Whether it’s to deposit a customer’s check or pay for a business expense, you’re going to need to set up a business bank account in your limited liability company's (LLC’s) name.It may seem like a hassle, especially in the early days of running your business when things are hectic and you’re trying to keep both feet on the ground while keeping up with all the new demands that a new business puts on you, but it is necessary.
By setting up an LLC, you’ve established a separate business entity which provides you with limited liability protection. Because your business is a separate entity from you, you’re required to separate your business finances from your personal finances. While it may be tempting to comingle your business funds with your personal funds, doing so risks jeopardizing this limited liability protection.
Aside from the legal requirement to maintain a separate bank account for your limited liability company, there are also practical reasons for having a separate business bank account, too.
- You'll have an easier time calculating the taxes you owe. And if you hire an accountant, it means you won’t have to pay for your accountant to sort out your business expenses from your personal ones.
- You’ll project far more professionalism and get more respect and trust from vendors and suppliers if you pay with a check in your company’s name.
- You'll develop a relationship with your bank that may be invaluable if you require a business loan in the future.
How to Open an LLC Bank Account
While opening an LLC bank account isn’t quite as easy as setting up a personal bank account, it shouldn’t take up too much of your time, provided you do the proper research and bring the right papers to the bank.
All business bank accounts are not created equal. There are a vast number of bank account options out there, and you’ll need to do some research to see which account is right for your needs.
There will be differing fee structures and service options. You’ll also need to decide on things such as overdraft protection, the ability to write checks from the account, or a debit card to go with your account. Will you need just one account, or several? Will a minimum-balance requirement work for you? What are the total charges you can expect to pay in an average month? These are all questions that will help you decide which kind of bank account will work the best for your business.
What Documentation Does the Bank Need?
Once you know what kind of bank account you want to open, call your bank to see what kind of documentation is required in order to open up a business bank account for an LLC. Your bank will likely require you to bring the following documents:
- A copy of your LLC’s articles of organization, certificate of formation or an equivalent document, depending on the state in which you registered your LLC
- Your LLC’s federal taxpayer identification number (EIN, or Employer Identification Number)
- Your LLC operating agreement or some other document which sets out who is authorized to sign on behalf of your LLC
Your bank may also have additional documentation requirements, so it’s important to call first to ensure you don’t end up making a wasted trip.
Opening an LLC Bank Account
Once you’ve gathered together all the proper documentation, you can then meet with your banker to open a bank account for your LLC. Doing your research beforehand and bringing all the required documentation with you will make this final step in the process an easy one.
Not only is a separate business bank account a requirement for your LLC, having one will also help you with many of the practical aspects of running your business, such as accounting for expenses, paying your business bills and depositing customer payments. Additionally, using your bank account responsibly will help you to establish a more solid relationship with your bank, which will be particularly valuable if your LLC has credit needs in the future.