Why You Need an LLC Bank Account

An LLC bank account is important for proving that you and your business are separate entities. Anyone who forms an LLC should get a business bank account to help maintain liability protection for the company's members.

One of the pros of forming an LLC (limited liability company) is having the protection that this business structure offers against creditors. Your LLC members aren't personally responsible for the company's liabilities and debts. Having an LLC bank account supports the separation of the business from its members. This is important in the event that someone sues the LLC.

If your LLC is sued and you can't show the separation between personal and business finances and expenses, then the LLC members could be responsible for the company's liabilities and debts. Having a bank account just for your LLC shows that members' finances aren't combined with the business finances. This adds an important layer of protection for the LLC's members.

How to Set Up an LLC Bank Account

Decide which type of bank account or accounts your LLC needs to conduct its regular day-to-day business. Select an account type based on what best serves your LLC's banking needs by considering the following: 

  • Fees
  • Interest
  • Overdraft protection
  • Minimum balance requirements
  • Interest
  • Other factors you find important for your LLC

Consult with a banker to find out which documents and verifications you need to provide to open an LLC account.

The bank will have to verify the following information before it opens an LLC account: 

  • The LLC name
  • Legitimacy of the LLC, including proper licensing information 
  • LLC tax ID number (TIN)
  • Names of authorized signers

Collect all of the required documents that the bank requests. Depending on which state your LLC is in, the document names may be slightly different. Most banks ask for documents such as the following: 

  • Articles of Organization
  • Business license
  • Proof of EIN
  • LLC Operating Agreement
  • Fictitious name certificate
  • Certificate of formation
  • Certificate of assumed name

Signers on the LLC account are usually a member, members, or a hired manager. Before members agree to open an LLC account, they should assign rights to parties detailing who can act as an authorized signer or who can withdraw funds. This is important if your company's operating agreement doesn't spell out who these parties are.

Anyone who's appointed as a signer should bring all required documents when they go to open the account, including their personal identification (example: state ID or driver's license).

What You'll Need to Open a Business Bank Account

The documents you need to open a bank account depends on the type of business organization you have. Requirements for an LLC differ from a sole proprietorship, for example. Typical documents needed for different business types are outlined below:

Sole proprietorship

Additional documentation you may need includes a government-issued license or a license or certificate showing your business name (if you operate a business under a name other than your legal one).

General partnership

  • The partnership's TIN
  • Copy of the partnership agreement (including the partner names and the business name)
  • Business name certificate (including partner names and the business name)

Limited liability company

  • Company TIN
  • Copy of the company's Articles of Organization (or equivalent document, depending on your state)
  • Document showing authorized signers (if not clearly stated in the Articles of Organization)

Corporation

  • TIN
  • A copy of the Articles of Incorporation (or equivalent document, depending on your state)
  • Corporate document spelling out who are authorized signers (if the Articles doesn't clearly state who the authorized parties are)

Make sure you provide all necessary documents and paperwork when you go to open an LLC bank account. The bank will check that you're able to legally prove the following: 

  • You have authorization to use the business name.
  • The general nature of the business is as described.
  • Your business is registered with the proper government bodies.
  • You're authorized to set up the account.

Having an LLC account is a smart way to protect a company's members from personal liability in the event that the business is sued by maintaining a clear distinction between personal and business finances.

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