How to Open a Business Bank Account
May 3, 2013
When I formed my LLC, I finally opened a business bank account. I probably should have had a separate account prior to that point, even though I was a sole proprietor, but I waited until the business felt more “official.”
Opening a business bank account requires a little planning, and proper documentation, depending on the type of business you have. Before you go into the bank, figure out what information you need to open your account.
In most cases, if you open a business bank account as an organization other than a sole proprietorship, you will need to first obtain an Employer Identification Number (EIN) from the IRS. You can apply for your EIN online, and in some cases receive it almost instantly.
Once you have your EIN, make sure that you have the other documentation required by the bank. This documentation can include:
- Proper documentation of your identity.
- Social Security number (if you are a sole proprietorship without an EIN).
- Business license from your state or city.
- Business name filing document (if you use a “trade name” that is different from your actual name).
- Partnership agreement.
- Business organizing document.
- Articles of organization, articles of association, or articles of incorporation.
- Corporate resolution (to identify authorized signers if needed).
When you contact the bank, be clear about your business organization, so that the representative can tell you exactly what to bring in.
Opening and Funding Your Business Bank Account
Once you understand what you will need, the process is fairly straightforward. You will need to provide personal information and business information, usually in form format. You will also have paperwork to sign affirming that you aren’t engaging in terrorist activities, or funding terrorist activities.
If you are funding your account from another bank, you should be prepared with the bank account number and routing number. I opened my business account at the same bank where I do my personal checking, so I was able to simply transfer the money from my personal checking account.
Consider what accounts you need in addition to checking. You can also open a business savings account, and apply for a business credit card or line of credit. However, it might be harder to obtain business credit if you’re representing a fairly new company.
Can You Open a Business Account Online?
It is possible to open a business account online. Be prepared to scan and upload copies of appropriate documentation to complete this process. Opening an account online can be convenient and easy to do.
Understand, though, that government entities, dealers in precious metals, and businesses involved with telemarketing and gambling cannot open business accounts online. These types of business accounts must be opened in person.
Keeping Business and Personal Expenses Separate
Opening a business bank account is a smart move, no matter your organization. It’s much easier to keep track of which income and expenses are personal, and which are business related. Not only does this make your own bookkeeping easier, but it also makes record keeping easier for tax purposes. If there is a question, your separate bank accounts can make it a simple matter to clear things up with the IRS.
Do you have any advice for readers on when they should open up a business bank account? Leave a comment and share some of your experience!
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