Discover the Crucial Differences between Business and Personal Checking in 2025 – Shopify Uncovered!

Think of your finances like a busy train station—your personal and business funds are two different lines running on separate tracks. Mixing them in one account is like sending every train to the same platform: confusing, inefficient, and risky.

A checking account is one of the key tools for managing your finances. But it’s important to keep your personal and business finances separate. You need a distinct account to take in your organization’s revenue and pay for business expenses. Having separate hubs for your personal and business funds may even be legally required for some business types.

Understanding the differences between business checking and personal checking accounts can help you better size up your options and know what to look for.

What is business checking?

A business checking account is where you can handle daily business transactions. For instance, you can deposit funds, process customer payments, handle payroll, or pay suppliers. You’ll typically get a debit card to use with the account, and you may also get access to a business line of credit if you’re eligible. The same goes for a business loan.

These accounts often come with banking tools tailored to the needs of business owners. Depending on the account, you may have access to bookkeeping integrations, cash flow monitoring, employee debit card access, and invoicing features. As a downside, basic business accounts may limit the number of transactions you make each month—although you can sometimes upgrade them for a fee to get over this hurdle. They also come with maintenance, cash deposit, and wire transfer fees, as well as other costs to keep the account open.

What is personal checking?

A personal checking account is where you can manage your day-to-day personal expenses and income. You might use this type of checking account to receive your direct deposit paychecks, pay household bills, deposit funds, withdraw cash, and send money to friends.

You typically get a debit card linked to the account and checks to make payments as needed. These accounts may come with simple budgeting features, but they’re usually not as robust as the tools that come with business checking accounts.

Some banks have rules against using a personal checking account for business purposes—and may close your account if you break those rules.

Business checking vs. personal checking: What’s the difference?

• Deposit insurance
• Access
• User roles
• Business tools
• Transaction limits
• Fees
• Earning interest
• Accepting credit card payments

Business and personal checking are two types of accounts that help you manage transactions. They both offer deposit insurance and charge fees, but they’re geared toward different audiences and come with different features. Let’s explore the commonalities and differences.

Deposit insurance

Personal and business checking accounts both come with deposit protection, which reimburses you for the funds in your account if your bank or credit union fails. The Federal Deposit Insurance Corp. (FDIC) provides this type of insurance for federally insured banks, while the National Credit Union Administration (NCUA) provides coverage at federally insured credit unions.

Business and personal accounts both have the same standard insurance limit of $250,000. Each depositor receives at least this amount in coverage at each insured institution for each account type. Business accounts are insured separately from the individual accounts of the business owners, with the exception of a sole proprietorship.

Access

Both personal and business bank accounts provide several ways to transfer, withdraw, or otherwise use your money. Personal and business checking both usually let you withdraw cash at ATMs, set up wire transfers, and send money using peer-to-peer payment services. Both types of accounts may also provide access to the Automated Clearing House (ACH), where you can send and receive payments and transfer money between bank accounts. The bank or credit union will also provide a debit card and checks. To manage your money, you can usually log in to a mobile banking app or your online banking account.

All bank accounts come with high-level security features, such as multifactor authentication and fraud detection. But because business checking accounts handle higher transaction volumes and may carry higher liability risk, security is often more robust. For example, the accounts may come with dual control requirements (where two employees must approve certain transactions), more sophisticated fraud detection, IP address restrictions, token-gated login, and more.

User roles

Both business and personal checking accounts allow you to grant access to authorized users, but with a business account, you can be more nuanced with permissions. Business checking accounts often allow you to assign different permissions and features to employees. For example, a manager may be able to pay bills up to a certain limit using a debit card or setting up digital transfers.

Jointly held personal checking accounts usually don’t offer this type of controlled access. Each user has equal permissions to the account.

Business tools

Many business checking accounts provide access to a robust suite of business tools, which can help you run your business more efficiently.

For example, Found Bank’s business checking account helps you estimate your tax payments, categorize your transactions, and look for deductible expenses to reduce your tax bill. It also integrates with your accounting software. Bank of America’s business checking accounts also offer this feature and help you check your business credit score for free. These business specific features can help make tax reporting and finance tracking easier.

Personal checking accounts, on the other hand, typically offer fewer, less-advanced features. For example, Bank of America’s budgeting tool helps you track your income and expenses on the mobile app, while SoFi’s checking account allows you to earmark funds for different purposes.

Transaction limits

Business checking accounts typically have large deposit limits but may limit the number of free transactions you can make, such as 100 or 200 per month. You might pay a fee, such as 50¢, for each transaction beyond your agreed number.

Personal checking accounts often come with lower deposit limits but don’t restrict the number of transactions you can make.

Fees

You can often find free personal checking accounts that come with no monthly service fees, opening deposits, or minimum balance requirements. If you do open a checking account with maintenance fees, you can often avoid the fee by meeting criteria, such as exceeding a minimum deposit amount.

Business checking accounts often set minimum opening deposit or minimum monthly balance requirements in order to waive or lower their monthly fees. They may generally charge higher fees than personal accounts for monthly maintenance and services like cash deposits.

Financial institutions may offer savings accounts you can link to for overdraft protection, which can help you avoid some fees. This feature may be available with both business and personal checking.

Earning interest

Some business and personal checking accounts pay interest on your balance in the form of an annual percentage yield (APY). Depending on the account’s compounding schedule, interest may be calculated daily, monthly, or quarterly.

The bank or credit union may require you to meet certain requirements, such as receiving direct deposits each month or maintaining a certain balance, to earn the best APY.

Interest-bearing accounts are more likely to charge monthly maintenance fees, so you’ll need to do the math to determine whether the account benefits outweigh those fees.

Accepting credit card payments

Many business checking accounts offer merchant services, which let you accept customer payments via credit card, debit card, or mobile app. Personal checking accounts lack these features, though you can transfer money to friends and others using a person-to-person payment app.

How to open a business checking account

It takes just a few minutes to open a business checking account. Preparing in advance can help make the process easy.

1. Consider your needs. For example, are you looking for a bank or credit union that has branches and ATMs nearby? Very small businesses might need a simple account for their business related expenses, while larger businesses with more employees may need extra features and higher deposit limits.

2. Gather documentation. Banks typically ask for copies of your business’s formation documents, ownership agreements, and business license. You’ll also need an employer identification number (EIN), or a Social Security number (SSN) if you’re a sole proprietor. Check your bank’s specific requirements in advance because it may request additional documentation.

3. Review your options. Research business checking accounts at several banks, credit unions, and online institutions. Compare details like available business tools, fees, introductory offers, interest rates on deposits, minimum account balance, and opening deposit requirements.

4. Submit your application. Once you choose a financial institution and the best checking account for your situation, fill out the application, and submit copies of your documents. Most banks and credit unions let you do this online, but you may be able to complete the step in person.

5. Open the account. If your application is approved, you’ll sign your account documents and make the minimum opening deposit, if there is one. You can also typically set up account access online and in a mobile app.