Though the U.S. accounts for less than 5 percent of the global population, its preeminent place in the world economy signals a huge opportunity for international startups. Whether your global startup is just getting off the ground or has already established its footing in other markets, it pays to think about what a successful business in the U.S. may look like further down the road. The first step to conducting business within the country is to get your finances in order—which means you’ll want to seriously consider opening a U.S. business bank account.
The best business bank accounts in the U.S. offer credibility and protection superior to their foreign counterparts—plus products and services designed to set your business up for sustainable growth. But not all U.S. banks are created equal.
In this article, we’ll review five key reasons why your global startup stands to benefit from a U.S. bank account. Then, we’ll break down the pros and cons of three banking options that may be available to your business.
Why do global businesses need a US bank account?
Conducting business in the U.S. can be complicated—especially if you’re a foreign startup unfamiliar with the intricacies of U.S. tax laws and other regulations. Fortunately, a U.S. bank account can streamline your finances and provide a clearer picture for future growth.
Here are five reasons why every globally-minded startup should strongly consider opening a U.S. bank account.
1. It helps with compliance and recordkeeping
Corporations and LLCs operating within the U.S. must maintain separate accounts for their business’s finances and their owners’ personal finances. This is a legal requirement for compliance and personal liability purposes, but it also helps with recordkeeping.
Come tax time, you may be especially grateful for a dedicated U.S. business account. Not only can this help keep your company compliant with U.S. tax laws, but it can also speed up the tax-filing process and take the pain out of a potential audit.
Maintaining a separate account and records for your business finances can also help you rest easier when it comes to your personal data and recordkeeping. For example, you could authorize your employees to review and manage company finances without giving them access to your personal banking information.
2. It may affect your personal protection from liabilities and debts
While we’re on the topic of peace of mind, we should discuss the issue of personal liability. If any issues arise in your business, separate accounts could help to distinguish your personal liability from your business liability—though this isn’t the only factor at play.
Your personal liability for business debts may also depend on other factors, such as your selection of business entity (partnership, LLC, C-Corporation, etc.) and whether you’ve signed any personal guarantees. If in doubt, we recommend discussing this with a legal advisor so you’re clear on your personal liability for any business debts or obligations.
3. It makes it easier to do business with US vendors and customers
When conducting business with stateside customers or vendors, the right U.S. bank account can simplify the transaction process and save you money on exchange, bank, and credit card fees.
A U.S. business bank account can also lend your company a helpful degree of credibility and legitimacy. For one, it enables U.S.-based customers and vendors to make payments directly to your business rather than to your personal account or to a foreign entity.
And then there’s the time and effort it takes to open a business account—factors that may demonstrate to vendors how invested you are in the long-term success of your company. At the very least, a U.S. business bank account signifies that you’ve satisfied the common criteria required to open one, including an Employer Identification Number (EIN), ownership agreements, and a business license.
4. It can help you build a business credit history in the U.S.
Building a business credit history that’s separate from your personal credit history is important. A strong business credit profile could help you secure better financing terms and give you better standing in negotiations with certain vendors.
But business credit doesn’t just appear out of thin air. It can take time to build—and one of the key first steps is to open a business bank account using your business’s legal name and details.
5. It sets your business up for future growth and opportunities
Many banks offer other relevant products and services in addition to checking and savings accounts. Establishing a relationship with a U.S. bank early on could make it easier to apply for loans, lines of credit, merchant services, and other products with that institution down the road.
And if you plan on pursuing equity financing, a U.S. business account is also part of the groundwork for that. Many U.S.-based venture capital firms are willing to invest in international businesses, but many also prefer to work with C corporations due to the financial and legal benefits they offer shareholders. As mentioned earlier, businesses—including C corporations—must keep their finances separate from their owners to meet compliance guidelines.
What is the best U.S. bank account for a global business?
Thanks to the fintech boom that has carried over from the early 2010s, traditional banking solutions aren’t the only option available to startup founders and entrepreneurs today. New alternatives are available to companies looking for more flexibility, convenience, and control in their financial stack—making it easier than ever to find the bank that’s the best fit for your business.
Here are three common categories of options, along with some pros and cons to consider for each.
Traditional business bank account
Most startup founders are familiar with traditional banks, as they’ve used them for their personal and business finances for years. Over time, these institutions have diversified their offerings to better accommodate businesses of all sizes, needs, and industries.
- Diverse product offerings. Traditional banks offer more than just checking and saving accounts. Business owners can also take advantage of business loans, lines of credit, and merchant services accounts—as well as additional offerings such as notary services and safety deposit boxes.
- Brick-and-mortar convenience. Business owners can access the cash they need at a moment’s notice from bank branches, ATMs, and even ATM drive-thrus.
- A personal touch. While this isn’t the case with all traditional banks, many business owners appreciate the personalized service they receive from their bank—as well as the ability to have sit-down meetings when desired.
- Potentially slow approval process. The approval process for a business account can take several weeks from start to finish, with many strict requirements that make it difficult for international startup founders to open even an entry-level account.
- Potentially higher fees. Traditional banks may have higher fees than other banking solutions such as online-only banks, due partly to the cost of maintaining their branch locations.
- Stateside support hours. Many banks only offer in-person and telephone customer service during U.S. business hours. If you’re stateside and experiencing technical difficulties, you’ll have to wait until the following business day to contact your bank. And if you’re abroad, it can be even harder to get the help you need.
Online-only business bank account
An increasingly popular option for personal banking, online-only banks are also expanding access to business accounts. These banks offer well-rounded financial products and services designed to serve startup founders wherever they are in the world.
- Potentially lower fees. Online banks may offer fewer fees and service charges than traditional banks. No physical locations means less overhead for these banks, and they oftentimes pass these savings on to their customers.
- A mobile-first experience designed for the modern world. Many online-only banks offer a more streamlined digital experience than their brick-and-mortar counterparts. (The digital experience is, after all, the only experience.) Business owners can typically access their funds from anywhere and at any time, from accounts that integrate seamlessly with their startup’s financial stack.
- Many of the same protections as traditional banks. As with traditional banks, deposits at U.S.-based online banks are typically insured by the Federal Deposit Insurance Corporation (FDIC). This insurance covers bank deposits up to $250,000 per depositor, even for non-residents. Many online-only banks also offer additional digital security features to protect their customers from bank account fraud and cyberthreats.
- No brick-and-mortar locations. This means it’s difficult, if not impossible, to make physical cash deposits.
- Potentially limited product offerings. Although online banks typically offer checking and savings accounts, they may not have all of the other products and services available at traditional banks—such as certificates of deposits, loans, and ATM access.
- Heavier reliance on web and mobile solutions. If the website or mobile app is experiencing technical problems or undergoing maintenance, you can’t just drop into a physical location to manage your money from there.
Neobank business account
The newest player in the industry, neobanks are sometimes called “challenger” banks for their tendency to challenge traditional banking norms. Though the term neobank is somewhat vague, many neobanks aren’t technically banks at all; instead, they’re fintech companies that partner with a third-party partner bank to offer FDIC-insured bank accounts. These fintechs are quick to adopt new technologies, so you’ll often find them with features that their competitors don’t have.
- Streamlined user experience. The best neobanks offer a simple and quick approval and setup process. These banks make it easier than ever for international startup founders to open an account for their business.
- Competitive rates and fees. No brick-and-mortar locations to maintain means that many neobanks can offer customers better interest rates and fewer service fees.
- Cutting-edge innovation. Neobanks boast a digital-first experience and tend to focus their offerings on a particular need, niche, or industry. This allows them to better serve customers with cutting-edge features and data-driven business solutions.
- Reliance on partner banks. Neobanks don’t have their own bank charter, so deposits are commonly insured through their partner banks instead.
- Potentially fewer product offerings. Neobanks may have fewer product offerings than their more established counterparts, so you may have to go elsewhere if you want to take out a business loan or open a line of credit.
- Lack of a human touch. Their digital footprint means you likely won’t get any in-person service from a neobank. This can be a dealbreaker for those who aren’t tech savvy or prefer the personalized service that traditional banks provide.
Global business banking made simple with Levro
As a multi-currency account created to support the needs of international businesses, Levro simplifies currency management with fewer fees and lower FX rates on over 34 currencies. Send money to anywhere in the world from your FDIC-insured account, and receive local currency payments with ease.
Plus, every application gets a dedicated success manager. With our quick and simple application process, you can open a bank account in less than 48 hours.