Opening a bank account for a limited liability company.
Creating a Limited Liability Company Bank Account by Belle Wong, J. D Assuming you've done your homework and have all the required documentation on hand, opening a bank account for your limited liability company shouldn't be too
Creating a Limited Liability Company Bank Account by Belle Wong, J. D
Assuming you've done your homework and have all the required documentation on hand, opening a bank account for your limited liability company shouldn't be too difficult.
If you're prepared to launch a company, read on.
by J. Belle Wong D
updated Monday, October 27th, 2022 · 3 min read
Establishing a business bank account in the name of your limited liability company (LLC) is necessary for a number of reasons, including receiving deposits from customers and paying business expenses. It may seem like a bother, especially in the beginning when things are hectic and you're trying to keep both feet on the ground while keeping up with the new demands that a new business puts on you, but it is essential.
By forming an LLC, you create a legally distinct business entity that shields you from personal liability. Your business's finances should be kept entirely apart from your own because it is a legal entity unto itself. Even though it's tempting, you shouldn't mix business and personal funds. Doing so could invalidate your limited liability status.
Not only is it required by law that your LLC have its own bank account, but there are also many good reasons to keep its funds in a dedicated business account.
- You can more easily determine your tax liability. It also means that if you do decide to hire an accountant, you won't have to shell out any additional cash to have said accountant separate your business and personal expenditures.
- Vendors and suppliers will treat you much more seriously and with greater respect if you use a company check to pay them.
- In the event that you ever find yourself in need of a business loan, the rapport you build with your bank could prove invaluable.
It may take a little more effort than opening a personal bank account, but if you do your homework and bring the necessary documentation to the bank, opening an LLC bank account shouldn't take too much of your time.
The same is not true of business checking accounts. You'll need to do some investigating to find the best bank account for your specific situation, as there are many to choose from.
Different pricing models and service choices will be available. Overdraft protection, check writing capabilities, and the availability of a debit card are all features that can be added to your checking account, but you'll need to make your own choice. Do you anticipate needing multiple accounts, or just one? Do you think you could handle a minimum balance? I was wondering, on average, how much a month's worth of fees would be. You can use the answers to these queries to determine the best business bank account type for you.
For what purposes does the bank require these documents?
The first step in opening a business bank account for an LLC is to call the bank and ask what documentation is needed to open the account. In most cases, the following items will be required by your bank:
- A certified copy of the articles of organization, certificate of formation, or equivalent document issued by the state in which your limited liability company was formed.
- The EIN (or Employer Identification Number) assigned to your LLC by the IRS.
- Your limited liability company's operating agreement, or another document that specifies authorized signatories,
If you want to avoid wasting time and gas, it's best to call your bank ahead of time to find out if they have any additional paperwork they need from you.
Incorporating a Limited Liability Company: Opening a Bank Account
You can open a bank account for your limited liability company once you have all the required paperwork and have met with a bank representative. This last step will be a breeze if you've done your homework and brought the necessary paperwork with you.
A separate business bank account is not only required for your LLC, but it will also help you with many of the day-to-day tasks associated with running a business, such as keeping track of business expenses, paying business bills, and receiving payments from customers. Further, responsible banking practices will strengthen your relationship with your bank, which will prove invaluable if your LLC ever needs credit.
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