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A merchant bank account is a specialized banking vehicle designed to help companies keep cash flowing through their businesses. This type of account can vary in its functions and features based on business needs. Establishing a merchant bank account requires certain proofs that a business has been legally established.
Types of Merchant Accounts
Businesses have access to a number of different types of banking accounts. The most common include:
- standard business checking - This type of merchant bank account operates like a standard checking account. This means businesses can accept automatic deposits, checks and cash payments. This type of account will also provide a way for businesses to make payments to employees and creditors. The interest provided on a business bank account can vary based on the institution offering the account and the going rates.
- money market accounts - Business money market accounts are meant to be savings and checking tools rolled into a single vehicle. This type of account will earn a business more in the way of interest, but it might have higher minimum balance standards.
- savings accounts - Businesses can also open up higher yielding savings account that limit options for withdrawals. The minimum balance and the interest offered will depend on the institution in question and the going payout rates on interest. CDs, or certificates of deposit, may also be considered for straight savings vehicles.
Obtaining a merchant bank account will require certain proofs that a business has been legitimately established. The documentation required can vary from institution to institution, but may include such things as:
- a taxpayer identification number
- a certified copy of a fictitious name if the business operates in a name other than the owner's
- copy of a county occupational license
- personal identification for the person or people establishing the account
- meeting the minimum opening balance
While companies that operate under a fictitious name will need a merchant account to accept and make payments with ease, sole proprietors often wonder if this type of account can assist them, as well. It can. When a merchant account is established for any business, it can help with:
- keeping personal and business finances separate
- enabling easier accounting at tax time
- assisting with the look of legitimacy in the eyes of employees, contractors or customers
Establishing a merchant bank account can help a business keep its finances straight. Opening this type of account generally only requires the minimum deposit amount and the proper certification that a business is legitimate.
