Opening a joint bank account with a business partner is a fairly simple and straightforward process. These days it’s possible to open joint business accounts online with virtual account providers such as Wise and Revolut. Wise even offers their joint business account for free and even comes with a great multi user access feature. Both offers are valid for citizens of countries such as the US, UK and most European countries. Other modern options include Anna.Money but are only for companies based in the UK.
How to open a joint business account
- Believe it or not, but to open a joint business account you need an established business. You need your registration details and tax details in order to open a business bank account.
- A joint business account is often opened by one person who becomes the admin of the joint account. You can then invite the other person to become a fellow admin. The usual option here is to open a regular business account.
- If you open a freelancer account or a sole trader account you often cannot invite fellow admins or have a multi-user account. Most freelancer bank accounts will likely not get you a joint business account.
Opening a joint bank account with business partner
A joint business bank account requires a level of trust between the business partners. If you want to have an easy time managing your finances, you and your business partner must have the same understand how you do your payments, so that you don’t have unwanted surprises.
Advantages of a Joint Bank Account For Business Partners
Joint bank accounts for business partners have several advantages including the following;
- You and your partner have equal access to deposit, withdraw, debit card, and chequebook. Apart from streamlining financial logistics, equal ownership helps partners spot mistakes easily and correct them in good time.
- It makes it easier to separate personal and business transactions
- A joint business bank account helps partners have extra Deposit Insurance. For example, the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) in the US provide $250, 000 of insurance per depositor if your bank fails. This means for a joint account, you will be insured up to $500, 000.
- You can easily categorize business expenses in one account. It makes budgeting and paying bills much easier.
- All business transactions are tracked in one place. This helps to keep a close eye on all business activities.
- A joint bank account for business partners makes it easy to compile taxes since you can track all your credits and debits in one place.
Disadvantages of a Joint Bank Account With a Business Partner
Even with the many benefits of a joint business bank account, there are cons of opening a joint business bank account with a business partner. These include;
- Minimal asset protection. If your business partner fails to settle his/her debts, creditors can choose to satisfy the debt by collecting from the joint business account.
- Both partners are liable for mismanagement. If one partner mismanages the joint account, all owners will be liable for the costs. The mismanagement can be reported to authorities. For instance, in the US you can be reported to consumer credit reporting agency, ChexSystems, and you might not be allowed to open a bank account in future.
- There is no privacy with a joint business bank account with a business partner. Both partners can access the account at any time and see all transactions.
Opening a Joint Bank Account With a Business Partner
Business partners can open a joint bank account either in a brick-and-mortar bank or online banks. First, you will need to agree on how you will use the bank account, determine your monthly budget, and decide what will be done with the account if your business relationship changes.
Since you and your business partner are equally liable, it is best to choose a financial institution that both of you are comfortable with. A financial institution that both of you can access at any time is the best choice. Alternatively, if you live far away from your business partner, you can choose an institution through which you can open an account with ATMs your partner can access.
The steps taken to open a joint business bank account are similar to those taken to open a business bank account They include the following:
Have your Documents Ready
When opening a joint business bank account, both partners need to provide personal information such as your full names, contact details, social security number, date of birth, phone number and your address. The documents you will need to present include either your ID, a driver’s license or a passport.
Visit a Bank to Fill Account Application Forms or Fill the Forms Online
Some banks will require you to visit a branch in-person to complete your application even after applying online while other banks offer services entirely online. It is best to complete this step with your partner. For your first deposit, it is best to split the minimum amount needed to start an account equally. If it is $500, you will both deposit $250.
Set your Ground Rules
Rules are important for the success of any business. Even though there’s trust between you and your business partner, rules are equally important. It is crucial to set rules on how you intend to handle your joint finances. How you set the rules is completely up to you, but make sure that you do it.
Is taking money from a joint account stealing? If you have a joint bank account with your business partner, it means both of you have the right to the money. However, you can be sued in a civil court by your partner if you mismanage the funds.
Best Banks With Joint Account for Business Partners
It is best to do some research to find out the available options. This is because different types of businesses may require different types of joint bank accounts. Crucial things to consider when choosing a joint business bank account include the types of transactions you’ll be making (international, wire transfers, etc.), whether or not you want a business with a physical or online presence, etc.
The following banks provide joint business bank accounts in the UK. These options are only available to businesses established and based in the UK.
- Cashplus Bank. You can access the bank through an app or online. It does not charge monthly fees, card purchases and bank transfers. It offers overdraft facilities.
- Anna. You are able to open joint business account online with Anna app. It is a business banking app that does not charge monthly fees, card purchases, bank transfers and no overdraft facilities.
- Tide.. Only for businesses based in the UK. It is a financial platform that serves businesses through an app. It does not offer overdraft facilities and does not charge monthly fees.
- Acorn Account. Only for businesses based in the UK. It is an online bank that offers free card purchases but there is a monthly fee of 12.50 euros.
- Starling Bank. It is a Free business banking that comes with integration feature for business platforms such as QuickBooks and Xero.
- CountingUp. It offers business current account that comes with built-in accounting software. It offers a three month free trial.
- CardOneMoney. It is accessible online and through an app. It charges a monthly fee of 12.50 euros while card purchases are free. It does not provide overdraft facilities.
Joint Account for Business Partners
There are several types of joint account you can open with a business partner. Examples of joint accounts include the following
- Linked Accounts. If your business is starting out, a linked account can be the best option. Linked accounts allow partners to transfer funds directly from their bank accounts.
- Joint Tenants With Right of Survivorship Account. Business partners have equal access and equal responsibility for the account. If one partner dies, all funds go to the surviving partner.
- Tenants-In-Common Accounts. If one of the partners wants to will their money elsewhere, this is the best joint account type. A joint tenants-in-common account is subject to probate. If there is no will, the funds of the deceased will go to the closest relative.
- A joint POD (payable-on-death)/ITF (in-trust-for) Account. For this account, when both owners die, the money goes to a third-party beneficiary. On the other hand, when one partner dies, the money goes to the other partner.
Final Word On Joint Account for Business Partners
Opening a joint business bank account with a business partner should be a well-thought about choice. It is important to understand your partner’s financial situation before you decide to open a joint business bank account together.