What You Need To Open a Business Bank Account for an LLC in the US

As a new business owner, you will be pleased to hear that opening up a business bank account is very straightforward and can be done online in a matter of hours, as long as you have the proper documentation.

While the most important requirement you must show to your bank is your employer identification number (EIN), you will also need to provide personal identification. Depending on your bank of choice and your state's laws, supplemental documentation may also include your Articles of Incorporation, business licenses, and certificate of assumed name.

Below, we explore why you should open a business bank account for your LLC, what the requirements are, and how to open the best US business bank account for you.

Why Should I Open a Business Bank Account?

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Having a bank account for your business or LLC will not just make your life easier but will be crucial for your success. Here are five reasons why:

1. Protect Your Personal Funds

Whether you are the owner of an LLC, corporation, or partnership, business law in the United States works to keep your personal assets separate and safe from company assets. In the case of company bankruptcy, for example, your business assets could be in jeopardy but your personal savings and property would be untouchable.

However, if you do not have a business bank account, then your personal funds may not be protected. Using your personal bank account for business activities can lead to serious legal repercussions for you and your business, including the seizure of your personal assets.

2. Comply With Taxes

Using business bank accounts makes it easier to organize and track your business expenditures. You will be able to clearly show the IRS the separation of your personal bank account from your business account. You will also be able to show the eligible purchases that you have written off for business tax deductions.

3. Professionalism

Customers and suppliers will be more willing to write a check or wire a bank transfer to a business account with your business address, rather than a personal bank account attached to your residential address. You will also be able to accept customers' credit card payments with a business bank account; personal bank accounts are not allowed to accept credit cards.

4. Access and Build Credit

Your bank will be able to issue business credit cards, which your business can use to make large startup purchases. Establishing a credit history for your business now will also improve your applications for bank loans in the future.

5. Give Teams Access to Company Funds

When you are working with a team, you probably won't be the only person with a budget and an expense sheet. You certainly don't want your business partners using your personal bank account to make purchases. Business bank accounts for LLCs will allow you to give your team access to business funds, plus you will be able to manage their budgets and set limits on their credit cards.

What Documents Are Required To Open a Business Bank Account?

Personal identification and your EIN are absolutely necessary if you want to open a business bank account in the United States. Some banks will ask for more documents:

1. Employer Identification Number (EIN);
2. Personal identification;
3. Your business's formation documents;
4. Doing business as (DBA) certificate (if applicable);
5. Business license (if applicable).

Read in more detail about each of the documents you may need to present to open a business bank account:

Employer Identification Number (EIN)

The bank is legally required to obtain this information from its business clients. Banks use the EIN of your LLC to identify you when sending your business taxes and tax deductions to the IRS.

Only if you are a Sole Proprietorship, then you may use your Social Security Number instead to open a business account with a bank.

Personal Identification

Provide a government-issued ID, such as a driver's license or a passport, to confirm to the bank that the person who is opening the business account is indeed the same person who is managing the corresponding business.

Your Business's Formation Documents

For LLCs, this will be your Operating Agreement or Articles of Incorporation. These documents inform your state about how your business is structured and how responsibilities are organized.

If your bank asks for these documents, they will likely want to confirm the business name, business address, owners' names, and your registered agent.

Doing Business As (DBA) Certificate

This is sometimes called a Certificate of Assumed Name. Some businesses have a trade name that is different from their legally registered name (i.e. "McDonald's" is a DBA name for the McDonald's Corporation).

If you have a DBA name, your bank may ask for a copy of the DBA documents that you filed with your state for proof of your business’s trade name.

Business License

Some small businesses need licenses at the federal and state level to conduct certain business activities. This may range from state liquor licenses to federal aviation licenses.

Banks may want to see that you have the appropriate licenses before opening a business account for you. Licensing varies widely by state and industry, so you may have to do some individual research.

Costs and Benefits to Consider When Opening a Business Bank Account

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Unlike retail customers, who may hold just a few thousand dollars in their accounts at a given time, business clients represent high potential cash flow to bankers. You hold a lot of leverage as a business bank customer.

That's why it's a good idea to compare your choices and shop around for good deals, especially at banks where you feel you can develop a good business relationship in the future. Here are a few things to consider:

Accounting Software Integration

Accounting software like Quickbooks and Xero is an LLC's best friend. If your online business bank account can integrate with this software, then you'll likely save yourself days and weeks of work on Excel.

Rewards and Perks

Many banks and their affiliated credit cards offer membership point programs to businesses. You can earn considerable savings on flights or exclusive hotel access with certain programs. These benefits often grow over time too, based on your relationship with your bank and on the size of your account balances.

High Limits and Low Charges

Some business bank accounts impose transaction limits. Make sure your bank gives you room to grow once your revenues and expenses pick up. Constantly getting hit with penalties for exceeding transaction limits will get frustrating over time.