Understanding the Employee Identification Number (EIN)
In short, the EIN is to a business what a Social Security Number is to an individual. For privacy and easier record keeping, we recommend using your EIN instead of your SSN. If you formed your LLC by following our LLC filing instructions, you should have obtained an EIN from the IRS.
Opening a Business Bank Account for Your LLC
The bank wants all managers and members to authorize the opening of an account with it. For practical purposes, provide the bank what it wants in this situation. The process for opening a business bank account can differ depending on the bank, the branch, and even the state. Non-US residents will also have to make additional considerations. Here we cover how an LLC opens a bank account and what documents may be required.
We recommend calling the bank ahead of time to double-check requirements. Most banks require all LLC members to be present when opening the account.
By setting up an LLC, you’ve established a separate business entity with liability protection. You’re required to separate your LLC’s finances from your personal finances. This helps show the IRS you’ve kept personal assets out of the business. All business expenses will be paid from that account, and all profits will go to that account. If you don’t create a separate bank account for your LLC and you mixed funds, you could "pierce your corporate veil" and lose liability protection.
Required Documentation and Considerations
Before opening a business bank account for your LLC, you’ll need to determine the right type of account and bank that aligns with your company’s needs. When selecting a bank, consider factors such as fees, interest rates, accessibility and customer support.
Some of the most commonly required documents include:
- LLC Certificate of Formation.
To open an LLC account, form the LLC first. File a formation document with the Secretary of State. The legal business name registers when filing organization articles. If operating under a DBA, banks might need a DBA registration copy. The operating agreement details procedures for adding members.
Relay allows businesses to manage finances with tools to make running a business easier. Business owners can open multi-currency accounts for cross-border payments.
Managers and Ownership in an LLC
Are managers considered the owners of an LLC?
A limited liability company (LLC) combines the personal asset protection of a corporation with the taxation advantages of a partnership. In a member-managed LLC, all owners participate in day-to-day decisions, and all LLC members are considered owners. In a manager-managed LLC, business owners elect one or more managers to make day-to-day decisions, but not all managers may be owners.
Maintaining Financial Separation
Having a separate account shows the IRS that personal assets are separate from the business. Pay all expenses from the business account and receive all profits into the business account. If getting a business credit card, ensure all charges are for legitimate business expenses.
It’s important to choose a bank that prioritizes services you need. Below are key steps and considerations when opening a business account as an LLC.