How to Protect Business Accounts From Bank Failure

People line up outside of the shuttered Silicon Valley Bank (SVB) headquarters in Santa Clara, Calif., on March 10, 2023. Justin Sullivan/Getty Images

The Federal Deposit Insurance Corporation (FDIC) has a track record of paying every depositor their money up to the insured amount when their banks have failed. Each insured bank pays a fee for the coverage, which goes into an account to cover insurance costs.

Generally, FDIC insures accounts for up to $250,000. Personal and business accounts are treated the same, and each account type is covered for the same amount. In the case of couples having joint ownership, the coverage is doubled.

Create Separate Accounts

The FDIC advises business owners to create separate business accounts from their personal accounts for tax purposes. It enables your business and personal accounts to be insured separately. Sole proprietors are different; the combination of personal and business accounts is insured for a total of $250,000.