When you start or want to take your small business more seriously, it can feel like a slog to set up the logistics such as filing paperwork and setting up systems. One of your tasks should be opening a business checking account separating your business and personal finances will help with your bookkeeping among other benefits.
While it seems simple enough (after all, it’s just filling in paperwork right?), opening a business checking account can be more complicated. That’s because banks will run a report on you when you apply for an account to see your past history when it comes to your checking and savings accounts. This is called your ChexSystems report.
What this means is that if you’ve been rejected for a business bank account, it’s most likely because of your ChexSystems report. Not to worry though, because you have options. There are plenty of business checking accounts that don’t use ChexSystems.
Let’s take a look in more detail at what ChexSystems means in regards to your business, how you can still open an account, and how you can make sure to get your ChexSystems report on the up and up.
What is ChexSystems For Business?
ChexSystems is what banks use to gather consumer banking information basically, a reporting agency. The type of information collected includes any negative banking activity. While there are other reporting agencies such as TeleCheck, ChexSystems is the most popular and widely used by financial institutions.
ChexSystems is used to look at potential banking customers. When applying for a banking account, a customer will show up in the system if a financial institution reported them for negative banking activity. This includes insufficient funds, bounced checks, writing checks from a closed bank account, bank accounts that have been closed involuntarily, and unpaid banking fees. These negative reports will remain on your ChexSystems report for up to five years.
ChexSystems also generates a number, called a consumer score based on the reported information. Think of it like a credit report, where credit reporting bureaus such as Experian base your score on your credit activity. Instead, your consumer score will range from 00 to 889, with a higher score meaning that you’re a responsible banking consumer.
Related: 5 Options When You Can’t Open a Bank Account
How Does It Affect My Business?
We already mentioned that ChexSystems can affect your business if you’re a sole proprietor who needs to rely on their Social Security number to open a business bank account. It may sound strange, which is why we’re going to break down why a bank would look at your ChexSystems report depending on your business’s legal structure.
Repeating what we said above, ChexSystems uses your Social Security number to access your report. If you’re a single-member LLC or operate as a sole proprietorship, your Federal ID tax number may be the same as your Social Security number. That’s why when you use this piece of information to apply for a business bank account, banks will consider your ChexSystems report.
However, if you’re a single-member LLC with a separate Federal ID tax number, also known as an EIN (Employer Identification Number), it probably won’t come up in ChexSystems. This also goes for other legal business entities like partnerships or S-Corporations who use a separate federal tax ID number.
That being said, most financial institutions that offer business bank accounts have terms that hold the business owner accountable for the company finances. In this case, you may be asked to provide your Social Security Number even if you have an EIN when you apply for a business checking account.
What this means is that no matter how you structure your business, a bank may look into your ChexSystems report. The good news is that you can look for a no ChexSystems bank if your report isn’t that great.
Important Features to Look For in a Non ChexSystems Bank
If you want to open a business checking account, you can look at your local bank or use our list below. The important thing is to look for a bank that doesn’t have stringent requirements to open a business checking account. More specifically, one that won’t look at your ChexSystems report.
Aside from that, you’ll want to look at features such as monthly fees and minimum balance amounts. You’ll find that many banks offering second chance accounts will have higher monthly initial deposit amounts or even charge a monthly maintenance fee. Luckily, there are plenty of online banks that don’t have these high minimums or charge exorbitant fees.
Other things to think about are what features you’ll use the most. For instance, if you’re planning on opening a business savings account, see if you can link it to your business checking account for overdraft protection. Or if you need paper checks, a debit card, or surcharge-free ATMs, there are banks out there that’ll offer them to you.
Best Business Accounts That Don’t Use ChexSystems
|Novo||Solo business owners who operate their business online|
|Bluevine||Business who may want financing and paper checks|
|LendingClub Bank||Businesses who use the ATM often and can maintain a high deposit amount|
Novo is a Fintech company that targets small business owners and freelancers. Novo makes it easy for you to open a bank account. Plus you can manage it easily online or through their app (like when you need to deposit paper checks).
There are no minimum balance requirements, though you do need to open the account with at least $50. We also like that your account can integrate with other apps like TransferWise, Slack, and Zapier, making it a breeze to automate some of your business tasks.
Though there are no monthly fees, you won’t earn any interest with Novo’s checking account. That isn’t a major deal breaker if you’re just starting out or not planning on keeping a lot of money in the account. Read more in our Novo Review.
What’s great about Bluevine is that it operates online but offers plenty of features you would find with more traditional and bigger banks. For instance, you can get free paper checks, free cash deposits, small business financing, and earn interest from your checking account balance.
Currently, Bluevine offers 2.0% interest for those with balances up to $250,000 – Eligibility requirements apply. That’s higher than many online savings accounts at the moment. You’ll even get your first set of 200 paper checks for free.
If your business uses a lot of cash, Bluevine is for you. You can access over 90,000 Green Dot locations throughout the U.S. for free and be able to deposit cash payments. Read more in our Bluevine Review.
LendingClub Bank is also online-based and it’s easy to open an account. After filling out your personal details and linking an external account, you can make your initial deposit.
Some of the best features of the LendingClub Bank business checking account include the ability to make cash deposits for free at any participating NYCE and MoneyPass ATMs, unlimited transactions (including ACH and account transfers), and unlimited worldwide ATM fee rebates.
Debit card lovers will enjoy the fact that they can earn unlimited 1% cash back on signature-based and online-based credit transactions. However, you’ll need to maintain a $5,000 average monthly balance. This applies if you want to earn 0.10% APY on your account as well. Read our full LendingClub Bank Review
How We Choose This List
We want to make sure you are banking with reputable financial institutions, which is why we took the time to research dozens of companies to see features such as types of bank accounts, fees, interest rates, and most importantly if they use ChexSystems.
We narrowed down our list to the ones you see above because we believe that they’ll offer you some of the best services around. Keep in mind we may receive a commission (at no extra cost to you) if you sign up for an account through our link. However, we would still recommend these financial institutions regardless of commissions.
Learn More: Best Business Checking Accounts For Freelancers and Entrepreneurs
How to Open a Business Checking Account With No ChexSystems
Opening a business checking account with no ChexSystems can be relatively simple depending on the bank you go with. In most cases, you can head to the bank’s online application form, fill out the required information and submit documentation as necessary. Then you’ll need to create login information and make your initial opening deposit.
However, if you’re opening a business checking account that will pull up your ChexSystems report, you’ll need to clean up your report. Even if you go with any of the above options, it’s still a good idea to improve your report – you never know when you’ll need to work with a bank that requires it.
Here’s what you need to do:
- Get your ChexSystems report: you can request a report from the ChexSystems website. Its free once a year. However, if you’ve already been denied a bank account, this report should indicate the reasons why that happened.
- Dispute and correct any errors: If there’s anything that’s inaccurate on your report, make sure it is indeed an error. Then, you can contact ChexSystems to dispute it. You can even contact your bank to see what’s going on. Whoever you contact, make sure you provide your Social Security number and contact information. Correcting disputes could take 30 days or more.
- Pay off outstanding bank fees: For those who have reports of unpaid bank fees or other types of debts leading to a negative report, pay them off. That way, you can increase your ChexSystems score
- Give it time: The truth is that it could take a few weeks for unresolved disputes and changes in your score to take effect. The key is to be patient and check your report in a few weeks or months.
Which No ChexSystems Business Bank is Best For You?
The best bank will depend on factors such as the size of your company, whether you want access to business loans, and other features like an interest-bearing account. Your final choice should take into consideration how your business operates.
|Brand||Minimum Opening Deposit||Costs and/or Fees||Standout Feature|
|Novo||$50||-No monthly fee
-$27 non-sufficient funds fee
|Integrates with popular apps like Zapier and Slack|
|Bluevine||none||-No monthly fee
-$4.95 for cash deposits
|No non-sufficient funds fees|
|LendingClub Bank||$100||-$10 monthly fee (waived with a $5,000 minimum balance in your account)
-$25 non-sufficient funds fee
|Unlimited ATM fee reimbursements|
Frequently Asked Questions
Is ChexSystems the same as my credit report?
No. Your credit report is completely separate from your ChexSystems report. Information from your ChexSystems report won’t be reported to the credit bureaus — only banks, creditors, and lenders.
Do I have to be in ChexSystems to open a bank account?
Not necessarily. There are some banks that tend to not use ChexSystems when screening applicants which could make it easier for you to open a business bank account. If you happen to be in ChexSystems, it does open up more options for you. That’s because there are plenty of banks that will use your personal information and check it using ChexSystems before approval.
Is there a way I can find out if I’m in ChexSystems?
You can go to the ChexSystems website to take a look at your report. It’s free every 12 months. However, most who know if they’re in ChexSystems are applying for a bank account and getting denied. The bank in question needs to tell you the reason you’re denied so if it’s based on your ChexSystems report, you’ll know.
It can feel discouraging when you’re trying to open a business checking account only to get denied because of an issue with your ChexSystems report. Although you may need to take some extra steps, it is possible to set up your financial systems.
If you’re a solo business owner or someone whos self-employed, you can open a business bank account online. Those with larger companies may be able to as well, though there may be more paperwork and other hoops to jump through.
No matter the size of your small business, you can open a business checking account with no ChexSystems verification. That way, you can tick that off your to-do list and work on other aspects of your business, like marketing or helping your customers.
Related: Best Banks for Small Business
That’s not to say you need to completely ignore your ChexSystems report. What it means is that you can use your time to learn from your past financial and banking mistakes to improve your ChexSystems report. That way, if you need to open other accounts or conduct any other form of business banking, you can.
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