Entrepreneurs looking to start a business in the United States must go through a set of processes to register their business and get the necessary permits and licenses. A key step in this process is to open a bank account for accepting payments, hiring workers, paying businesses, and more. Moreover, a bank account adds credibility to your business and ensures compliance with federal and state regulations.
However, opening a bank account can be complicated, especially for non-residents who are unfamiliar with the U.S. requirements. This U.S. banking guide for foreign entrepreneurs 2025 provides all the information you need to understand the banking regulations and open a bank account. Additionally, Manay CPA’s international banking specialists are also available to simplify this process for you. They are experts in helping non-U.S. businesses and individuals to invest or set up businesses in the United States.
US Banking System Fundamentals for Foreign Business Owners
The first step to setting up a bank account is to understand the banking structure and how it works. While many aspects of the banking industry are similar to the international system, there are also some variations to know, especially the dual state and federal structure and regulations.
Banking Structure Overview
The U.S. banking structure is complex and comprises three broad categories of banks. The first is the Federal Reserve, the central banking authority that’s responsible for managing the money supply and interest rates in the country. It also oversees member banks and their operations and provides liquidity when required.
From an individual and business perspective, there are commercial and regional/community banks. Commercial banks are large banks like Citibank, American Express, etc. that have operations across the country. Due to their large size, these banks offer a wide range of services. Regional or community banks, on the other hand, are smaller banks that cater to a specific region. They offer more personalized services, and the fees can also be lower.
You can open an account with commercial, regional, and community banks. Regardless of your choice, all the banks are regulated and safe.
Types of Business Accounts
You can choose from four types of banking accounts. They are:
- Business checking account – Useful for daily business transactions like payments, deposits, and withdrawals.
- Business savings account – A good choice to save money. Banks pay interest on the balance in these accounts.
- Merchant account – Necessary for companies that accept debit and credit card payments.
- Multi-currency accounts – Offered by some banks, this is helpful for holding and managing multiple currencies.
Depending on your requirements, you can select the appropriate bank account.
Digital Banking Options
Besides commercial and community banks, you can also open accounts with digital or online banks. These banks don’t have physical branches and operate digitally. As they don’t have physical branches, their operating costs are lower, and this means they are more likely to offer lower fees and competitive interest rates. Like physical banks, many of these digital banks are insured by the U.S. Federal Deposit Insurance Corporation (FDIC). However, make sure to thoroughly check the bank and its operations before opening an account.
Next, let’s look into what banks require to open an account for you.
Essential Requirements for US Business Bank Accounts
As a non-U.S. entrepreneur, you must meet certain requirements to open a bank account. Though these requirements and the subsequent decision depend on the bank’s policies, below are some key aspects to keep in mind.
Documentation Checklist
Banks will require the following documents to open an account:
- A Federal Employer Identification Number (FEIN), sometimes also called EIN or Form SS-4, is necessary, as banks use this for taxation purposes.
- Corporate documents that show that your business is lawful and registered. This could include Articles of Incorporation or Certificates of Incorporation, necessary permits and licenses, organizational minutes of meetings, etc.
- Ownership information, especially details of the entities that own more than 25% of the stake or voting rights in the company.
- A minimum of two forms of identification of the owner and the agent, and one of them must have a photo.
- Proof of address for the owner or representative.
- The physical U.S. address of the business. Some banks also accept virtual mailboxes or addresses of the companies, but these are usually accepted only as legal mailing addresses. A physical address must be provided as an active business address. Also, some banks may require additional documentation if you use virtual addresses.
You need to make sure that you gather all these documents before you apply for a bank account.
Physical Presence Requirements
A key challenge for businesses and entrepreneurs will be establishing their physical presence in the U.S. This requirement is complex because banks require at least one owner or representative to visit the branch and submit the documents. This requirement is to fulfill identify verification laws like Know Your Customer (KYC), Know Your Business (KYB), and Anti-Money Laundering (AML).
Some online banks and fintech companies waive this requirement as they offer remote account opening. However, eligibility depends on factors like business type, nationality, and whether the owner has a U.S. SSN or ITIN. Foreign entrepreneurs without U.S. identification may still be required to appear in person or appoint an agent. Most times, this requirement is handled case-by-case, and hence, it’s important to check with the concerned financial institution.
Identity Verification Process
KYC is a mandatory requirement that banks must follow to prevent illegal activities through their accounts. Failure to perform KYC can result in strict penalties for the bank. For example, Deutsche Bank was fined $186 million for not taking enough measures to prevent money laundering.
To avoid these fines, you must provide the following details, though the list can vary between banks:
- Names of company directors.
- Physical address of the business.
- Social Security Number (SSN) of the owner or the agent.
- Address of the individual owners.
Along with this information, banks also gather publicly available data from annual reports, stock exchange listings, registration details, and more. This information is then compared with the list of individuals and organizations in law enforcement agency databases to ensure no criminal activities are involved.
FATCA & International Banking Compliance
The Foreign Account Tax Compliance Act (FATCA) is a U.S. legislation enacted in 2010 to prevent tax evasion and promote transparency in financial dealings. Non-compliance can lead to legal cases, like this case in which the U.S. Attorney’s Office convicted four individuals. The U.S. government has also entered into InterGovernmental Agreements (IGA) with many countries to simplify tax reporting. These measures result in more stringent reporting requirements for foreign entrepreneurs.
Additionally, foreign entrepreneurs also have additional reporting obligations like the Report of Foreign Bank and Financial Accounts (FBAR), also known as FinCen Form 114. You must file this form if the combined balance of all your qualifying foreign accounts is more than $10,000 during a tax year.
Reporting Requirements
Every non-U.S. citizen must file Form 8938 with the IRS, provided they meet specific income and residency thresholds.
- U.S citizens who are residing outside the U.S must file this form if their limits are
- $200,000 at the end of the year or $300,000 at any time during the year, if filing single.
- $400,000 at the end of the year or $600,000 at any time during the year if married and filing jointly.
- Non-U.S. citizens who are residing in the U.S. must file this form if their limits are:
- $50,000 at the end of the year or $75,000 at any time during the year, if filing single.
- $100,000 at the end of the year or $150,000 at any time during the year, if married and filing jointly.
Tax Implications
From a taxation perspective, you must report the maximum value of specified financial assets. For the remaining, you must report the fair market value in U.S. dollars. It is important to convert all multi-currency assets into U.S. dollars for reporting purposes.
Form 8938 must be filed along with your income tax. Non-filing can lead to a fine of $10,000. If the IRS has sent you a notice, then the fine increases to $10,000 for every 30 days of non-filing.
Compliance Obligations
To meet FATCA requirements, banks can require the following additional actions.
- W-8BEN or W-8BEN-E form to provide tax exemption on U.S.-sourced income. Failing to provide this form will make the bank hold 30% of your income as tax. It applies to both individuals and companies who receive income from U.S. companies.
- Some banks may require proof of tax residency to avoid double taxation, provided the U.S. has an IGA with the individuals’ native country.
Not providing these documents can prevent you from opening a bank account. If you already have an account, it can lead to higher tax withholding and restricted account access.
To overcome these challenges, it’s best to contact experienced international banking consultants like Manay CPA.
Selecting the Right Bank for Your Business
Choosing the right bank is an important decision, given that banks offer different features and charges. Before opening an account, make a list of what you require and then look for banks that offer it at the best rates.
Major vs. Regional Banks
Major and regional banks come with their advantages and disadvantages. Some of the biggest advantages of major banks are their wide range of services and extensive network, which means you can access their services from any part of the country. They are also more likely to support transactions in multiple currencies. Furthermore, they have the budget to invest in technology and can keep your accounts safe. However, the downside is that you can’t expect personalized service, given the vast number of clients they service. These banks are also subject to many regulations, which, in turn, will increase your compliance efforts. Lastly, the transaction costs can be high.
When it comes to regional banks, you can expect more personalized service and competitive rates, as they focus more on community building and service. The downside is that they don’t have a wide network and fewer services when compared to major banks. Also, they don’t have the budget for heavy tech spending, which can cause some processing to be slower.
International Banking Features
Some features are more important than others for non-U.S. entrepreneurs. Below are a few to look out for.
- Competitive fees and rates.
- Acceptance of multiple currencies.
- Required set of services.
- Expertise in international markets for advisory/consulting.
- The regulatory environment of the state in which the regional bank operates.
- Rate of technology adoption.
- Security systems.
- Reputation
Fee Structures
The fee structure also varies greatly between banks, with the major banks more likely to charge higher fees than the regional banks. In general, the fee structures can include the following components.
- Monthly maintenance fees.
- Fees for converting currencies.
- Charges for specialized services.
- Transaction fees.
Familiarize yourself with the above information so you can make an informed decision on selecting the right bank. If you have any doubts or require suggestions in selecting an appropriate bank, reach out to Manay CPA.
Common Banking Challenges & Solutions
Foreign entrepreneurs face many challenges when opening a bank account in the U.S. They may be unaware of regulations, file the wrong form, or fail to produce the required documents. Below, we list some common banking challenges and ways to overcome them.
Address Requirements
A major challenge is that banks require a physical address in the U.S. to open an account. Though some banks may accept a virtual address or a postbox number, compliance with certain regulations can still be a problem. To handle this challenge, you may consider hiring a U.S.-based agent who can act on your behalf or looking for banks that accept virtual addresses.
Another problem is that banks require you to visit a physical branch to submit your documents. This means you can’t open accounts remotely.
To overcome this problem, you may notarize all documentation and hire an agent to visit the branch. Many fintech companies today offer remote account opening, but with certain limitations. Make sure to understand these limitations and provide the necessary documents.
Alternative Solutions
To cater to the growing requirements of non-U.S. entrepreneurs, many fintech companies and online banks offer bank accounts. These alternate solutions remove some of the restrictions of traditional banks, provided you meet certain eligibility criteria and can produce the required documents. However, these accounts may not offer full banking functionality, such as issuing checks or holding FDIC insurance.
Some alternative solutions include online payment platforms or digital wallets such as Payoneer and Wise. These fintech companies aim to simplify the banking process and provide a user-friendly experience. However, they are still well-regulated, and you need to be eligible to use their system.
Account Management Best Practices
Opening and maintaining a bank account can be challenging in some situations for foreign entrepreneurs. Let’s now look at some best practices that can ease this process for you.
Digital Banking Tools
Make the most of digital banking tools offered by banks to download forms and meet compliance requirements. Specifically,
- Download mobile apps to stay on top of your transactions.
- Set up notifications for suspicious activity, low balances, and other alerts.
- Automate bill payments.
- Download account statements from the website or app.
International Transfers
Cross-border payments can be a hiccup, especially if you primarily deal with businesses and individuals who are out of the country. To streamline these international transfers,
- Compare the transaction fees of different banks to find the most competitive one.
- Check if your selected bank handles the currencies of countries you primarily do business with.
- Maintain accurate records of transactions.
- Double-check the foreign bank accounts and their addresses to avoid delays.
Security Measures
Protecting your account from fraudulent activity is a top priority, as this can restrict access to your account or, worse, even lead to its closure. Some best practices to take in this regard are:
- Check your transactions regularly and report to the bank or law enforcement if you find any suspicious activity.
- Make sure your bank has the necessary safety features like encryption.
- Use Multi-Factor Authentication (MFA) to keep your account safe.
- Avoid using public Wi-Fi when accessing your account.
With these measures, you can have a smooth banking experience. For further suggestions or consulting, you may always consult Manay CPA’s international banking experts.
Conclusion
Overall, opening a bank account can be complex for foreign entrepreneurs, especially when it comes to regulations like having a physical address. The government is changing regulations to adapt to the geopolitical environment, which could also impact the banking industry.
We hope this U.S. banking guide for foreign entrepreneurs 2025 acts as a good starting point.
Streamline Your US Banking Setup – Get Expert Guidance from Manay CPA’s International Banking Specialists
