Yes, a business can have a savings account. Sole proprietorships, partnerships, LLCs, and corporations can all open an interest-bearing business savings account at a bank or credit union to hold surplus cash separately from operating funds. The rules that govern these accounts, however, are not the same as the rules for personal savings, and the differences affect your legal protections, your taxes, and how much of your money is insured.
Why the Distinction From a Personal Account Matters
For LLCs and corporations, keeping a dedicated account is more than housekeeping. Courts can “pierce the corporate veil” and let creditors reach an owner’s personal assets when business and personal finances have been commingled. A separate savings account documents the boundary between company capital and your own.
The other difference is legal protection on the account itself. Personal accounts are covered by the Electronic Fund Transfer Act, which gives consumers error-resolution rights and caps their liability for unauthorized electronic transfers. Business accounts are not covered. The relationship between your business and the bank is governed largely by the Uniform Commercial Code and by the account agreement you sign.1Legal Information Institute. Uniform Commercial Code 1-201 – General Definitions Read the agreement carefully, because fewer protections default to you automatically.
What You Need to Open One
Banks want to confirm that the business exists, is in good standing, and that the person in front of them is authorized to act for it. The exact package depends on your entity type, but expect to bring the following.
- An Employer Identification Number. The IRS issues these for free in minutes online. Sole proprietors without employees can use a Social Security Number instead, though many prefer an EIN to keep their SSN off banking paperwork.2Internal Revenue Service. Get an Employer Identification Number3Internal Revenue Service. Instructions for Form SS-4
- Formation documents. LLCs bring Articles of Organization; corporations bring Articles of Incorporation; partnerships may bring a partnership certificate or agreement.
- An operating or partnership agreement showing which individuals can manage and sign on the account.
- Government-issued ID for at least one authorized signer.
Banks also have to identify anyone who owns 25% or more of the business and at least one person exercising significant control, under FinCEN’s Customer Due Diligence rule.4Financial Crimes Enforcement Network. Information on Complying with the Customer Due Diligence (CDD) Final Rule You will fill out a short certification form during the application listing those people. This collection happens at every account opening regardless of any separate federal reporting rules.
How Much of the Money Is Insured
Deposits in a business savings account at an FDIC-insured bank are covered up to $250,000 per depositor, per bank, per ownership category.5FDIC. Understanding Deposit Insurance A corporation, partnership, or LLC counts as its own depositor, separate from the personal accounts of its owners. Your business gets its own $250,000 of coverage at that bank even if you personally already have $250,000 insured there.
Credit unions offer parallel coverage through the NCUA at the same $250,000 limit, though an authorized representative of the business must qualify for the credit union’s field of membership. Credit unions cannot let someone open a business account solely to stack insurance.
Businesses sitting on reserves above the limit sometimes spread deposits across multiple separately chartered banks, since each institution provides an independent $250,000 of coverage.6FDIC. General Principles of Insurance Coverage
Fees and Minimum Balances
Monthly maintenance fees on business savings accounts typically run around $5 to $10, and many banks waive them if you keep a minimum daily balance. Balance thresholds vary widely, from zero at some online banks to $50,000 or more at some traditional institutions. Opening deposits commonly range from a few hundred to a few thousand dollars. Compare fee schedules before you commit, because the gap between a fee-free online option and a full-service bank can be substantial over time.
Getting Money In and Out
Federal Regulation D used to cap savings account withdrawals and transfers at six “convenient” transactions per month. The Federal Reserve removed that cap in April 2020, and the change remains in effect. Banks are no longer required to enforce it.
Many still do, as a matter of internal policy. If you exceed a bank’s own limit, expect one of three consequences: an excess-transaction fee (often $5 to $15 per extra withdrawal), conversion of the savings account to a checking account at a lower interest rate, or account closure for repeated violations.7Consumer Financial Protection Bureau. Why Am I Being Charged for Transactions in My Savings Account Check your account agreement for the actual number.
Taxes on the Interest You Earn
Interest is taxable income. How your business reports it depends on structure.
- Sole proprietors report interest on their personal return. The bank sends Form 1099-INT if you earn at least $10 in a year.8Internal Revenue Service. About Form 1099-INT, Interest Income
- Partnerships and S corporations pass the interest through to owners on Schedule K-1, and each owner reports their share individually.9Internal Revenue Service. Partner’s Instructions for Schedule K-1 (Form 1065) (2025)
- C corporations report interest on line 5 of Form 1120, and it is taxed at the flat federal corporate rate of 21%.10Internal Revenue Service. Form 1120 U.S. Corporation Income Tax Return11Office of the Law Revision Counsel. 26 U.S. Code 11 – Tax Imposed
Banks are not required to send Form 1099-INT to corporations, which are classified as exempt recipients under IRS reporting rules.12Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID (01/2024) The income is still taxable. The corporation just has to track and report it itself.
One other tax point worth flagging. If the Taxpayer Identification Number on your account is wrong or the IRS notifies the bank of a mismatch, the bank must withhold 24% of interest payments and send it to the IRS as backup withholding.13Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide Getting your EIN or SSN right on the application prevents this.
When a Bank May Refuse
Not every business gets an easy approval. Anti-money-laundering rules push banks to scrutinize certain industries, and some get turned away outright.
Cannabis is the clearest example. It remains illegal under federal law even where states have legalized it, so banks that serve cannabis businesses risk violating federal anti-money-laundering statutes and must file suspicious activity reports on every transaction. Many decline these accounts entirely. Money services businesses—check cashers, currency exchangers, money transmitters—also face heightened scrutiny under FinCEN guidance, especially when they handle cross-border transfers to jurisdictions with weak anti-money-laundering controls or specialize in third-party check cashing.14Financial Crimes Enforcement Network. Interagency Interpretive Guidance on Providing Banking Services to Money Services Businesses Operating in the United States If your business fits either category, plan for more documentation and a longer approval timeline.
Keep the Account Active
An untouched savings account can be lost to the state. After a period of inactivity, generally three to five years depending on your state’s unclaimed property laws, the bank must turn dormant funds over to the state through a process called escheatment.15Office of the Comptroller of the Currency. When Is a Deposit Account Considered Abandoned or Unclaimed Any activity resets the clock, including a deposit, a withdrawal, or even a contact-information update. If you use the account as a long-term reserve, log at least one transaction or update per year and the state stays out of it.