If you are setting up a business or a new LLC, you will need the ability to separate your personal and business financials. This means that your business or LLC will need its own bank account, with an attached business name and beneficiary. Setting up a business bank account is easy, and can be done online, in-person at a bank of your choice, or over the phone. Here's how to set up a business bank account for your new business:
Can I Set Up a Business Bank Account Online?
Much of our lives are spent online, and navigating online banking and online payment processors makes things a whole lot easier. But when it comes to cybersecurity and banking, some banks actually hesitate in allowing a business bank account to be set up online. While you can find a forward-thinking bank that allows you to open a business account online, you may need to provide government identification to prove your identity and business identity. These steps are part of the Know Your Customer or Know Your Business banking laws. When you open an account that requires a beneficiary, as the account owner, you may be required to visit the bank in-person. So, if you want to get started opening a bank account, you may be able to start online. However, some banks might require you to visit a branch in-person to finish the process.
How To Open a Business Bank Account
The first step in opening a business bank account is choosing the bank that best suits your business needs. Consider your day-to-day needs, the number of account holders allowed on the account, monthly fees, transaction fees, and other investment needs. No matter which bank you choose, making the decision sets you well on your way to opening a bank account dedicated to your new business!During this process, you may need to have some items prepared for verification purposes. Here are some important steps to consider when opening a business bank account:
Choose What Type of Account You Want To Open
For the most part, you will want to consider opening both a checking and savings account, this way you can better organize your financials and keep a clean Statement of Accounts. Some businesses opt to open more than one of each account type, but the need for this will depend on how your business will use the bank account. If you need to put aside funds for various reasons, you should opt for more than one savings account. If you have more than one business partner or you’ll be delegating expenditures to employees, you’ll want to have a separate checking account for Accounts Payable, a separate checking account for Accounts Receivable, and a designated checking account that your employee might use. You will then want to transfer funds between the accounts through online banking depending on the needs of your company. The type of checking or savings accounts that you’ll open will depend on what the bank offers and the fees associated with transactions. Be sure to get a checking account that supports a lot of bank transfers or card usages, and savings accounts that will accumulate interest over time.
Complete a Business Account Application
Every bank that you will go to will require that you provide some basic information about your business. This follows Know Your Business regulations so that banks and financial institutions can better trust you in the business relationship. The business account application will also break down the rules around that account, such as the availability of checks, overdraft fees, and information about signing up for a credit card. A business account application will likely need things like your business legal name, the business structure (i.e., LLC, sole proprietorship, corporation, etc), whether or not your business is unincorporated, the registration number, the business address, business email address, and business phone number, the owners and partners information, detailed information about the business’ principal (those who have 25% or more equity ownership), as well as identification for the principal (i.e., driver’s license or passport), details of partnerships, and corporation members. Documents needed to open a business bank account as an LLC include:
- State LLC approval forms, such as the Articles of Organization, Certification of Organization, or Certification of Formation
- Your Employer Information Number (EIN; CP575) and your EIN verification letter (147C) from the IRS.
- Your businesses LLC Operating Agreement
- And two forms of identification may be necessary for members owning more than 25% of the business
While this might sound like a lot of information, it is necessary to ensure that the bank knows exactly who has rights to the money in this account. This is also why your governance structure is submitted to the state in which you file as an LLC or as a corporation. Once this information is provided, sign and date the account application. Then, designate which accounts you will be opening at that time.
Getting Started with Your Business Bank Account
Once you have completed the application form and chosen your preferred business bank account, submit the form to the bank through their preferred method (i.e., email, fax, mail, or in-person). If it is required, the bank will reach out to you to finalize your application process. Getting approved could take anywhere from a few minutes to a few days, but all this depends on the processes of the financial institution. If you need to go in for finalizing the application, be sure that everyone who attends, such as business partners and members, brings two pieces of government identification, the completed business account application and official documents that are specific to the business type. If starting your LLC feels confusing, reach out to NewLLC for our handy step-by-step guides that will walk you through the process. We can connect you to simple and affordable online banking platforms and other resources so that your small business can get up and running faster.