How to Start a Bank

Start a bank by following these 10 steps:

1. Plan your Bank
2. Form your Bank into a Legal Entity
3. Register your Bank for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Bank
6. Get the Necessary Permits & Licenses for your Bank
7. Get Bank Insurance
8. Define your Bank Brand
9. Create your Bank Website
10. Set up your Business Phone System

We have put together this simple guide to starting your bank. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out othersmall business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit ourHow to Name a Businessguide or get help brainstorming a name with ourBank Name Generator

If you operate asole proprietorship, you might want to operate under a business name other than your own name. Visit ourDBAguide to learn more.

Whenregistering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• 网络域名的可用性.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening a bank?

The costs are significant, since the banking industry is the most regulated industry in the country. Banks generally need between $12 to $20 million in starting capital. If you start a local community bank, you might be able to raise that money locally. Otherwise, you may have to solicit investors.

Once the capital is raised, you must apply to regulatory agencies. Regulators are strict in their review of applications since the financial crisis. Once you're approved, you may open up your bank.

What are the ongoing expenses for a bank?

Ongoing expenses vary. However, in general, expenses are 15% of non-interest expenses, with a median expense across the country of about $400,000 per branch.

Who is the target market?

Preferred customers are both individuals and businesses.

How does a bank make money?

Banks make money by taking in deposits and lending them out to other people or businesses. A bank's primary cost is the infrastructure they build, including buildings and labor costs. However, the basic function of a bank is simple. The bank must invest its money in such a way that they earn more than what it costs them to keep money on deposit.

For example, a bank may accept deposits from the general public and pay them 0.05% on savings accounts. They can then lend this money out to others at market rates. The difference between the 0.05% and the market rate is the interest "spread." This is the bank's profit.

Banks also make money by charging fees and offering other banking services, like business checking accounts, bank certificates of deposit, and money market accounts. Some banks also sell insurance.

How much can you charge customers?

You can charge customers for opening and maintaining a checking or savings account. The type and amount of fees vary, as well as how they are charged. Some banks have minimum deposit levels, while others charge monthly service fees that range from $5 per month to $100 per year unless a minimum balance is kept in the account. Most banks charge fees for overdrafts. And then there are the service fees for printing account balances, doing wire transfers, and a performing a host of other services.

How much profit can a bank make?

Banks typically make between 10% and 15% net profit. Return on equity ranges between 7% and 10%. Some banks realize a strong return on equity in excess of 10%.

How can you make your business more profitable?

Consider setting up an expansive network of ATMs to bring in more income for the bank. Offer more services. Banks can do more than just bank, these days. Consider offering insurance and retirement accounts.

STEP 2: Form a legal entity

The most commonbusiness structuretypes are thesole proprietorship,partnership,118bet金博宝 , andcorporation.

Establishing a legal business entity such as an有限责任公司orcorporationprotects you from being held personally liable if your bank is sued.

You can金宝搏188是什么公司yourself and pay only the minimal state有限责任公司costsor hire one of the118金宝app for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more aboutstate sales taxand franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to aspiercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting abusiness credit cardhelps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our有限责任公司Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

Federal Business Licensing Requirements

Banks must be approved for federal deposit insurance. Information on requirements and how to get approved can be found on theFederal Deposit Insurance Corporation website.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a bank. Learn more about licensing requirements in your state by visitingSBA’s reference to state licenses and permits.

Certificate of Occupancy

A bank is generally run out of a building or storefront. Businesses operating out of a physical location typically require aCertificate of Occupancy(CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

• If you plan to lease a location:
• It is generally the landlord’s responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a bank.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening,it is recommendedto include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.

• If you plan to purchase or build a location:
• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for your business’ location to ensure your bank will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully.Business Insuranceprotects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face,begin withGeneral Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need isWorkers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

Owning a bank is a demanding endeavor. It requires intimate knowledge of the banking industry and regulatory structure of the financial services industry. A banker needs to be good under stress, love working with numbers, and also working odd hours. While employees clock out at the end of the day, a bank owner may need to take his or her work home with them.

What happens during a typical day at a bank?

Day to day activities of a banker include making loans, taking in deposits, and servicing bank customers. As an owner, you are also responsible for making sure the bank complies with all regulatory requirements. Banks are under immense pressure to turn a profit, so this means spending a lot of time underwriting good credit risks and figuring out where to put the bank's money so it will make a stable and reliable return.

一些技能是什么nd experiences that will help you build a successful bank?

Bankers need to have good business sense and must be good with numbers. They are responsible for overseeing the profitability of the bank so having a degree in finance, business administration, accounting, or related field is helpful.

What is the growth potential for a bank?

Growth potential for a bank is huge. Banks can stay small or can operate as large commercial and investment banks. Some banks offer franchise opportunities, but you don't have to buy into a franchise to grow into a large national or international bank.