Opening a business bank account for your LLC doesn't just streamline your bookkeeping and operations (though of course it helps with that too): A bank account dedicated to your LLC is an essential step in maintaining the legal distinction between the business and its owners, and is necessary to preserve your limited liability protections. Even a one-member LLC should open an account.
To open an LLC account, follow these steps:
1. Form an LLC
This may be your first step if you haven't legally formed your LLC and obtained an Employer Identification Number (EIN). An EIN allows you to open an account in the LLC's name, but single-member LLCs may be able to open a business account without an EIN at some financial institutions.
Obtaining an EIN is beneficial, even if it's not required, and can be obtained quickly by applying on the IRS website. Other methods, such as sending an application by mail or fax, can take several weeks to process. International applicants must apply by phone.
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2. Choose a Bank for Your LLC Business Account
A business checking account is the default business account for most LLCs. This account can be used for everyday operations such as accounts payable and receivable.
Look for an account that has low (or no) monthly fees, easily integrates with your existing business tools, and supports joint accounts if your LLC has multiple owners. Also consider other useful account features like cash deposits, free employee debit cards, ATM reimbursements, free wire transfers, and cash back on business purchases.
For small businesses or LLCs with no employees, one business checking account may be sufficient, but larger corporations may need multiple business accounts.
For example, an LLC may choose to use one business bank account for payroll and another for operational accounts, or it may choose to leverage a business savings account to earn a higher yield on excess cash on its balance sheet.
🤓 Geek Tips
Having multiple business bank accounts at multiple banks can help you maintain access to your funds if an account is compromised or a bank is closed.
3. Apply for an LLC Bank Account
Depending on the bank you choose, you can apply for an LLC bank account online, in person, or over the phone. As long as you have the things you need to open a business account ready, applying is very easy.
Check with your bank for exact requirements, but you'll need to provide the following information:
Terms of organization/establishment.
An EIN confirmation or validation letter from the IRS.
“Doing business as” (DBA) or assumed name certificate, if applicable.
Company name, address, phone number, EIN.
Industry, type of business, and date of incorporation of the business.
Projected annual revenues and transaction types/volumes.
Driver's license or passport.
Date of birth and social security number.
Your home address, personal email address, and mobile phone number.
A multi-member LLC will need to provide personal information and identification for everyone who owns 25% or more of the business.
4. Open a Bank Account for your LLC
Once approved, deposit funds into your LLC bank account to open it. If your account has a minimum opening deposit, deposit it now.
From there, gradually transfer your business' assets into the newly opened account. Business accounts typically have longer hold periods for new account deposits (up to 10 business days), and some financial institutions flag large transactions, including deposits, as fraudulent, so avoid temporarily tying up all your funds.
You will also need to log into your bank's online banking platform for alerts and settings. Decide who has the authority to sign onto your account. This is especially important for LLCs with multiple members. Add additional users, such as an accountant or an employee who handles accounts payable, and set their account permissions accordingly.
If your bank offers direct integration with your business tools, connect your accounts to streamline your bookkeeping. We also recommend setting up recurring bill payments and invoices, and downloading your bank's mobile app for easy access to your banking on the go.
Finally, if there's a sign-up promotion for your business account, check the requirements to ensure you can claim the bonus. Typically, you'll need to maintain a certain average balance over a period of time, plus perform other qualifying activities (such as making a certain number of transactions on a linked debit card).