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Opening a business bank account is an important task in the formation of an LLC. Here are some steps to opening the account correctly.
Choosing a Bank
While there are several options for commercial banks, don’t underestimate the importance of great customer service, convenience and pricing options above all else. Local banks are easier for many business owners to work with as they typically have more flexible minimum account requirements, ability to make business loans at the branch versus at a corporate office and lower monthly fees.
Many banks charge fees based on the time an account is open, number of transactions and cash handling. Be sure to look over the details before opening the account.
Why Using a Personal Bank Account is a Bad Idea
Having an account set up just for the business is critical to separate the assets of the business and personal assets of the owners. By not doing so, you risk the liability protection of the LLC. Using your personal bank account will likely be considered “commingling of funds” and could also potentially find you individually liable for judgments against the LLC.
What is Needed to Open the Bank Account
Every financial institution has different requirements, but the following are some common things required to open a bank account for an LLC.
Personal identification for each member or other authorized individual on the account is needed in addition to their social security number, date of birth and address. Often banks will need two types of personal identification such as a government-issued ID, such as a passport or U.S. driver’s license, and a bill or other form of identification
Federal Employer Identification Number
A banking resolution may be needed which is a document that authorized the member(s) to open a bank account on behalf of the LLC. While there are many companies selling banking resolutions online, most bank will give you one at no cost.
Signing checks on behalf of the LLC are a little different than signing personally. When signing a check you will need to write your name and role within the business along with the legal name of the company and account number.