Benefits of Having a Separate Bank Account for Single-Member LLC
Technically, single-member LLCs and sole proprietorships are not required to have an EIN as they are taxed as individuals. Some institutions may be open to using your Social Security Number (SSN) to register so it is worth checking first.
Most banks will let Single-Member LLCs open a bank account with their SSN, and some might even suggest it. We recommend using your EIN instead of your SSN for privacy and easier record keeping.
Opening a separate bank account for your single-member LLC offers clear boundaries between your personal and business finances, helping with organization, record-keeping, and tax compliance.
If you don’t open a separate account, you might lose liability protection. Maintaining a clear distinction between your business and personal finances is key for a single-member LLC. Setting up a separate business bank account is one way to achieve this.
Importance of EIN for Business Bank Account
In most cases, you’ll need an EIN (Employer Identification Number) to open a business bank account, especially for corporations, partnerships, and those with employees.
Due to banking regulations, an EIN is used to confirm details such as your identity, business operations, and dealings. Obtaining an EIN for your single-member LLC offers asset protection, avoids commingling personal and business assets, provides a paper trail for audits, justifies business expenses, and helps minimize taxes.
Opening a Business Bank Account
As soon as you start accepting or spending money for your business, you should open a business bank account. Common business accounts include checking accounts, savings accounts, credit card accounts, and merchant services accounts.
Investing Money in Your Business.
Can a single-member LLC use a personal bank account?
For other business entities, it may be possible to use other types of documentation instead of an EIN. However, it could be more time-consuming than just applying for one.
If you’re not a U.S. citizen and don’t have a Social Security number, banks may allow you to provide alternate information for identity verification.
You can apply for an EIN by mailing or faxing your completed Form SS-4 to the IRS. When sending your form via fax, you can expect a reply within four business days if you provide a return fax number.