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Business Bank Accounts
Non-residents can open bank accounts in the US.
However, it has become slightly difficult in the recent years — more formalities and more background checks are required for non-residents.
For a US citizen, it is as easy as opening an account online. Sometimes, they get everything done in a day. For non-residents, it may take a few days, but it is possible to open a real business bank account fully online without having to visit US.
We’ll go in detail.
Basics
Let’s start with something fundamental. Let’s ask us if there is really a need for a US bank account.
Can’t we run US businesses without having a US bank account? You can, but it turns out it will be much cheaper if you have one.
When exactly do you need a bank account?
- If customers pay you in USD, you can avoid currency conversion fees by payment processors which are pretty high.
- PTo open Stripe US or PayPal US account (only Business account).
- Pay ad platforms like Google and Facebook in USD
- Pay manufacturers and vendors in USD
In short, having a US bank account reduces a lot of transaction expenses and makes it easier (and cheaper) to pay your business expenses.
Types of accounts
Which accounts are ideal for non-resident businesses?
Savings account
For saving your money over time
Checking account
For day-to-day transactions
Savings
- Designed for saving and investments
- Balance earns interest
- May have transfer fees
- If you withdraw beyond a limit(usually 6), you’ll be charged with fees(5-10$ per transaction) and your account may even be converted to a checking account
- Mostly don’t issue debit card
- Some possible fees include:
- monthly maintenance fees,
- minimum balance fees,
- saving limit fees
Checking
- Designed for transactions
- Zero or very low interest earned on the balance
- When you need easy access to pay rent, bills, online transactions, etc.
- Have check book and debit card
- Some possible fees include:
- monthly maintenance fees
- overdraft fees
- minimum balance fees
- Non-sufficient fund fee
- out of network ATM fees
Is it hard to get an account? Nope. It used to be. We’ll see some ways to do it quickly and completely online.
Before that, let’s understand some basics. In general, there are 2 types of bank accounts.
Personal account
For personal transactions, savings
Business account
For business transactions, international transfers
Almost all small businesses take up Business(corporate) bank account for their US business.
Most payment platforms require you to have a business bank as well. So, that’s what we’ll be covering mostly in this guide.
But before we do that, let’s briefly cover Personal accounts, just to give you a feel for it.
Personal account
A personal account, as the name suggests, is created for an individual to achieve their financial goals.
It facilitates one’s daily personal transactions, savings, big purchases and everything needed to help an individual.
Non-residents can open up personal accounts in the US. But it’s almost impossible to do it without visiting the US.
A few years back, US passed the Patriot Act aiming to prevent the use of financial system to support criminal activities. As a result, background checks and compliance for non-residents became much stricter.
Small banks in the US don’t support non-residents. However, most large banks like JP Morgan Chase, Bank of America and Wells Fargo allow non residents to open a personal account.
You may have to provide your Individual Taxpayer Identification Number (ITIN), contact details, ID proofs and other documents. There is only drawback to this: you’ll have to visit US to complete the application.
Alternatively, you can open a multi-currency account with e-money institutions like Wise or Payoneer that will enable you to send and receive US payments. They create local US bank accounts for you, but they are virtual accounts. You can do this completely online, but you can’t connect them to PayPal/Stripe/Amazon to withdraw funds.
So can a non-resident open a ‘real’ personal bank account without visiting US? Almost always No.
That’s fine.
What about Business accounts? Can we have some happy news there?
Business account
Business bank account helps businesses to send and receive payments in USD, withdraw funds from payment platforms, send international wire transfers, apply for credit cards, and a lot more.
There is only one condition to open a business bank account: you should have a business in the US.
For a non-resident, it could an LLC or a C-corp.
There are 3 different ways of opening a business account:
- At a regular, big bank
- At an online-first banking platform
- At virtual bank accounts
Regular Banks
Most residents open their business accounts at regular banks. They may have personal bank accounts with these banks and they naturally approach them when they need one for their business.
However, these banks may not have the most pleasant customer experience. Their technology may be not as user-friendly as you would find in other modern startups.
Biggest drawback for a non-resident: you have to be physically present in US to open an account.
Most of them require a minimum balance of $1500-$2000 to be maintained for savings+checking accounts.
These are some of the credible banks:
- Wells Fargo
- Citi Bank
- Capital One
- Bank of America
Documents needed to open a business bank account
- Members’/owners’ physical presence in the US
- Passport (or national ID, license, etc)
- Proof of Address
- Local phone number and address (depends)
- Need a US LLC, US Physical address and EIN.
It’s nice to know that every such bank account has their deposits FDIC insured.
Online-first banking platforms
These are modern banking platforms that are specifically designed for startups. They are modern, user-friendly and have a lot of slick features.
You might wonder if these are ‘real’ bank accounts. Typically, people consider a bank account to be ‘real’ when it is insured by the federal government. Deposits you put in these online-first bank accounts are FDIC insured for up to $250,000. That’s awesome.
However, they can get a bit strict when it comes to their application process. Since they provide FDIC insured bank accounts, they do a lot of background check to ensure money laundering and other frauds are prevented.
After your registration, they typically have follow up questions regarding your customers and suppliers. Especially if you have an e-commerce/FBA business.
They even provide you with physical and virtual debit cards that can be used like any other card.
Can you use these accounts to withdraw funds from PayPal, Stripe/Amazon?
Yes, you can.
Do these banks have all the features of a full-fledged financial institution?
Not yet.
But, that’s fine most of the cases. The convenience they offer and the pace at which they add new features are good enough reasons to give them a try.
2 examples of online-first banking platforms are Mercury and Relayfi.
Mercury
FDIC insured US Bank account
Yes
Connection possible with payment processors (Stripe, PayPal, etc)
Yes
Offers Physical Debit Card
Yes
Personal account
No
Multiple checking accounts
Yes
Requirements to setup Mercury account
- US company (LLC/C-corp)
- US address
- EIN
- Articles of organisation
- Passport copy
- Personal contact details
Belarus
Burundi
Central African Republic
Cuba
Democratic Republic of the Congo
Iran
Iraq
Lebanon
Liberia
Libya
Nicaragua
North Korea
Somalia
South Sudan
Sudan
Syria
Venezuela
Yemen
Zimbabwe
Relayfi
FDIC insured US Bank account
Yes
Connection possible with payment processors (Stripe, PayPal, etc)
Yes
Offers Physical Debit Card
Yes
Personal account
No
Multiple checking accounts
Yes
Requirements to setup Relayfi account
- US company (LLC/C-corp)
- US address
- US phone number
- EIN
- Articles of organisation
- Passport copy
- Personal contact details
Belarus
Bermuda
Burundi
Central African Republic
Cuba
Democratic Republic of the Congo
Iran
Iraq
Lebanon
Libya
Nicaragua
North Korea
Sint Maarten
Somalia
South Sudan
Sudan
Syria
Ukraine
Venezuela
Yemen
Zimbabwe
Virtual payment platforms
Payment platforms like Wise (Formerly Transferwise) and Payoneer don’t offer FDIC insured bank accounts, but they offer local currency accounts that enable you to move between currencies at lower currency exchange rates.
When do you need them?
For instance, if you have money sitting in your US bank account, you will need to transfer it to your home currency one way or the other. You could wire transfer from your US bank to your local bank. But that’s expensive. Currency rates are usually high and there are several fees involved.
Another instance: if you have an E-commerce/FBA business where customers pay in dollars, you would generally need to convert your money from USD to your local currency. These e-money institutions can offer much lower exchange rates and very minimal(or zero) fees.
They even provide a physical debit card that you can use everywhere — pretty sweet.
The amount you keep in their wallets are safeguarded, but not FDIC insured like in the case of normal banks. That’s the main difference.
Can you use these accounts to withdraw funds from PayPal, Stripe/Amazon?
No.
PayPal no longer accepts Wise/Payoneer accounts as valid bank accounts to withdraw funds. PayPal used to allow this, but not anymore.
That means if you have PayPal US, you need a real US bank account to withdraw funds. Mercery and Relay bank accounts work fine.
Same with Stripe as well.
Wise
Requirements for US business account
- Legal Name of entity
- US address
- EIN
- Names & details of directors and shareholders with more than 25% ownership
- Company description
Payoneer
Requirements
- Name
- Contact information
- Local bank account details
- ID Proof
Conclusion
Non residents can easily open up business bank accounts online by using online-first banking platforms like Mercury and Relay. These bank account can be connected to PayPal/Stripe/Amazon easily.
Best part? You can connect these bank accounts to Wise/Payoneer when you want to convert USD to your local currency for further savings on currency conversion.
That way, you can withdraw funds from PayPal/Stripe to your Mercury/RelayFi bank account in USD, and later convert that USD to your local currency using Wise/Payoneer.