If your side hustle is still a sole proprietorship, you don’t legally need a business bank account, though opening one is the cheapest twenty minutes you’ll spend all year. If you’ve formed an LLC, you do need one, because running business and personal money through the same account can undo the protection you paid to set up. Either way the account itself is free at the online banks, so the only real cost is the paperwork.
*I’m not an accountant and this isn’t financial or legal advice. It’s what I did and what I’d check. Liability protection and taxes turn on your state and your situation, so run the real decision past an accountant or an attorney before you make it.*
*Disclosure: the Mercury link below is my referral link. If you open an account through it and meet the deposit requirement, we each get $250.*
Do you need a business bank account for a side hustle?
Legally, if you’re a sole proprietor, no. Your side hustle and you are the same legal entity as far as the IRS is concerned, and there’s no rule saying the money has to sit somewhere separate.
Practically, you want one anyway, and the reason is the thing I wrote about in is my side hustle profitable. When business and grocery money share an account, you can’t easily answer basic questions about your own hustle. Every deposit in a separate account is income. Every charge in it is a cost. The month’s math takes fifteen minutes instead of an evening of squinting at a statement trying to remember what a $47 charge was.
You don’t need an LLC to do this. A second checking account in your own name works fine, and most banks will open one for free. The separation is what’s doing the work, not the label on it.
What changes when you form an LLC?
Once you form an LLC, it’s its own legal entity, and the separation between you and it is the entire point. If your personal Venmo and your business payouts share one checking account, a court can decide the LLC was never genuinely separate. That’s called piercing the corporate veil, and it means losing the protection you paid to set up.
So for an LLC it stops being a convenience and becomes the thing holding the structure up. Open the account before the first dollar arrives, not after you’ve spent three months untangling it.
The tax side gets easier too. You stop guessing which charges were business, and you stop missing deductions you can’t prove.
Do you need an LLC before you open a business account?
For a real business bank account, usually yes. Mercury and most online business banks want an EIN and proof of formation, meaning your articles of organization or your state’s equivalent. So the order goes: form the LLC, request the EIN from the IRS, which is free and takes minutes, then open the account.
If you don’t have an LLC yet and don’t want one this month, you’ve still got two options that work:
- A second personal checking account used only for the hustle. No legal separation, but all the bookkeeping benefit, and you can open one today.
- A DBA and a sole proprietor business account. Some banks will open a business account for a sole proprietor with a DBA registration and your Social Security number instead of an EIN. Rules vary by bank and by state, so ask before you assume.
Neither gives you liability protection. Both give you a clean set of books, which is the thing you need first.
What I use, and why
I bank with Mercury for my LLC, on the free plan, and I’ve been using it for more than six months now without a complaint.
I’d love to tell you I compared six banks and built a spreadsheet. My sister did that. She researched it, settled on Mercury, told me to use it, and I went straight there without shopping around at all. That’s the real story, and it’s the version I’d recommend if you have someone whose homework you trust.
What’s kept me there:
- No minimum and no monthly fee. My local bank offered neither.
- It’s easy to use. I don’t want to think about my bank.
- It connects to automations without a fight. I run my books through a setup I put together myself, and a bank that wouldn’t talk to anything else would have broken the whole thing.
The trade-offs are real and you should know them before you follow me into it:
- It’s online only, and that’s worth sitting with. There is no branch, anywhere, ever. You can’t deposit cash, you can’t hand anyone a check, and there’s nobody to go see when something goes wrong. If your hustle takes cash, or if walking into a building matters to you, a local credit union is the better answer and I’d rather you pick that than follow me.
- You need the LLC paperwork first. It isn’t the fast option if you haven’t formed yet.
- Support is a chat window, not somebody at a desk who knows your name.
If your money moves digitally, those trade-offs cost you nothing. If it doesn’t, they could cost you a lot.
What does Mercury actually cost?
Nothing, for what I use. I’m on the $0 plan. There’s no minimum balance to open and none to keep it active, and ACH payments and domestic wires are free to send and receive.
What surprised me is how much sits on the free plan. Mine includes:
- Business checking and savings
- Debit cards and the IO credit card, with no annual fee
- Unlimited bill payments and unlimited invoices. I expected these to be the upsell. They aren’t.
- Xero and QuickBooks sync
- Three months of Xero free, as a current offer
What isn’t free, so you’re not surprised later:
- 1099-NEC and 1099-MISC filing runs $5 per filing on the free plan. Fine for a couple of contractors, worth doing the math on if you pay a lot of people.
- Currency conversion. USD international wires are free, but non-USD wires carry a 1% conversion fee.
- The $15 option if you need OUR coding on an international wire, which most side hustles never will.
- The upgrade tiers, which a one-person side hustle almost certainly doesn’t need. Mercury Plus is $29.90 a month and adds recurring invoices, invoicing with ACH debit, an invoicing API and unlimited 1099 filings. Mercury Pro is $299 a month and adds a relationship manager and NetSuite categorization. I pay for neither.
Figures read off Mercury’s own pricing page and my own account on 08/25/2026. Bank pricing moves, so check it yourself before you decide.
What about the credit card?
The IO credit card comes with the account and has no annual fee. It pays 1.5% cash back on everything, with no categories to track and no cap, which suits a side hustle where the spending is scattered across supplies, software and shipping.
The part to understand before you apply: you can’t carry a balance on it. Mercury pays the full balance off automatically out of your account every business day when you start out, and once your balance runs above $15,000 you can switch to a monthly full-balance autopay instead. So it never charges interest, and it also never floats you. If your plan was to put a $900 equipment purchase on a card and pay it down over three months, this isn’t the card for that. If you were going to pay it off anyway, the 1.5% is free money on spending you were doing regardless.
How does the $250 referral bonus work?
We each get $250 when you open a business account through my Mercury referral link and meet the deposit requirement inside your first 90 days.
The part worth reading carefully, because it’s the part I’d have gotten wrong: the money has to stay. Mercury’s terms require the referred account to hold a balance at or above the threshold for at least one full calendar day, midnight to midnight Eastern, during the eligibility period. Money that arrives Tuesday and leaves Tuesday afternoon won’t count. There’s also an alternative path through debit card spend if the balance route doesn’t suit you, which is worth asking about.
Now the part that matters more. $10,000 is a real number. If your hustle is in the $200-a-month stage, you might not get there in 90 days, and that’s fine. The account is free with or without the bonus. Open it because you want clean books, and treat the bonus as a separate question you might answer later. Don’t move money you don’t have to chase a payout, which is the opposite of planting a seed.
Is Mercury safe for a one-person LLC?
Mercury is a financial technology company rather than a bank itself. Deposits are held at its partner banks, Choice Financial Group and Column N.A., both FDIC members.
Through the partner bank sweep program your deposits get spread across a network of program banks, which raises coverage to as much as $5 million instead of the standard $250,000. One detail the coverage claims usually skip: you opt in to the sweep program. It isn’t automatic, so if that coverage is the reason you’re choosing Mercury, turn it on and confirm it.
For a one-person LLC moving money online, that’s a good trade. For a business depositing cash on a Friday afternoon, it isn’t a trade at all, because there’s nowhere to hand the cash over.
Mercury vs Bluevine for a side hustle
Two free options that work differently. Both checked 08-25-2026.
| Mercury | Bluevine | |
|---|---|---|
| Monthly fee | $0 | $0 standard, $30 Plus, $95 Premier |
| Minimum to open | $0 | $0 |
| Interest on checking | None on the base account | 1.3% standard, but only if you spend $500 a month on the debit card or take in $2,500 a month in payments. 1.75% on Plus with no activity requirement, 3.0% on Premier |
| Wires | ACH and domestic wires free, USD international free | Free outgoing wires on the paid tiers |
| Branches | None | None |
Bluevine wins if you’ll carry a balance big enough for the interest to matter, and if you’ll actually meet the activity requirement on the free tier. Mercury wins if your balance is small and you want zero conditions attached to zero dollars. Novo is a third free option worth a look, though I haven’t used it and won’t quote numbers I haven’t verified.
Today’s action
If you have an LLC and you’re still running money through personal checking, open the business account this week. You already have the EIN, so it’s one application.
If you don’t have an LLC, open a second checking account in your own name today and route the hustle through it. That’s fifteen minutes, it’s free, and it makes next month’s profit math possible.
Frequently asked questions
Do I need a business bank account if my side hustle is just me?
Not legally, if you’re a sole proprietor. You want one anyway, because separating the money is what makes it possible to tell whether the hustle earns anything. If you’ve formed an LLC, then yes, you need one to keep the liability protection intact.
Can I open a business bank account without an LLC?
Sometimes. Some banks open sole proprietor accounts with a DBA registration and your Social Security number instead of an EIN, and the rules vary by bank and state. If that’s a hassle, a second personal checking account used only for the hustle gives you the same bookkeeping benefit today.
Do I need an LLC before I open a Mercury account?
Yes. Mercury asks for an EIN and proof of formation, so form the LLC first and request the EIN from the IRS, which is free. From deciding to having an account is usually two to three weeks, most of which is your state.
What if I can’t deposit $10,000 in 90 days?
Open the account anyway. It’s free whether or not you hit the threshold, and the bonus is a perk rather than a reason. Chasing it with money you don’t have is the wrong seed.
Will opening a business bank account affect my credit score?
Not through a hard inquiry in the usual case, since these applications typically run a soft check. The business account also doesn’t show up on your personal credit report. Confirm with the bank you pick, because policies differ.
What happens if my application gets declined?
It happens, and the usual causes are incomplete formation documents, an industry on the restricted list, or an EIN that doesn’t match the legal name on file. Fix the mismatch and reapply, or try Bluevine or Novo, which have similar fee structures.
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Related reading
- How Do You Know If Your Side Hustle Is Actually Making Money?
- A Free Side Hustle Income Tracker That Grows Like a Garden
- What Should You Sell First When You’re Decluttering for Money?
You don’t need the LLC, the EIN and the perfect setup before you start. You need the money to stop landing in the same place as the groceries.
*Affiliate disclosure: the Mercury link in this post is my referral link, and we each get $250 if you open an account through it and meet the deposit requirement.*
*Not financial or legal advice. I’m a business owner writing about what I use, not an accountant or an attorney. Bank terms, fees and tax rules change and they vary by state, so verify anything here against the source and talk to a professional before you act on it. Figures in this post were read off Mercury’s and Bluevine’s own pages on August 25, 2026.*
