Best Online Banks for Freelancers + Solo Business Owners
UPDATED JANUARY 24, 2021
Starting your own business is incredibly empowering!
Freelancing allows you to be your own boss - to take back your independence and no longer be dependent on an unreliable outside employer.
You get to dictate your own rules, work your own hours, and create a space where your personal creativity can be nurtured and grow. You learn a lot about yourself through freelancing and running a solo business!
But for all that, running your business - no matter how big or small - is quite scary, even overwhelming at times. But you should know, you're in great company!
For all that you do for your business, the most important is taking care of your money and managing it properly!
That means having a good budgeting and tracking system, as well as a good bank that supports your business.
If you think your business is too small, or you don’t make enough to afford putting your cash into a business bank account, think again! Business checking accounts are no longer reserved for large businesses with multi-million dollar accounts.
Since 2014, there’s been a massive shift in people going into business for themselves. So massive that it’s had a direct impact on the U.S. economy and big banks have taken notice!
Business banking is no longer reserved for large businesses bringing in tons of money.
Solo business owners and freelancers now have many options to open low and no-fee business bank accounts with legitimate FDIC banks.
There are so many more options today than there were just a few short years ago (I know first hand. Back when I started four years ago, there was only one bank offering free business checking online).
Why should I use a business bank account?
Many new freelancers are hesitant to open a business bank account because traditional banks make them notoriously expensive.
Not anymore! With freelancing becoming a significant part of the overall economy, banks, neobanks and payment platforms have started to offer business checking and savings accounts with low or no fees.
Six reasons a freelancer should use a business bank account:
- Separate personal and business transactions: From the moment you earn your first business dollar, keep business and personal money separate. Using a separate business account for business transactions helps you keep clean and accurate bookkeeping statements which makes tax time much easier.
- Makes paying taxes easier: Business owners have to pay estimated quarterly taxes in the U.S.. When all your business transactions are in one place (and not commingling with non-business transactions), managing and estimating your tax payments are more accurate and faster. Plus, some business bank accounts offer basic tax calculations to help out with quarterly estimates.
- Legitimize your business: While incorporating a business, and/or registering your business entity with a DBA license (for sole proprietorships) are the actual first steps in legitimizing your business. Opening a business bank account is the very next step to take to legitimize your business. Paying clients from a business bank account gives you more credibility and it looks much more professional. Which leads me to the next reason you should use a business bank account.
- Accept more forms of payment: As a freelancer, you may have clients all over the world, with varying degrees of invoice-paying preferences or abilities. With a business bank account, you’ll be able to accept credit card payments, paper checks in your business and legal name, commercial/merchant transfers, and (most importantly) you’ll be able to accept a larger amount of deposit and withdrawal transactions. You can’t do these things with a regular personal checking account.
- Your business can grow: Sole proprietors (from a U.S. legal and tax perspective) are not required to use business bank accounts - nor are they required to separate business and personal transactions. However, if in the future, you want to incorporate into an LLC or create a partnership, you will be legally required to maintain a distinction between the transactions of the business and personal transactions of the owners. By the way, I am not a tax or legal professional but I think it’s smart to have separate business and personal accounts from the beginning; it just makes things easier.
- Build business credit: If you ever choose to build business credit (aka: commercial credit) so you can obtain small business loans and business credit cards, you’ll need to establish a business banking relationship. Why not start early?
What credentials do I need to open a business bank account?
Along with personal identity information, banks will require you to furnish business credentials in order to approve your business bank account.
If you haven’t yet secured the following business items, check out this post to find out how to properly set up your freelance business (for U.S. solo business owners).
To open a business bank account in the U.S., you’ll need to have the following documents handy:
Business name, address and phone number
Legally, a sole proprietor may use a personal name, address and phone number but many freelancers use a completely separate address and phone number for their business.
Business formation documents
If you are doing business under a different name, you will need to furnish a Doing Business As (DBA) license or fictitious name certificate. LLC’s and partnerships will need to provide a general partnership agreement or articles of organization documents.
Employer Identification Number (EIN)
An EIN is a Federal Tax Number you can get for free from the IRS website. And even if you don’t have employees, you’ll still need one to open a business checking account. A sole proprietor isn’t required to have one but an EIN can be used in place of an SSN on business documents and contracts.
Best online business bank accounts for freelancers + solo business owners - 2020
This list was curated June 2020 and all links are non-affiliated . I am in no way associated with any of these banks and will not be compensated in any way when you click any links in this post.
UPDATE DECEMBER 2020: Axos Bank was removed from this list due to the many problems I've experienced while using their business account.
UPDATE JANUARY 2021: Azlo will be shutting down and is no longer taking new applications. I've updated this list to reflect that and added new freelancer-friendly financial services to the list
These banks were chosen as the best online business banks for freelancers because of the following reasons:
BBVA Business Connect Checking: BBVA USA (the national bank partnered with Azlo) offers small business banking online with no service charge and no minimum balance requirements. However, only sole proprietors can apply online.
US Bank Silver Business Checking: If your business makes less than 125 transactions a month, you can get fee-free online business checking and the backing of an FDIC-insured national bank. It only costs a minimum of $100 to open.
PayPal Business: Not a true bank but an online payment system that you can use like a bank. I mention PayPal Business here because most freelance clients like to pay via PayPal. You can accept PayPal and credit card payments under your business name with this account, as well as create and send professional-looking invoices. You can also store money and pay merchants from your PayPal Business account. However, you will be subject to merchant fees and may receive a 1099-K so be sure to read terms and conditions carefully.
Axos Basic Business Checking: Axos is a federally-chartered FDIC bank that offers affordable business accounts to small businesses. I like what this true bank has to offer and have been thinking about moving from Capital One since Axos is one of the oldest online banks available. If you choose Axos, here’s what you’ll need to open an account.
AXOS UPDATE - December 2020: I can no longer recommend Axos Basic Business Checking for freelancers and small business owners. Since opening an account with them, I have had numerous issues with customer service, problems transfering money, paying bills, and the website interface for business accounts is not user-friendly or intutive. The platform has limiting features that were not explained in the information they provide to prospective customers.
It has been a banking nightmare for me to get my money out and I continue to have issues with the website and customer service. As a freelancer, you need flexibility, knoweledgeable customer service, and easy access to your money whenever you need it. Axos does not provide any of this for its customers and I regret opening an account with them.
Azlo Business Banking: Azlo is a neobank partnered with BBVA USA to federally insure customers. They concentrate on digital-only fee-free business banking for freelancers. You can also integrate bookkeeping and payment platform apps to your account.
AZLO UPDATE - JANUARY 2021: Azlo is no longer taking new applications and will be shutting down soon. Azlo's parent bank, BBVA USA, is making the decision to shut down a couple of it's popular neo banks, Azlo and Simple. I would imagine that current customers of Azlo and Simple will be transitioned to a BBVA USA account shortly.
Novo Business Banking: Novo is another neobank that is partnered with Middlesex Federal Savings to offer FDIC insurance to customers. Novo also caters to solo business owners and offers slightly different perks and integrations.
Radius Bank Tailored Checking: Radius is a real FDIC-insured bank that was founded in 1987. It is a large bank that offers online banking. Coming across its Tailored Checking for small business was a hard find so I’m not exactly sure if they still offer it but I’m including it here because the landing page says its business checking account is interest bearing, has unlimited transactions, cash-back, free ATM, and you can apply online. That’s impressive coming from a big bank for a small business checking account.
Navy Federal Credit Union
Navy Federal Credit Union Business Checking: My military peeps who enjoy banking with NFCU will be happy to hear that it offers affordable business checking accounts!
Lili is a mobile neobank that caters specifically to freelancers. Lili is partnered with Choice Financial so your money is FDIC insured. A Lili account does not charge account fees, overdraft fees, or foreign transaction fees, nor does it require a minimum balance. You also get a free debit card and free cash withdrawls.
Mercury is a promising neobank that caters to startups and helps small businesses scale up. Perfect for a freelancer. A standard account is free with no minimum balances. Your money is FDIC insured through its partner Evolve Bank & Trust. With a Mercury account, you get a checking AND savings account, debit card, and more.
Brex is a bit different from other financial services on this list. Brex is a cash-management account that allows customers to invest their money into money market funds. This is an alternative way to "bank" and your invested money is covered by SPIC (Securities Investor Protection Corporation); uninvestied cash is covered under a partnered FDIC bank. With a Brex Cash Account, you can use your money like you would a normal bank account. It's free to sign up and there are no minimum deposit fees. As a Brex customer, you can also sign up for the Brex Corporate Card (it's like a credit card) which you can use to build business credit.
Your Turn - how will you bank?
Opening a financial account for your business is quick once you have the necessary business credentials. The hard part is actually establishing your business, gathering your legal documents, and finding the right bank!
What did you decide, did you find a bank not on this list or one outside the U.S.? What has been your experience with banking as a freelancer?