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Opening a business bank account for your LLC is an important step when starting your new venture.
Why You Shouldn’t Use a Personal Bank Account
Having an account specifically designated for your business is not only convenient, but also necessary to maintain the LLC’s liability protection. Using a personal checking account will likely be considered commingling of your funds with those of the business and a court may find you liable personally for any judgments against the LLC.
What is Needed to Open an LLC Bank Account
Every financial institution has different requirements when setting up an LLC bank account, so it is important to contact the bank before going to make sure all paperwork is in hand.
Banks will require two types of personal identification for each member or any authorized individual like a registered agent. At least one needs to be a government-issued IS, such as a passport or U.S. driver’s license, and the other may be verification showing a current address from a credit card or utility company.
Each person on the account will need to provide their date of birth, social security number, current address, and contact information. Depending on the financial institution, each member may also be required to be present at the bank in order to open the account.
Federal Employer Identification Number
In the instance of a single-member LLC without employees who can use the owner’s social security number, most LLCs will need to obtain a Federal Employer Identification Number (EIN) with the IRS. The EIN is a 9-digit number that identifies a business entity for tax purposes, much like a social security number does for a person.
Learn how to apply for an EIN.
A bank resolution is a document that is signed by the members that the LLC has the authority to open a bank account. This resolution will also select who has access to the account. Many banks probably won’t require a banking resolution or copy of your LLC operating agreement to set up your account, unless the LLC has multiple members and there is no banking authorization given to the members in the Operating Agreement. The bank will have a banking resolution template to fill out if you don’t have one.
How to Sign Checks
Knowing how to properly sign a business check under the capacity of the LLC is an important aspect of maintaining liability protection. Just as signing any legal document personally when acting on behalf of the LLC can create a problem, you must ensure that you sign a check with your correct title.
When signing a check on behalf of the LLC, you must properly write your name and role within the business along with the legal name of the company.
When endorsing a check to the LLC, you must also include your full name, legal name of the LLC, and your official title.