The Ultimate Guide to Choosing the Right Business Bank Account for Your LLC

May 16, 2023
Business Banking
The Ultimate Guide to Choosing the Right Business Bank Account for Your LLC

If you're starting a business as a limited liability company (LLC), you may be wondering whether you need a business bank account. The answer is yes, you do. Not only is it important for managing your finances, but it's also a legal requirement in many cases. A separate business bank account for your LLC can help you keep your personal and business finances separate, which is crucial for maintaining the limited liability protection that an LLC provides.

In this article, we'll go over the basics of opening a business bank account for your LLC, as well as provide an overview of the Chase Business Complete Checking Account.

What is an LLC?

Before we dive into the specifics of business bank accounts, it's important to understand what an LLC is and why it's important to have a separate account for your LLC. An LLC is a type of business structure that provides limited liability protection for its owners, meaning that they are not personally liable for the debts and obligations of the business. This protection is important because it helps protect your assets from any legal claims or liabilities that might arise from your business activities.

However, to maintain this protection, it's important to keep your personal and business finances separate. This means having a separate bank account for your LLC, in addition to separate bookkeeping and accounting records. If you commingle your personal and business finances, you risk losing your limited liability protection and being personally liable for any legal claims against your business.

How to Open a Business Bank Account for Your LLC

Now that we understand the importance of having a separate business bank account for your LLC, let's go over the steps to open one. The specific requirements may vary depending on the bank you choose, but here are some general steps you'll need to take:

Step 1: Obtain an EIN and Register Your LLC with the State

Before you can open a business bank account, you'll need to obtain an Employer Identification Number (EIN) from the IRS. This is essentially a tax ID number for your business, and it's required for opening a bank account. You'll also need to register your LLC with your state's Secretary of State and obtain any necessary business licenses or permits.

Step 2: Gather the Necessary Documents

When you're ready to open a business bank account, you'll need to provide some basic information about your LLC, including your EIN and business address. You'll also need to provide documentation to prove that you're authorized to open an account on behalf of your LLC. This may include the Articles of Organization (or Certificate of Formation, depending on your state), which is the document that establishes your LLC as a legal entity. You may also need to provide additional documentation, such as your operating agreement or business license.

Step 3: Choose a Bank and Account Type

Once you have all the necessary documents, you'll need to choose a bank and account type. There are many different banks and types of business bank accounts to choose from, so it's important to do your research and choose the one that best fits your needs. Factors to consider might include the bank's branch locations, fees, interest rates, and online banking capabilities.

Step 4: Open the Account

Once you've chosen a bank and account type, you can start the process of actually opening the account. This may involve filling out an application and providing additional documentation, such as a copy of your driver's license or passport. You may also need to make an initial deposit to fund the account.

Features of a Business Bank Account for an LLC

Now that you understand the basics of opening a business bank account for your LLC, let's go over some of the features you should look for in a business bank account. Here are some of the most important features to consider:

Business Checking Accounts: A business checking account is a type of bank account designed specifically for businesses. It allows you to deposit and withdraw money, write checks, and pay bills. A business checking account typically comes with a debit card and online banking access, which can make it easier to manage your finances.

Incoming Wires: If you'll be receiving payments from clients or customers via wire transfer, it's important to choose a bank that allows incoming wires. Some banks may charge a fee for incoming wires, so be sure to factor this into your decision.

Cash Deposit: If your business deals with cash regularly, you'll want to choose a bank that allows cash deposits. Some banks may limit the amount of cash you can deposit, so be sure to check the policies before opening an account.

Business Debit Cards: A business debit card can be a convenient way to make purchases for your business. Look for a bank that offers a debit card specifically for business accounts, as these may come with additional features like rewards points or cash back.

ATM Fees: If you'll need to use ATMs frequently, be sure to choose a bank that has a large network of ATMs or reimburses ATM fees. Some banks may charge a fee for using out-of-network ATMs, which can add up quickly if you're using ATMs frequently.

Maintenance Fees or Minimum Balance Requirements: Some banks may charge maintenance fees or require a minimum balance for business accounts. Be sure to read the fine print before opening an account to avoid any surprises.

Business Loans: If you'll need to borrow money for your business in the future, it's a good idea to choose a bank that offers business loans. Building a relationship with a bank early on can make it easier to secure financing later on.

Payment Processing: If your business accepts credit card payments, you may want to choose a bank that offers payment processing services. This can make it easier to accept payments and manage your finances.

Online Banks vs. Traditional Banks

When choosing a bank for your business, you'll need to decide whether you want to go with an online bank or a traditional brick-and-mortar bank. Here are some factors to consider:

Online Banks: Online banks typically offer lower fees and higher interest rates than traditional banks. They may also have more flexible account options and easier access to online banking features. However, online banks may not offer the same level of customer service as traditional banks, and they may not have physical branch locations.

Traditional Banks: Traditional banks may have more fees and lower interest rates than online banks, but they often offer a wider range of services and more personalized customer service. They also have physical branch locations, which can be helpful if you need to make deposits or withdrawals in person.

Chase Business Complete Checking Account

One business bank account to consider is the Chase Business Complete Checking Account. Here are some features of this account:

✔ No monthly service fee for up to 100 transactions per month

✔ $5,000 in cash deposits per month without a fee

✔ 24/7 access to Chase's online and mobile banking features

✔ Access to over 16,000 ATMs and 4,700 branches nationwide

✔ Free online bill pay and account alerts

✔ Option to enroll in Chase QuickAccept for payment processing

Opening a business bank account for your LLC is crucial for maintaining your limited liability protection and keeping your personal and business finances separate. When choosing a bank, be sure to consider factors like fees, interest rates, account features, and customer service. The Chase Business Complete Checking Account is one option to consider, but be sure to do your research and choose the account that best fits your business's needs.

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