Though the U.S. accounts for less than 5 percent of the global population, its preeminent place in the world economy signals a huge opportunity for international startups. Whether your global startup is just getting off the ground or has already established its footing in other markets, it pays to think about what a successful business in the U.S. may look like further down the road. The first step to conducting business within the country is to get your finances in order—which means you’ll want to seriously consider opening a U.S. business bank account.
The best business bank accounts in the U.S. offer credibility and protection superior to their foreign counterparts—plus products and services designed to set your business up for sustainable growth. But not all U.S. banks are created equal.
In this article, we’ll review five key reasons why your global startup stands to benefit from a U.S. bank account. Then, we’ll break down the pros and cons of three banking options that may be available to your business.
Conducting business in the U.S. can be complicated—especially if you’re a foreign startup unfamiliar with the intricacies of U.S. tax laws and other regulations. Fortunately, a U.S. bank account can streamline your finances and provide a clearer picture for future growth.
Here are five reasons why every globally-minded startup should strongly consider opening a U.S. bank account.
Corporations and LLCs operating within the U.S. must maintain separate accounts for their business’s finances and their owners’ personal finances. This is a legal requirement for compliance and personal liability purposes, but it also helps with recordkeeping.
Come tax time, you may be especially grateful for a dedicated U.S. business account. Not only can this help keep your company compliant with U.S. tax laws, but it can also speed up the tax-filing process and take the pain out of a potential audit.
Maintaining a separate account and records for your business finances can also help you rest easier when it comes to your personal data and recordkeeping. For example, you could authorize your employees to review and manage company finances without giving them access to your personal banking information.
While we’re on the topic of peace of mind, we should discuss the issue of personal liability. If any issues arise in your business, separate accounts could help to distinguish your personal liability from your business liability—though this isn’t the only factor at play.
Your personal liability for business debts may also depend on other factors, such as your selection of business entity (partnership, LLC, C-Corporation, etc.) and whether you’ve signed any personal guarantees. If in doubt, we recommend discussing this with a legal advisor so you’re clear on your personal liability for any business debts or obligations.
When conducting business with stateside customers or vendors, the right U.S. bank account can simplify the transaction process and save you money on exchange, bank, and credit card fees.
A U.S. business bank account can also lend your company a helpful degree of credibility and legitimacy. For one, it enables U.S.-based customers and vendors to make payments directly to your business rather than to your personal account or to a foreign entity.
And then there’s the time and effort it takes to open a business account—factors that may demonstrate to vendors how invested you are in the long-term success of your company. At the very least, a U.S. business bank account signifies that you’ve satisfied the common criteria required to open one, including an Employer Identification Number (EIN), ownership agreements, and a business license.
Building a business credit history that’s separate from your personal credit history is important. A strong business credit profile could help you secure better financing terms and give you better standing in negotiations with certain vendors.
But business credit doesn’t just appear out of thin air. It can take time to build—and one of the key first steps is to open a business bank account using your business’s legal name and details.
Many banks offer other relevant products and services in addition to checking and savings accounts. Establishing a relationship with a U.S. bank early on could make it easier to apply for loans, lines of credit, merchant services, and other products with that institution down the road.
And if you plan on pursuing equity financing, a U.S. business account is also part of the groundwork for that. Many U.S.-based venture capital firms are willing to invest in international businesses, but many also prefer to work with C corporations due to the financial and legal benefits they offer shareholders. As mentioned earlier, businesses—including C corporations—must keep their finances separate from their owners to meet compliance guidelines.
Thanks to the fintech boom that has carried over from the early 2010s, traditional banking solutions aren’t the only option available to startup founders and entrepreneurs today. New alternatives are available to companies looking for more flexibility, convenience, and control in their financial stack—making it easier than ever to find the bank that’s the best fit for your business.
Here are three common categories of options, along with some pros and cons to consider for each.
Most startup founders are familiar with traditional banks, as they’ve used them for their personal and business finances for years. Over time, these institutions have diversified their offerings to better accommodate businesses of all sizes, needs, and industries.
An increasingly popular option for personal banking, online-only banks are also expanding access to business accounts. These banks offer well-rounded financial products and services designed to serve startup founders wherever they are in the world.
The newest player in the industry, neobanks are sometimes called “challenger” banks for their tendency to challenge traditional banking norms. Though the term neobank is somewhat vague, many neobanks aren’t technically banks at all; instead, they’re fintech companies that partner with a third-party partner bank to offer FDIC-insured bank accounts. These fintechs are quick to adopt new technologies, so you’ll often find them with features that their competitors don’t have.
As a multi-currency account created to support the needs of international businesses, Levro simplifies currency management with fewer fees and lower FX rates on over 34 currencies. Send money to anywhere in the world from your FDIC-insured account, and receive local currency payments with ease.
Plus, every application gets a dedicated success manager. With our quick and simple application process, you can open a bank account in less than 48 hours.
Apply for an account today, or send an email to email@example.com to learn how Levro can help your business.