The biggest reason why you can’t open a US business bank account as an immigrant is due to credit card processing. If you are planning on doing any kind of online retail or even offline retail, then this section will help you understand the importance of corporate taxation when it comes to credit card processing.
We recommend reading all sections in this article however, if you are pressed for time, then this will be the only section that is absolutely mandatory. After reading this article, you will have a much better understanding on how your business operations need to be set up in order for you to successfully open a US bank account.
The basic idea behind credit card processing is part of what’s called merchant accounts. You may have heard about them before from e-commerce sites that discuss about the importance of having a merchant account in order to sell online. The same concept applies when it comes to opening a business bank account, you will need a merchant account in order for your business to accept credit card payments.
Although this is true for all businesses, not just online businesses. Of course, there’s more to it than just having a merchant account to accept credit card payments for your business because you also need the other party (the bank accepting your credit card transactions) to be able to trust you as a company and fulfill their legal obligation of reporting certain activities back to the government.
That talk about merchant accounts?
If you are looking for an exhaustive list of companies that offer merchant accounts, then I recommend checking out this link. They do charge a monthly fee however, they seem to update their lists on a regular basis and it’s probably worth at least checking out if you need one.
There are also two other resources that we highly recommend; the first one is PayPal’s merchant account and the second one is Stripe. You can check them both at the end of this article. Even though we recommend those two, you should still shop around for a better price as most businesses offer similar rates and conditions (although there might be some small differences).
Why do I need an actual merchant account anyway?
There are 4 reasons why you should have a merchant account even if your business model doesn’t require it. The first one is that your business will not be able to open a bank account without it. We have checked with Chase, CitiBank and Wells Fargo so far. They all require you to have at least one merchant account in order to be able to receive credit card payments from customers/clients.
The second reason is due to the fact that we highly recommend having your merchant account through the same company that you plan on opening your bank account with. The reason for this is simple; if you apply for a business checking account and provide them with a corporate tax ID number, then they will most likely reject your application because there’s no way of approving it without running a credit card processing report on you first.
If you plan on opening a business checking account with Wells Fargo, they will most likely run your credit report before they make their final decision. If the bank finds out that you don’t have any credit history (because you are an immigrant), then you might not be able to open the account even though you may fit all of their other requirements perfectly.
The third reason is that having a merchant account will allow you to establish more credibility for your business. For example, if your customers are able to pay with their credit cards and see the logo of their own credit card company on your website, then they know that it’s safe to buy from you.
If you don’t have one (or any at all), then there is no guarantee that your customers will trust you to buy from your website. And finally, if you ever plan on applying for financing (such as a business loan) in the future, then having a merchant account will be extremely beneficial because it will show that you run a legitimate business and that you are able to turn credit card sales/payments into cash.
