Opening a Bank Account for an LLC: All You Need To Know

ByVladana Donevski
December 22,2022

It’s never a good idea to mix your personal money with your limited liability company funds and thus be personally liable for your LLC’s legal obligations and potential debts. 

That’s why we’ve compiled detailed instructions and a comprehensive list of requirements for opening a bank account for an LLC. Stay with us and learn more about the procedure and the required documents. 

Why Should Your LLC Have a Designated Bank Account?

There are a variety of legal and practical reasons for you to open a designated business checking account for your LLC. Here are some of them:

  • Having an LLC means that you have formed a separate business entity. If your LLC doesn’t have a separate bank account, your personal and business finances will be commingled, and you’ll be at risk of jeopardizing the LLC.
  • Should your LLC end up in debt or get sued, your personal funds won’t be sought after, leaving only your business funds open for scrutiny.
  • If you set up an LLC bank account, calculating the taxes, keeping track of your business’s expenses and income, and preparing and auditing financial statements will be much easier. With two separate accounts, you won’t need to pay your accountant for doing the extra work of sorting through your personal and business expenses. 
  • When paying your business partners, stating your company’s name on the check instead of your personal information seems more professional. Your clients will take you more seriously when you have a separate account for your business.
  • Another practical reason for a dedicated checking account for your LLC is that it can be a requirement for applying for an LLC business loan or a good business credit card

How To Open a Business Bank Account for LLC

Now that you know why a separate bank account is a good idea for your LLC, here are the steps you need to take to get one:

1. Choose a Bank

The first step when opening a bank account is choosing the right bank for your small business needs. When shopping around for the bank that you’ll place your trust in, pay attention to the following:

Online or Brick-and-Mortar Bank

Depending on whether you prefer to go to the physical bank branch or enjoy banking from your home or office, you can open an LLC bank account online or choose a bank with physical branches.

If you decide on the latter, a favorable system is to pick the same bank you have your personal account with. Visiting the same branch for both business and personal transactions can save you a lot of time.

Check the Fees

There are other basic LLC bank account rules, such as checking which banks offer the best terms, conditions, and fee structures. That’s why you should always ask about the monthly maintenance fee, minimum monthly balance, minimum initial deposit, and overdraft fees before you make a decision. 

You should also see whether you can write checks and if there are any promotions, enticing rewards programs for business customers with high balances, or discounts on loans. 

Debit and Credit Cards

Most banks will issue you a debit card for your business account right on the spot, while others might mail them, so you could end up waiting for a couple of days. An LLC debit card is useful for tracking your business expenses. 

Make sure to check whether the bank offers a business credit card that you can use for cash-back rewards, miles, points, and other perks.

2. Gather the Documents

When you decide to open an LLC bank account, the requirements might differ from institution to institution. However, here’s a list of some of the most common documents that banks will ask you to submit:

    • A copy of LLC’s articles of organization is a legal document that establishes your LLC at the state level. Depending on where your company is registered, this document can also be referred to as a certificate of formation or certificate of organization. 
  • Your Employer Identification Number is necessary as it lets the IRS identify your business entity for tax purposes. If the LLC is formed as a single-member LLC, you can provide the Social Security number of the sole proprietor. Also, an EIN verification letter would be accepted, too. 
    • An LLC operating agreement is necessary when opening a bank account for an LLC as it lets the bank know who is authorized to sign, deposit, and withdraw funds on behalf of the company.
  • Government-issued photo ID, such as a valid driver’s license or a passport is a must.
  • Additional documents will be required if the LLC is doing business under a different name. Banks usually accept a business license, trade name certificate, fictitious name certificate, certificate of assumed business name, or occupational license.

3. Fill In the Application

If there’s an option to open a bank account for your LLC online, you’ll be required to fill out the application form. It usually asks for information such as the name and address of the business, the date the company was established, the country and state of legal formation, and the country and state of the primary business operation.

Keep in mind that the business must be formed and operational in the US.

Be prepared to enter your company’s EIN number and personal information, such as SSN, for all business owners listed in the application, should they have at least 25% of the ownership. Remember that you’ll also be asked to state the person who will be authorized to sign financial and legal documents. Unless you’re a single-member LLC, that is.

Some banks will require applicants to come personally to the branch and meet with a designated banker to discuss setting up a bank account for their LLC. In that case, make sure to call the bank beforehand and inquire about all the necessary documents so that you can come prepared.

4. Fund Your Account

Congratulations! The time has come to fund your account using any of the deposit methods supported by your bank. Make sure to check whether the bank asks for a minimum deposit amount.

What About Nonresidents?

Nonresidents, too, can open a business bank account in the US. However, in that case, the business needs to be officially registered in the US and have its unique EIN number.

So, how do you open an LLC business bank account if you are a nonresident? If you registered your LLC in the US and got your EIN number so that the IRS could identify you, the first step would be to find a bank with foreigner-friendly options. 

Then, the documents: You won’t need a residency requirement, an SSN, or an Individual Taxpayer Identification Number, but most banks will require the following:

  • LLC’s registered agent address as LLC’s office address or proof of having an office in the US. A lease agreement or utility bill works, too.
  • The EIN number
  • A certificate of formation, articles of organization, or an equivalent document
  • LLC’s operating agreement or an equivalent document 
  • A US phone number
  • Foreign driving license and foreign passport
  • Information on the company’s owners

In most cases, setting up a bank account for your LLC when you’re a foreign entity has to be done in person. However, some banks might allow you to start the procedure online and then show up to hand over the documents. There are also agencies that help you set up a US business remotely using a registered agent. 

Business Credit Score Concerns

A business’s credit score is a potential problem that’s often overlooked. 

Similar to your personal FICO score, from the moment you open your business account, you’ll start to build up your business credit history.

Opening a bank account for an LLC also means that the way you run your business can affect your credit score in both good and bad ways. These numbers are available to the public and will be used by banks to decide if you can get a business loan or insurance, as well as by potential business partners and rental agencies. 

Whereas a personal credit score usually falls between 300 and 850, your business score will range anywhere from one to 100. The calculating models depend on which of the three major bureaus the bank reports to: Dun & Bradstreet, Experian, or Equifax. 

Finally, even though it would be beneficial for your business to maintain a good credit score, remember that even if you end up with a less-than-stellar score, you can still get a business loan.

Final Thoughts 

If you’re still wondering whether you should open a bank account for your LLC, we can assure you that it’s worth the effort. With a business account, your personal assets will be safer, you’ll appear more trustworthy to your business partners, and it will be much easier for you to keep track of your business transactions.

Can I use a regular bank account for my LLC?

Yes, you can use a regular bank account for the LLC company, especially if it’s a sole proprietorship. However, that may not be the best idea. By using your private account for your business transactions, you won’t be able to protect your own funds should your business end up being sued or stuck in debt. 

On top of that, without a dedicated LLC business bank account, organizing your finances would be more complicated. Without a business bank account, you’ll also appear less professional in front of your business partners.

Should an LLC have its own bank account?

Definitely. With a dedicated business account, your LLC will be eligible for a business loan and a business credit card, your personal funds will be protected in case your LLC gets sued, and you’ll manage your business finances more easily.

Can I open a bank account with my EIN number?

Yes, you can. But that’s just one of the requirements when you’re opening a bank account for an LLC. Aside from your EIN, you’ll be required to submit a list of documents, among them a copy of your LLC’s articles of organization, an operating agreement, a government-issued photo ID, and additional documents in case your LLC is doing business under a different name.

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Michele Elliott
10 months ago
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Does your brand new LLC start with a FICO score of 0?