How to open an LLC banking account for your business?
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An LLC banking account is considered as a separate bank account for your limited liability company (LLC). It’s vital to own a separate account for your business, so that you can show that your business and you are financially independent under the law.
Anyone with an LLC should own a business bank account to help maintain liability protection for the company's members.
Do you need an LLC banking account for business but don't know where to start? The guide will enlighten you on how to open an LLC banking account.
Why is an LLC banking account important?
If your business is structured as a limited liability company, even if you're the only member, it's wise to keep your personal and business funds separate.
You can easily track your business tax deductions and file your business tax returns, manage a business budget, track your business's balance sheet, produce expense reports… by owning an LLC banking account in your business.
How to open an LLC banking account for your business?
In addition, it looks professional to write a check with your company's name on. And by paying yourself from your LLC, it makes it clear that you're keeping your business and personal finances separate from each other.
When referring to an "LLC bank account," it's safe to refer to a business checking account. Most people with a business bank account need an LLC bank account to pay vendors and accept payments, not to save your own money for a rainy day.
Also, having an official bank account for your business gives you additional credibility that will affect the decisions of suppliers, vendors, and customers.
Your LLC members aren't personally responsible for the company's liabilities or debts. It can support the separation of the business from every member. It’s important in case someone sues your LLC.
If your LLC is sued and you can't prove the separation between personal and business finances and expenses, then the LLC members could be responsible for the company's liabilities and debts.
If you are wondering “Can I use my personal bank account for my LLC.” Here is the answer. The most common business entities are sole proprietorships, LLCs, and corporations. Sole proprietors aren’t legally required to open a business banking account, so using a personal bank account is allowed.
However, it isn’t recommended, and your bank doesn't allow you to use personal bank accounts for business transactions. With an LLC account, you are legally required to keep your company's finances and your personal finances separate.
How to open an LLC banking account?
Although opening a business bank account for LLC isn’t as simple as opening a personal bank account, it’s quite direct process to do with 3 steps as follows:
Step 1: Find a bank meeting your business needs
Not all banks meet your need for an LLC banking account. Some offer fee-free accounts while others charge high service fees. There are banks with low fees while others charge expensively to restrict you from withdrawals.
It can be a member FDIC that can keep your money safe and secure. Many banks and credit unions often publish their available service online. Besides, there are many trusted websites ranking and reviewing the financial institutions via their service qualities.
To get to know each bank, you can search on Google “the best bank for LLC”. Many results will be shown and you can compare multiple banks.
Alternatively, it’s possible to visit branch locations of brick-and-mortar banks nearby to see what services and fees structures they provide.
You should consider some basic factors: types of accounts on offer, overdraft protection, minimum deposit, minimum balance requirements, types of LLC loans, interest rates on loans, business debit cards, mobile banking or wire transfer support.
Step 2: Gather the necessary documentation
Once picking a bank that meets your LLC’s needs, contact them and find out what it’s required from you before opening an account. This consists of some documentation and an initial deposit.
Here are some of the most common documents when you open an LLC bank account.
A copy of your company’s articles of organization or certificate of formation.
The LLC’s EIN (employer identification number).
Documentation to confirm the authorized signatories of the LLC.
If you have a business under a fictitious name, it’s required to provide it to the bank. Some banks will also ask for personal details of the shareholders.
This can be their government-issued IDs, driver’s license, contact information, email addresses, and Social Security Numbers. Depending on your industry, the bank can also ask you to supply copies of your LLC business licenses and permits.
Step 3. Submit application
The application step involves filling out forms and submitting them to the bank as well as the legal documentation.
For a multi-member LLC, all the shareholders need to be present and provide their signatures. Once everything’s done, your company will have its own LLC banking account.
Some banks will give you a business credit card and LLC account. It’s convenient to take the credit card. A credit card can build your business’s credit score, independent from your personal FICO score.
This is proven invaluable when you need the LLC to qualify for loans, lines of credit and other facilities based on its creditworthiness.
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