How to Open a Bank Account for an LLC Online
- Hosted August 14, 2020
- By Admin
Wondering how to open a bank account for an LLC online? First, congratulations on starting your business! Establishing an entity, such as an LLC, takes patience, paperwork, and diligence. Second, kudos to you for making the choice to separate your personal and business finances. Doing so will help you keep better track of your business expenses and cash flow.
Opening a bank account for your LLC can be a relatively straightforward experience when you go into it prepared and organized. The LLC is one of the most popular business structures, which means that banks have clear requirements and processes for providing business bank accounts to LLC owners. Before you approach a bank, here are answers to a few questions you might be asking yourself:
How do I open a bank account for my LLC?
While you are waiting for your LLC approval or shortly after receiving approval, it could be helpful to shop around for a business bank account that suits your needs. Many business customers are beginning to rethink business banking by opting for banks that are digital, include integrations, and have fewer fees.
When you have made your selection, you can apply for a business bank account either in a branch office or online, depending on the bank. Opening an account online is often the faster and more convenient route, but there are pros and cons to whether you choose a physical bank or an online one. Either way, you will likely need to supply your LLC formation documents alongside personal verification, such as your ID, Social Security card, or proof of address.
Depending on the state and your business type, the main LLC document to have on hand while applying for a business bank account could be called the Articles of Organization, Articles of Incorporation, Certificate of Organization, Certificate of Incorporation, or Certificate of Formation. Most banks will also ask for your Employer Identification Number (EIN).
If you have a DBA name and your state requires that you register it, the bank may ask for a copy of the registration document as well. It will likely be called an Assumed, Fictitious, or Trade Name filing, depending on your state.
The bank should let you know during the application process if any additional items are needed.
Should I open a separate bank account for my LLC?
While a sole proprietorship or partnership is able (though typically discouraged) to operate on a personal bank account, an LLC may be required to have a separate business bank account. Requirement and entity type aside, most financial experts agree that a best practice for any business owner is to separate personal and business finances. One writes:
“A business checking account is a useful way for business owners to separate business assets and affairs from personal assets and affairs. Failure to maintain separate bank accounts could expose the owner to personal liability, even in a corporate setting, especially if the owner is not treating the business as a separate entity. While sole proprietorships are not treated as separate entities from the business owner, a separate business account may help the company differentiate between expenses, which can be useful come tax season.”
Opening a separate bank account for your LLC might not be the most exciting task in an entrepreneur’s journey, but you may quickly come to realize the many benefits of a business bank account, which can include digital and mobile banking, payment and payroll integrations, and more.
Can I open a business bank account with just an EIN?
The requirements to open a business bank account vary from state to state, and from one bank to the next. However, an EIN alone is usually not sufficient documentation for a bank to confirm that your business is a legal entity. Additionally, obtaining an EIN before forming an LLC can possibly cause more work in the long run. If you attach an EIN to an LLC name that is later rejected, you will need to go through the EIN process over again to obtain a new EIN for an approved LLC. The good news is that it’s possible to apply for an LLC, EIN, and business bank account all online.
Does a single-member LLC need its own bank account?
An SMLLC is not always required to open a separate bank account, but experts generally recommend having one. Commingling personal funds with your SMLLC funds could blur the lines between you and your business could put your personal assets at risk. SMLLC owners do have to obtain an EIN, which further reinforces opening a business bank account as the next logical step. As always, seek guidance from a professional.
Are there fees to open a business bank account for my LLC?
Whether or not your business bank account comes with fees will depend on the bank and account type you choose. A 2020 WalletHub study showed that business checking accounts could be 70% more expensive than personal checking accounts and 47% more expensive than online-only personal checking accounts. Large financial institutions require monthly maintenance, transaction, cash handling, and ATM fees as well as minimum balances, which might not work for you. Online banks are typically known for minimizing fees, and sometimes even removing them altogether. While opening any business bank account, pay attention to fees and ask as many questions as you need in order to understand any and all costs associated with owning the account.
What bank is best for an LLC?
It’s not so much a question of finding the best bank for an LLC, but more so a matter of finding the best bank for your business. Learn how to open a business bank account for an LLC online.
Back to Blog