida
  5. Christine C. Renee

    January 30, 2017

    Hi Sara,
    Thanks so much for stopping by! I hear a lot of new freelancers asking these questions so I’m hoping this helps them find a bank that they’ll love using, and that will help them to manage their money so their business can grow.

    I’m so glad you like this post and thank you for sharing! 🙂

    Reply to Christine
  6. Sara Frandina

    January 30, 2017

    Thanks for a fantastic article, Christine! I still encounter freelancers and solopreneurs who aren’t managing their business money separate from the personal accounts, and much of it comes from uncertainty over which bank to choose and/or how to process payments. I’ll be sharing this with them! 🙂

    Reply to Sara

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