Maintaining a US Business Bank Account for Non-Residents

If you're an entrepreneur planning to do business in the U.S. or expanding your operations to the American market, you'll likely need to open a U.S. business bank account. Understanding the rules and regulations for using a U.S. bank account is essential to ensure smooth operations. Below is a guide that highlights key aspects of banking in the U.S., from account setup to transaction limitations.

Core features of the U.S. banking system

While all countries have their own banking rules, the U.S. has some particular characteristics:

• Regulatory authority

In the U.S., the Federal Reserve System (FRS) acts as the main regulatory body, overseeing over 4,700 commercial banks.

• Documentation requirements

To open a U.S. business account, you typically need:

• A certificate of incorporation
• Articles of incorporation
• Employer Identification Number (EIN)
• Individual Taxpayer Identification Number (ITIN)
• Proof of identity for authorized representatives
• Business licenses or permits
• Board resolutions or meeting minutes
• Proof of address

The verification process (KYC) typically takes a few days to weeks, depending on the complexity of your business.

How to fund your U.S. business bank account?

There are multiple ways to deposit funds into your U.S. business account. Each has specific rules to follow:

1. Non-cash transfers

You can transfer funds from your other accounts or third-party accounts, including client payments. Coordinate with your accountant to ensure that the payment purposes are correctly documented for tax compliance.

2. Cash deposits

If depositing cash, you need to specify the source of funds and classify it correctly as personal capital or a loan.

3. Bank credit

You may apply for a credit line if you require additional funds for business operations. Approved funds will be directly deposited into your account.

4. External investments

Venture capital or investments can also serve as a funding source. Document each transaction for accurate bookkeeping.

Tip: Keep separate accounts for business and personal use to ensure transparent financial tracking.

How to withdraw money from a U.S. business bank account?

Withdrawing money from a business account in the U.S. requires careful consideration and planning, often different from personal accounts. Here are some reasons for withdrawals and their relevant methods:

1. Personal profit

Business owners may draw a fixed percentage of profits or receive a salary, depending on the company structure.

2. Business expenses

Document all business-related expenses, such as vendor payments and operational costs. Consult with your accountant for the correct process.

3. Risk mitigation

Some entrepreneurs withdraw a portion of their funds to establish reserves outside the company for risk mitigation.

Withdrawals can be made either in cash or through non-cash transfers, but it's crucial to maintain proper records and seek professional advice to ensure compliance.

Steps for paying an invoice

One of the common transactions for businesses is paying invoices. Here's a straightforward approach:

1. Review the invoice

Ensure that the amount matches the services or products received.

2. Confirm payment method

Check for the payment details and acceptable methods of payment.

3. Process and document the payment

Transfer the funds to the stated account and record the transaction.

4. Confirm receipt

Contact the recipient to confirm the payment has been received and applied correctly.

Including all invoices in your financial statements ensures a clear financial picture and good business relationships.

Transactions prohibited in the U.S.

U.S. regulations restrict certain types of bank transactions to maintain the integrity of the financial system. The following activities are prohibited:

• Money laundering: transactions suspected to hide illegally obtained funds are heavily scrutinized.
• Terrorism financing: any links to financing terrorism are illegal and will lead to account blocking.
• Fraudulent activity: transactions aimed at deceiving others for financial gain are prohibited.
• Insider trading: trading stocks or securities based on confidential, material information is illegal.
• Sanctioned countries & entities: transactions involving countries under U.S. sanctions, such as Iran or North Korea, are forbidden.
• Unlicensed financial services: engaging in money transfers, currency exchanges, or check cashing without a proper license is not allowed.
• High-risk businesses: industries such as gambling, real estate, and transportation may face additional scrutiny or restrictions.

If you're uncertain whether a transaction is permissible, seek advice from qualified accountants and legal professionals.

Reasons and consequences of account freezing

In some cases, banks may freeze access to your account due to:

1. Suspicion of illegal activity: such as money laundering or fraudulent checks.
2. Court orders: a legal decision requiring you to pay a sum to a plaintiff.
3. Government action: unpaid taxes may trigger a freeze.
4. Suspicious account activity: unusual patterns like new trading partners or large transactions.

In rare cases, errors in fraud detection systems may mistakenly freeze legitimate accounts. If this occurs, it’s best to seek professional assistance to resolve the situation.

Account verification process

Verifying your business bank account helps confirm your identity and ensure compliance with regulations. The following documents may be required:

• Identity proof: passport, driver's license, or other state-issued ID.
• Business address confirmation: utility bills, lease agreements, or bank statements.
• Tax Identification Number: EIN for businesses or ITIN for foreign nationals.
• Company documents: articles of incorporation, business licenses, or other legal documents.

The bank will conduct a thorough review of your provided information and may require in-person document submission or notarization.

Final thoughts

To efficiently manage a U.S. business bank account, it's crucial to document every transaction, work closely with an accountant, verify compliance with U.S. banking laws. To avoid common mistakes, consider seeking a professional help for account opening and support. If you need assistance opening or managing your U.S. business bank account, our team of experts can provide comprehensive support to ensure a smooth experience. Reach out for detailed guidance on legal and financial matters!