What is an EIN?
An EIN is a tax identification number issued by the IRS to uniquely identify your business. For most small-business owners, obtaining an EIN through the IRS website is free and allows for efficient management of business finances.
Opening a Business Bank Account
Do You Need an EIN?
While you’ll need an EIN to open some business bank accounts, it’s just one piece of information you’ll likely need to provide. Most banks require additional documentation like articles of incorporation, IRS Form 1040, and a business license. However, some banks allow sole proprietorships and single-member LLCs to open an account without an EIN under certain conditions.
Benefits of Having an EIN
Having an EIN helps separate company assets from personal ones, confirms your business’s identity, and provides access to more financial services. It’s not recommended to open a business bank account without an EIN due to the professional image it provides and the convenience in financial matters.
Documents Required
To open a business bank account, proof of identification for both you and your business is necessary. This may include:
- A state-issued driver’s license or passport
- A business license
- Partnership agreements
- Your Employer Identification Number (EIN) or your personal Social Security number, especially for a sole proprietorship with no employees
Applying for a Business Bank Account
When applying for a business bank account, you can do so online, in person, or over the phone, providing the necessary documents and personal details. Once approved, transfer funds to the new account and close any old business bank accounts to ensure a clear financial separation.
Choosing the Right Bank
Choosing the right bank for your business is crucial, and you must ensure to keep business funds separate from personal funds for limiting personal liability.
In order to comply with legal requirements and have a hassle-free process, gather necessary documents such as registration documents, identification documents of directors and signatories, proof of company address and directors, and financial documents of the company.