When managing a business, securing your funds is just as important as growing them. Many business owners wonder whether the money they deposit in a business bank account is safe—particularly in the event of a bank failure. The good news is, the Federal Deposit Insurance Corporation (FDIC) provides a safety net. But what does that mean for your business accounts?
In this article, we’ll explore what FDIC insurance is, how it applies to business accounts, the coverage limits, and important factors you should be aware of as a business owner.
Table of Contents
- What Is FDIC Insurance?
- Are Business Accounts Covered by FDIC Insurance?
- How Much Coverage Do Business Accounts Get?
- Ownership Matters: Separate Businesses, Separate Coverage
- What Isn’t Covered by FDIC Insurance?
- How to Make Sure Your Business Account Is FDIC Insured
- Tips to Maximize Business Account Protection
- Conclusion
- FAQs
What Is FDIC Insurance?
FDIC insurance is a type of protection offered by the U.S. government to depositors in case their bank fails. Established in 1933 after the Great Depression, the FDIC insures deposits up to a specific limit, allowing customers to have peace of mind that their money is safe.
As of now, the standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
Are Business Accounts Covered by FDIC Insurance?
Yes, business accounts are generally FDIC insured—as long as they are held at an FDIC-member bank and meet the eligibility requirements.
FDIC insurance applies to a variety of business-related deposit accounts, such as:
- Business checking accounts
- Business savings accounts
- Certificates of deposit (CDs)
- Money market deposit accounts (not money market mutual funds)
Whether you operate as a sole proprietorship, LLC, partnership, or corporation, your business account can be covered.
How Much Coverage Do Business Accounts Get?
FDIC insurance covers up to $250,000 per business entity, per bank.
If you have multiple business accounts (e.g., checking and savings) at the same bank, the total combined balance is insured up to $250,000 for that business. However, if your business maintains accounts at multiple FDIC-insured banks, each bank provides separate coverage up to $250,000.
Examples:
- Scenario 1: Your LLC has $100,000 in checking and $100,000 in savings at the same bank. Total: $200,000 → Fully insured.
- Scenario 2: Your business has $300,000 in a checking account at one bank → Only $250,000 is insured; the remaining $50,000 is not insured.
- Scenario 3: Your business has $200,000 at Bank A and $200,000 at Bank B → Fully insured at both banks, since the limits are per bank.
Ownership Matters: Separate Businesses, Separate Coverage
If you own multiple businesses, and each is legally separate (with its own tax ID/EIN), each entity qualifies for its own $250,000 coverage at the same bank.
However, sole proprietors and DBAs (Doing Business As) are not treated as separate legal entities—they are considered part of your personal account ownership.
What Isn’t Covered by FDIC Insurance?
FDIC insurance does not cover:
- Stocks, bonds, or mutual funds (even if purchased through a bank)
- Crypto assets
- Safe deposit box contents
- Losses due to fraud or cyber theft (though banks may reimburse separately)
- Business funds held in non-FDIC institutions (e.g., fintech apps, credit unions not federally insured)
How to Make Sure Your Business Account Is FDIC Insured
- Verify your bank: Make sure the institution is an FDIC member. You can use the FDIC’s “BankFind” tool on their official website.
- Check your balance: If you regularly exceed $250,000, consider spreading funds across multiple banks or using sweep accounts.
- Review account titles: Clearly identify your business accounts with the legal entity name and EIN.
- Consult your banker: Ask for a detailed explanation of your coverage and whether additional insurance options (like private deposit insurance) exist.
Tips to Maximize Business Account Protection
- Use multiple banks: Divide funds to stay within insurance limits.
- Consider IntraFi or CDARS: Some banks offer networks that split your funds across multiple banks while maintaining full FDIC coverage.
- Monitor fintech platforms: Many fintechs partner with FDIC-insured banks, but verify where your funds are actually held.
Conclusion
Yes, business accounts are FDIC insured—up to $250,000 per business entity, per bank. This federal guarantee offers security and confidence to business owners, but understanding the limits and applying smart financial practices is key.
If your business holds substantial cash deposits, it’s wise to speak with your bank representative or financial advisor to ensure your funds are fully protected and that you’re not unknowingly exceeding the coverage limits.
FAQs
1. Are LLC business accounts FDIC insured?
Yes, as long as the account is at an FDIC-insured bank and properly titled.
2. Is the $250,000 FDIC limit per account or per bank?
It’s per depositor, per insured bank, per ownership category.
3. Are business CDs covered by FDIC insurance?
Yes, up to the $250,000 limit per business entity per bank.
4. Are fintech business accounts FDIC insured?
Only if the fintech partners with an FDIC-insured bank and deposits are held accordingly.
5. What if I have multiple businesses at the same bank?
Each legally distinct business entity is insured up to $250,000 separately.
