How to Open a Business Bank Account
Q: Can you help me open a bank account for my LLC?
Thank you to a customer from Puerto Rico for that great question! Many clients ask us questions about how to open a business bank account, so we decided to address this topic in a blog post. Opening a business bank account is a crucial step because it allows you to separate your business finances from your personal money. When you go to open a business bank account, you’ll need to bring some legal documentation with you, including your EIN (Employer Identification Number), business formation documents, and Resolution to Open a Bank Account. Here’s what you need to do.
1. Obtain an EIN number
An EIN is a tax ID number, similar to a social security number (SSN), issued to businesses by the IRS. LLCs and corporations are usually required to have an EIN before they can open a business bank account. You can get an EIN directly from the IRS for free by mail, fax, or online. Applying online is fastest, but business owners without a social security number will need to use the paper form.
Learn How to Get an EIN Number.
Do I need an EIN if I have a sole proprietorship?
It depends. According to the IRS website, a sole proprietorship isn’t required to have an EIN unless they have employees or file an excise or pension plan tax return. Even so, some banks require sole proprietors to have an EIN in order to open a business bank account, while other banks will let you provide your social security number instead.
Even if it’s not required for you, it may be a good idea to get an EIN, because having an EIN means you don’t have to give out your SSN to vendors and clients, which can help you avoid identity theft.
Check out The Sole Proprietor’s Guide to Opening a Business Bank Account.
2. Create a Resolution to Open a Bank Account
If your business has more than one owner, it’s a good idea to create a Resolution to Open a Bank Account, which is a document proving to the bank that the person opening the bank account has been authorized by the business to do so. Feel free to use one of our Resolution to Open a Bank Account templates:
- LLC Resolution to Open a Bank Account Free Template
- Corporate Resolution to Open a Bank Account Free Template
3. Choose a bank
You should also consider where you want to open your business bank account. Here are a few things to consider when choosing a bank for your business:
- Monthly fees
- Minimum balance requirement
- Incidental fees, such as for overdrafts
- Convenience of location
- Online and mobile banking options
4. Bring the necessary documentation to the bank
When you’re ready to open your account, you should make sure to bring the following to the bank with you:
- Personal identification, such as a driver’s license or passport
- Business formation documents, such as Articles of Incorporation or LLC Articles of Organization
- LLC Operating Agreement (for LLCs only)
- Corporate Bylaws (for corporations only)
- EIN (if you have one) or SSN (if you don’t)
- Resolution to Open a Bank Account
- Opening deposit (required by some banks)
Do I have to open my business bank account in person?
Not necessarily. Many banks will let you open a business bank account online.
Am I legally required to have a business bank account?
It depends on your business type. LLCs and corporations have a legal obligation to keep their business assets separate from their personal assets in order to maintain their limited liability status. That’s because an LLC or corporation is considered a separate legal entity from its owners. If you don’t keep your business finances separate, a court could rule that your business is not truly a separate entity, and you could be held personally liable for debts or charges against the business.
Sole proprietorships and general partnerships are not required to keep their business assets separate. However, it’s still a smart idea to keep your business money in a separate bank account, so that you can easily calculate your business expenses and profits during tax season.
Not a US resident? Read Open an LLC Bank Account as a Non-US Resident.
