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Opening a bank account for your LLC is an important step for your business. Learn how to open an LLC bank account using our guide.
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by Jenn Morson
Jenn is a writer who specializes in real estate, finance, health care, and education. Her words may be found in The N...
Updated on: January 26, 2024 · 8min read
One of the most important moves after you've formed a limited liability company (LLC) is to open a separate bank account for your LLC.
Having a separate bank account is required by law because a limited liability company is a separate entity from you as an individual. You have provided yourself with liability protection by creating an LLC, and in order to enjoy the limited liability protection, you must keep your personal accounts completely separate from your business banking by opening a new account for an LLC. If you mix your personal and business finances in your personal bank account, you are in danger of losing those limited liability protections and could be liable for your business' financial obligations.
When you open a bank account for an LLC, not only are you following the law for limited liability companies, but you are also protecting your personal funds while making it easier to run your business.
Having a separate bank account for your business funds means:
Opening a business account is a necessary step for most LLC businesses, but it is a fairly simple process. Small business banking services like Novo allow you to apply in minutes for a free checking account. Regardless of which institution you choose, ensure a smooth application process by checking their documentation requirements prior to applying.
The first step in opening an LLC bank account is gathering all necessary documentation and information needed by the bank. While there may be some variation by bank, generally speaking, you will need the following documents in order to open your account:
Your business has wants and needs unique to you, and your choice in banking should reflect the current state of your business as well as your plan for growth. As you begin your search for the right bank, here are some banking features for all LLC members to consider:
There are many online banks available for businesses, and you can open an LLC business bank account without leaving your house. There are some limitations to opening an online-only bank account for your business, such as having a multimember LLC, but each bank's website will make these requirements clear as you explore the possibility of an online account.
In order to open an LLC business account online, you will need the same information needed to open a business bank account in person. You will be asked to upload these documents through the bank's secure server. Finally, you will need the funds to deposit the minimum balance required for opening your LLC business bank account.
When opening your LLC bank account, whether in person or online, you will want to make sure that all of your business' needs are addressed. Most banks use enticing perks in their advertising, but the fine print may not hold up to your scrutiny. For example, perhaps you've discovered an online banking institution with an incredible annual percentage yield (APY), but the minimum balance is $100,000 in order to receive that APY.
Many banks also offer 1% cash back for each business debit card purchase, although some banks may restrict this benefit to a limited number of merchants. If you don't frequent those businesses for your company or even plan on using a debit card frequently, this is not a benefit that should influence your choice of bank.
When choosing a banking institution for your LLC, you should also explore options for both checking and savings bank accounts. Make sure you familiarize yourself with your options in banking and choose the institution that best serves your business. Remember, however, that if you are ultimately dissatisfied with the bank you choose and it is no longer a good fit for your business, you can always revisit your decision and move your banking elsewhere.
When you open a business bank account, you provide the bank with a lot of personal information. What you may not realize is that some of that information may be shared with third parties. While a bank may not share private information such as your Social Security number or your income, other information can be shared for marketing purposes.
Banks collect your personal information in order to determine your eligibility for their services, but they also use this information in other ways. And while there are some exceptions and opt-out possibilities, there are no blanket opt-out options for individuals and businesses. Additionally, any time you access your banking website or app, your bank can gather information about your web browsing history, your social media, and even the type of device you are using and where you are using it. This information is meant to help the bank prevent fraud, provide better service, and also to adjust its advertising.
Once you have chosen a bank for your business, you will need a service to manage all of your accounting needs. LegalZoom offers LZ Books—accounting software to manage your small business finances through tracking your income and business expenses, invoices, and payments, all in one centralized location. LZ Books securely connects with your business bank accounts and also creates invoices, and sorts your finances into tax categories, making tax season much simpler. If you are also an LZ Tax customer, LZ Books shares your financial information seamlessly across these services. Affordable subscription plans for personalized services are a part of LegalZoom's small business solutions.
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