Opening a US bank account as a UK business
Let's address the most important question first:
Can I open a US bank account if my business is registered in the UK?
The short answer is no, at least not with traditional US-based banks. Most American banks will require you to have a business entity registered locally.
However, it's possible to get a US-format account and routing numbers for your foreign company through alternative banking solutions such as digital banks and e-money institutions. In this article, we'll look deeper into each option to help you decide which is right for you and what you need to know before you apply.
Why do UK businesses expand to the US market?
According to a recent research, more than half of UK SMEs are planning to explore foreign markets, and approximately 20% of those are looking towards the USA. The primary reasons include:
- Resilience against domestic market conditions: The UK's rising interest rates and fluctuating economic climate prompt businesses to seek stability in more diverse markets.
- Greater returns from bigger markets: The US market, being larger and more varied, offers the potential for higher returns and a broader customer base.
However, despite their ambitious plans, nearly half of these firms admit lacking confidence in addressing the challenges of fluctuating exchange rates and effectively managing their international finances.
Benefits of US accounts for foreign businesses
If you've ever sent international payments in a foreign currency different from your bank account balance, you know this isn't a practical option for regular business operations. These transfers can easily cost over 40 GBP per payment, and they usually take 3-5 days to process. In addition, they can be halted for compliance checks, further slowing the process and putting a strain on your cash flow. If your business has clients or partners in the US, having a local account can offer significant benefits.
Avoid exchange fees
By holding a separate balance in dollars, you eliminate hefty conversion fees. It's not rare for banks to apply a 2-3% surcharge over the interbank exchange rate for every foreign currency transaction.
Faster and cheaper payments
Bank transfers within the US are sent via local payment networks (ACH, Fedwire, FedNow or CHIPS), which are quicker and less expensive compared to international SWIFT transfers.
Win over American customers
US customers prefer dealing with businesses that have a local bank account and pay them in dollars, as they would with a local company, without incurring extra costs.
A must-have for e-commerce
Having local account details in the US (Account and Routing numbers) opens up new collection methods and helps avoid losing profits to forced currency exchanges when withdrawing dollars from payment processors like PayPal, Stripe, EcommPay, and others.
When to opt for a traditional US bank account
Consider a traditional US bank account such as Bank of America, Wells Fargo, Chase, Citibank or others if you:
- Plan to establish a new entity in the US.
- Intend to hire local business representatives and staff.
- Ready to file annual tax returns in the US and the state of incorporation.
- Need to access additional banking services like checks, cash operations or loans.
When to choose a non-bank business account
A non-bank multi-currency account such as MultiPass is suitable if you:
- Wish to transact with US clients & partners like a local, without setting up new entities abroad.
- Require a quick setup to start operations immediately.
- Wish to test the market without incurring significant costs.
- Deal overseas without the burden of annual tax returns, local laws, etc.
- Need to combine this with simple payments in other global regions like the UK, EU and others.
Can I open a US business bank account as a non-resident or non-US citizen?
Yes, it's possible. US banks do not discriminate based on nationality, however, be ready to provide more documentation than locals. Keep in mind that you will need to have an established company and a business address in the United States, either as an LLC or a corporation and an Employer Identification Number (EIN), which is a nine-digit number assigned by the IRS.
Can I open a US business bank account online?
No, traditional banks will require either you or an authorised local business representative to be present in the branch. Although you can usually do part of the application online, in-person verification is mandatory as part of the Customer Identification Program that helps combat terrorism and money laundering. Ironically, while you can set up a business entity in the USA remotely, opening a bank account requires being physically present.
Can I open a US business bank account from abroad?
There are two main ways to do it. You can hire a co-founder, a US resident whom you trust, to handle document submission, or you can open an account with a non-bank payment provider like MultiPass.
Some UK banks have branches overseas and can open foreign bank accounts for you. However, be wary of costs and eligibility criteria. These business accounts often come with high monthly fees, have minimum balance requirements, or are reserved for customers with significant business turnovers.
What are the challenges of bank account opening in the US?
Some challenges are that different banks, and even different branches within the same bank, may have varying requirements based on state. Some of the common issues include:
- Stringent document demands for non-residents.
- Additional challenges for residents of sanctioned countries.
- The necessity to verify up-to-date information with the bank in person.
- Providing Social Security Number (SSN) and Employer Identification Number (EIN) for personal bank account applicants.
- A need to confirm a physical US address such as a utility bill, credit card statement, etc.
How can MultiPass help?
With MultiPass you get a single account to manage multi-currency payments globally in over 30 currencies. This includes US account details to make and receive payments within the States just from £0.50 per payment. On top of that, it comes with additional features to elevate your global banking experience including bank-beating exchange rates, virtual and plastic corporate expense cards, multi-user account management and a professional Personal Manager to assist you with any payment-related questions.
The onboarding is simple and fully remote, just start with the application, and we'll guide you through the rest. Get all the benefits of local dollar transactions without the burden of setting up a foreign entity.
Is there a difference between the US account and non-bank US accounts?
In terms of payment capabilities, there’s little difference – the transactions are equally fast and typically low-cost. However, the way your name appears in transactions can vary. Some e-money institutions (EMIs), like MultiPass, provide separate account details in the customer's name. Other EMIs use a pooled account for all their customers' USD funds. With a pooled account, the EMI's name is displayed as the sender/recipient on transactions, and your company name is only included in the payment description.
Of course, there are more differences between how banks and e-money institutions work.
Which UK bank has branches in the USA?
HSBC and Barclays both have operations in the US. Lloyds is also an international bank but only has one local branch in New York, mainly for commercial services. There are also American banks that have a presence in both UK and US such as Chase and Citibank.
How to open a business bank account in the United States?
To open a US bank account for a UK business, the company should provide its business documents, such as Articles of Incorporation, obtain an Employer Identification Number (EIN) from the IRS, and present personal identification for account signatories. Proof of business address in both the UK and potentially the US is required. A company representative must be physically present in the US It's important to consult the specific bank for their exact requirements.
How long does it take to open a business bank account in the US?
Opening a business bank account requires obtaining a tax identification number from the Internal Revenue Service (IRS), such as an EIN (Employer Identification Number) which usually takes up to two months. After submitting all required documents, including the EIN, opening a corporate bank account in the US generally takes 1-2 weeks.
Pay and get paid via local payment methods – cheaper & faster