If your looking to setup and operate a US company, eventually you will have to look into banking options for your US company. There are many options but the process to navigate this can be complex. If you are looking to setup a physical presence for your US business, the process is straightforward, as you will have an address and local bank branches you can visit to have this taken care of, The intent of this article is to provide you with some options and insights for opening a US business bank account ahead of time or for a business that doesn’t necessarily have a physical US presence.
Hurdles on Opening a US Business Bank Account as a Non-Resident
There are some challenges that can make finding a good bank in the US difficult for non-residents, but by following a few guidelines, you should be able to find one that works without much difficulty.
The challenge with banking in the US is that the landscape is constantly changing, another difficulty with the US banking system is that not all bank employees are well-trained, and they may not be familiar with their bank’s policies regarding non-residents.
You may walk into a Wells Fargo or Bank of America, and the teller or manager may tell you that they don’t accept foreign nationals opening business bank accounts – even though those banks actually do. While you may have been rejected by an individual who wasn’t fully aware of the bank’s policies, you may still be able to open an account there with a different manager or at a different branch. Knowledge is key in this area.
Despite these challenges, you can still find a bank that will accept you as a non-resident fairly painlessly by following a few guidelines, so let’s take a look at these options.
The know your customer or know your client (KYC) guidelines
In recent years, authorities in the US and abroad have increased their focus on modernizing and enforcing anti-money laundering and terrorism financing (AML) regulations. As part of these efforts, the US’s Financial Crimes Enforcement Network (FinCEN) proposed Know Your Customer (KYC) requirements in 2014 and these rules require that an individual present themselves in person to open a US bank account.
The know your customer or know your client (KYC) guidelines in financial services requires that US Banks make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship with a customer. Banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information. Initially, these regulations were imposed only on the financial institutions but now the non-financial industry, fintech, virtual assets dealers, and even the non-profit organizations are liable to oblige.
Based on these regulations, opening a US business bank account online for non-residents and non-citizens is more complex than those of a US citizen or permanent resident.
Online banks, then, aren’t generally going to be an option for non-residents
As a general rule, larger banks like US Bank, Chase, and Wells Fargo are more open to non-residents than smaller banks.
Larger banks have less exposure than small, local banks or credit unions, which makes them more willing to take risks. If they get a bad apple, they have plenty of other accounts and can move on fairly easily. Smaller banks, on the other hand, will feel more heat if they have problems, so their risk tolerance is much lower.
Larger banks, then, are generally your friend. They’re not as paranoid about compliance as smaller banks, and they usually have solid features like Visa- or Mastercard-backed debit cards.
While online banking in the US can make some of the simpler aspects of remote banking easier to deal with, you usually need a US phone number to manage your account – especially when you need to authorize large transfers or resolve complex issues over the phone. Yondaa, Inc. can provide you with a US phone number for call forwarding.
Larger banks also rely heavily on mail for sensitive items like debit cards, so you’ll need to have a mailing address that you can easily access if the bank sends anything to you. Yondaa, Inc. can provide you with a US mailing address to forward these documents to you.
Despite these challenges, larger banks are still usually your best bet for opening a bank account as a non-resident simply because they are more willing to approve your account and work with you.
Can I open a business bank account in the United States with a foreign corporate entity?
To open a business bank account in America, you must first have a business which is registered in the USA. You’ll be asked to present proof of registration when you open your account so your first step should be to setup your US company.
What types of corporate entities are there in the United States?
US law recognizes several different types of corporate entities. You may have one of the following company types and each has a different set of requirements for opening your business bank account:
• Sole Proprietorship
• Limited Liability Company (LLC)
• Corporation
• Partnership
• Cooperative
• S Corporation
What’s the process for opening a corporate bank account in the United States?
To open a US business bank account, financial institutions are required based on the KYC guidelines mentioned earlier in the article to request specific documentation when opening an account . You’re likely to be asked for the following documents when opening a business bank account:
• Photo ID for the director opening the account (Foreign passport)
• Proof of personal address for the named director (Utility bill or Driving License)
• Articles of incorporation/organization. You will have to prove that your business is properly registered, although the acceptable documents will vary according to the type of business entity you run.
• EIN (Federal Employer Identification Number) confirmation letter. This is required for tax reporting purposes.
• Proof of business address. Some banks will require you to prove a business address in the same geographic area and state as the bank branch. Others are more accommodating. (Lease agreement or articles of incorporation depending on bank)
Many accounts may also ask for a minimum deposit amount to open the account. It’s worth checking with your chosen bank before you visit to confirm which specific documents are acceptable.
Can I open a business bank account as a non-resident?
There’s no legal issue with opening a bank account in the US as a non-resident. However, do remember that for a company account, your business must be registered in America and have a EIN.
Can I Open a US Business Bank Account from Abroad?
Most banks require you to visit and present identification. This area of law is tightly regulated, so expect stringent checks.
There are some specialist banks and agencies who may be able to help you open an account from abroad. Silicon Valley Bank, for example, specializes in helping startup businesses in certain sectors and they may be able to make arrangements with entrepreneurs from overseas.
Alternatively, there are agencies who will help for a fee. Because these agencies operate typically on a state by state basis, you'll need to search for a reputable agency in the state where you register your business.
Can I open a business bank account online?
It’s difficult to open an account online as most banks require you to present documents in the branch personally. Some specialist online banks may be able to help you, but they're not as established as the ‘Big Four’ listed below and may not have the breadth of product range.
Most banks will let you start the account application process online and then make an appointment to show your documents later.
Which bank should I choose?
There are a huge number of banks to choose from in the US, including globally recognized brands and smaller local operations. If you already bank with an international bank who works in America, they might be able to help you transfer your account to the US more easily.
If you’re starting from scratch, then choose one of the ‘Big Four’ American banks. Some details are given below about business bank accounts for each of the following:
• JP Morgan Chase
• Bank of America
• Citibank
• Wells Fargo
JP Morgan Chase
JP Morgan Chase is one of the largest banks in America. There are several products designed for business banking, with monthly fees from $10-95. All monthly fees can be waived if you keep a minimum deposit amount in the account. The exact products on offer may vary according to the location of your business, so you have to enter a zip code to get the final word on available products.
Bank of America
Bank of America offers two regular corporate accounts with fees, which are then waived subject to fulfilment of certain conditions. For example, if you make a minimum number of transactions or payments over a monthly cycle then the fee (of $17 or $30 depending on the account) could be avoided. There are 4,861 branches of Bank of America in the US.
Citibank
Citibank has a very large range of business banking accounts; including checking accounts designed for different size of businesses. Luckily, the bank website provides a helpful comparison table so you can choose between them. There are also specialist accounts designed for different sectors and needs. There are 983 Citibank branches in the US, and more branches overseas.
Wells Fargo
Wells Fargo has business checking accounts, and accounts which are tailored to the needs of small businesses or nonprofit organizations. As with all American banks, the products (including fees and charges) on offer vary from state to state so you need to enter your zip code to get the full details.
Alternative Options
Aside from opening an account in the US in person, there are a couple of other options for you. Here are some of our recommendations.
The TransferWise Borderless Account
Old-world bank accounts only work properly in one country. They hold money only in one currency. And it gets expensive when you try to use them across borders. TransferWise's new Borderless accounts solve all of this. Now you can send, receive and organize your money internationally, without crazy fees or even-crazier exchange rates – just a small, fair charge when your money moves between currencies.
Silicon Valley Bank
Silicon Valley Bank ( https://www.svb.com/connect ) allows tech companies and startups based overseas to open accounts remotely. You can apply for this online and there are certain criteria that must be met.
Setting up at an International Bank with a Branch in your Country
The easiest approach is for the business owner to find a home-country bank that has an affiliated bank in the U.S. Unfortunately, that approach is not widely available. International Banks that operate in the US include;
• Citibank
• HSBC
• TD Bank
• BBVA
• Lloyds Bank
Utilizing a US Based Partner or Associate
The more common approach is for the business owner to find a trusted individual in the U.S. to open the account on the business's behalf. I have seen accountants, family members, and friends take that role.
The trusted individual is appointed to an officer position (such as CFO) in the business. In that position, s/he opens an account at a nearby bank branch, because banks in the U.S. typically want an individual to live near the branch where an account is opened.
Conclusion
If you need a US business bank account setup prior to establishing your physical presence, you really have 2 clear cut options. The first is to take a trip to the US and visit a bank branch in the state where you have incorporated your US company and present your incorporation documents.
The second clear-cut option is to discuss your business banking needs with a branch of an international bank that has a US presence and a presence in your own location.
