How to Open an LLC Bank Account
Looking to open a bank account for your LLC? There are specific documents you must submit. Here's a guide to make the process as painless as possible.
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Congrats, starting an LLC is exciting! But opening an LLC bank account seems like such a headache, especially when you already have a million other things to do for your business.
And plus, banks can reject your application if you don't meet all the requirements. So it's super important to properly prepare and know the process.
But don't stress! We've put together a handy guide on everything you need to know about opening an LLC bank account. Let's dive right in.
Documents Needed for an LLC Bank Account
Before doing anything else, you need to gather the documents needed for an LLC bank account.
While the exact requirements will differ from bank to bank, here are some common ones they look for:
- LLC Employer Identification Number
- Articles of Organization
- Certificate of Good Standing
- DBA Certificate (if applicable)
- LLC Operating Agreement
- Business Licenses/Permits
- Annual Report (in some cases)
EIN (Employer Identification Number)
Banks will use your EIN to verify some of your company's details, like its identity, business activities, and legal status. It also lets them know that your LLC is legitimate.
You can show your EIN verification letter from the IRS. Or just submit a copy of your company's most recently filed tax returns.
Only single-member LLCs don't need an EIN because they can still use the owner's SSN as their EIN. But getting a separate one is better to remove doubts about your business transactions. If you haven't gotten an EIN yet, you can apply for free with the IRS.
Articles of Organization
Your Articles of Organization can also help banks verify your company's identity and your authorization to apply on its behalf.
It also lets them know that the state officially recognizes your LLC as a separate legal entity.
Certificate of Good Standing/Status
Many banks also look for a Certificate of Good Standing/Status when applying for an LLC bank account.
This shows them that you're complying with government requirements. And it verifies that you're still authorized to do business in the state.
DBA Certificate/Certificate of Assumed Name
If your LLC is operating under a different business name, you also need to present your DBA certificate to the bank. This proves that you registered the name with the state and can legally use it for your operations.
Operating Agreement
Some banks may look at your LLC's operating agreement because it shows them that your company is a serious business.
And it gives them insights into your LLC's management structure and internal operations. So that they know what to expect from your company.
Business Licenses/Permits
If your LLC needs a business license and/or permit, the bank may ask for that. These show them that your business is operating legally.
Annual Report
Some banks, like Chase, may also look for your LLC's annual report during the application process.
This gives them a clear overview of your company's financial performance and business activities in the past year. It also shows them that your company won't expose them to potential risks.
To avoid delays or rejection, make sure you prepare all the documents the bank may ask for before submitting an application.
| Bank | Requirements |
|---|---|
| Lili |
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| Bluevine |
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| Chase |
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| Found |
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| Bank of America |
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Best LLC Bank Accounts
Free Checking Account for Small Business Owners
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- Deposit at least $5,000 from eligible merchant services to your Bluevine account OR
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- Spend at least $2,000 with your Bluevine Business Debit Mastercard® and/or Bluevine Business Cashback Mastercard®
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Chase Business Complete Banking® - $300 Bonus
- Earn $300 when you open a new Chase Business Complete Checking® account. For new Chase business checking customers with qualifying activities.
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- Your choice of payment types. Choose from a full range of options for accepting payments and making deposits that include Zelle®, Online Bill Pay, wire transfers and ACH payments.
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- Associate Debit and Employee Deposit Cards available upon request
If you're a non-U.S. resident/citizen, you have 2 options. You can either visit the U.S. to apply in person, or you can open an account with an online bank.
Just make sure you have the requirements (e.g., your Articles of Organization and EIN) before applying.
You can sometimes use your registered agent's address if you don't have a local address. Check with your bank first to see if it's allowed.
How to Apply for an LLC Bank Account
Once you have all the documents, it's time to open that LLC bank account.
Keep in mind that banks tend to be more stringent with business bank account applications than personal accounts. But being approved for one should be easy as long as you meet all the requirements.
1. Contact your bank
Since every bank has different requirements, it's a good idea to first contact the bank you're interested in. Tell them you want to open a business bank account for your LLC.
That way, they can give you their list of requirements and inform you how to open one.
Fortunately, most banks these days allow online applications. So you don't have to get stuck in long lines or wait for an open spot.
Some traditional banks may want you to apply in person. This can be good if you need more hands-on support because you'll work closely with a small business banker. They can guide you through everything and ensure a smoother application process.
2. Submit the required documents
After confirming with your bank, the next step is to fill out the application forms and submit the requested documents.
If you're opening the account in person, you need to meet with a bank representative to complete the process.
You usually need to provide the following information about your LLC on the application:
- Business name and official address
- Company's phone number
- Date of formation
- Business's other locations (if any)
- Official purpose, industry, and main activities
- Yearly sales information
- Number of employees (if any)
- Estimated transaction types and volumes done through the new bank account
Aside from that, the bank will also ask the following information about the LLC members (usually with 10% to 25% or more ownership):
- Personal ID
- Full legal names (as reflected in their government-issued IDs)
- Residential addresses
- Dates of birth
- Ownership percentage
- Personal tax ID numbers (SSN, FTIN, ITIN, etc.)
- Country of citizenship
Note that you may be asked to provide 2 IDs. It can be 2 primary IDs (e.g., driver's license, passport, etc), or 1 primary & 1 secondary ID (e.g., utility bill, credit/debit cards, etc).
3. Make your first deposit
Once the bank approves your application, you need to make an initial deposit to fund your new LLC bank account.
You can do this in several ways: via check, cash, wire transfer, or other accepted deposit methods.
If you're opening the account in person, you can just give it to the bank representative in charge of your application.
After you fund your account, you can use your new LLC bank account for business transactions.
Why Open an LLC Bank Account?
LLCs must have a separate bank account in order to maintain your company's liability protection. This is an LLC's main benefit, so don't lose it by comingling personal finances.
With this protection, your personal assets won't be touched if your company defaults on its debts or gets sued. You don't have to worry about losing your home, car, or other personal properties if your business goes south.
To keep this benefit, you need a dedicated LLC bank account. It draws a clear line between your personal and business transactions. So there will be no doubts about your company's finances (i.e., you're not using them for personal purchases).
Aside from that, here are other good reasons for a separate LLC bank account:
- Simplifies bookkeeping and accounting
- Keep track of business expenses for tax write-offs
- Increases the company's credibility
- Be eligible to apply for loans and other business services
Overall, having a separate bank account for your LLC will make your life easier and provide protection for your personal assets.
No. You need to open a separate bank account for your LLC because it's considered a separate legal entity. If you use your personal bank account, you will lose your personal liability protection.
How to choose the right bank for your LLC
When you're choosing a bank for your LLC, just keep in mind that every bank is different. Consider the following factors before deciding:
- Traditional or online
First, figure out if you want a physical bank or if you're okay with online-only banking. Physical banks are usually better for local small businesses, especially if you need to deposit cash.Online banks could be better if you do all your transactions digitally and don't need a banker. They usually have lower fees and may even offer rewards or interest.
What kind of bank do you want to use for your small business? - Minimum balance requirements
A lot of business bank accounts have a minimum balance requirement, or else there's a monthly fee. Make sure the bank's requirements are realistic for your company.If you're just starting out, it's best to go with a free business checking account.
- Locations & ATM access
If you need to bank in person, you'll want a traditional bank with branches nearby. You should also consider your bank's ATM network, even if it's an online bank. This is especially important if your business deals with cash. - Transaction limits
Many business checking accounts give you a certain number of free monthly transactions (especially for brick-and-mortar banks). After that, you'll pay a fee for each transaction. Be sure to choose a bank that can accommodate your LLC's regular transaction volume.Many online checking accounts (like Bluevine) give you free unlimited transactions. So look into that if you're a high-volume business.
- Features and services
Not all banks offer the same features and services. Double-check if your choice meets all your business's banking needs. Some features to look out for are cash deposits, check-writing, multiple users, etc. - Integrations
Connecting your bank account to other business tools can optimize your operations. Consider choosing a bank that integrates with the ones you use, like your bookkeeping, payroll, payment processor, etc.
Not really sure which banks are great for LLCs? Here's a list of the best LLC banking accounts.
Using the same bank for your personal and LLC bank accounts can be a good idea. Some banks offer extra perks for existing customers, like discounted/waived fees or higher transaction limits.
If you plan to apply for business financing later on, you may have better chances of being approved if you use the same bank for both accounts.
Tips for opening an LLC bank account
Opening an LLC bank account tends to be more complex and daunting than opening a personal account. To ensure things go as smoothly as possible, here are a few tips:
Make sure your LLC is already approved.
Even if you've already submitted your registration, your LLC won't officially exist until the state approves it. And you can't really open a bank account for an entity that doesn't exist.
Banks will also look for your formation documents and EIN when you apply. And they will reject your application if you can't provide the requested documents.
Call your bank before applying.
Most of the information you need can usually be found online. But it's still a good idea to call your bank and inquire before applying.
They can confirm the requirements you need to prepare and entertain questions whose answers you can't really find online. The bank can also process your application more quickly if they already know you.
Decide who in the company will apply.
Many banks require all LLC members to be present while opening the account. But only one person actually needs to apply.
To avoid delays, make sure you've already discussed this with the other members and decide who will do it.
This also applies to signing rights/authorization. Everyone needs to decide beforehand who's allowed to sign on behalf of the company.
Bottom Line
Every LLC needs its own business bank account. Not only does it keep your company's financial records in order, it also reinforces its liability protection.
Still, banks can (and will often) reject your application if you can't provide the documents they ask for.
That's why researching and being adequately prepared are vital to avoid rejection.
Write to Alyssa Supetran at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.
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