Best Practices for Opening a Bank Account for Your LLC

As a limited liability company owner, one of your responsibilities is to maintain complete separation between your business finances and your personal finances. This distinction helps maintain the LLC’s liability protection and streamlines your business operations. You can fulfill this obligation by opening a dedicated bank account. This guide will teach you how to do so. 

Why LLCs Need a Separate Bank Account

One of the main advantages of forming an LLC is personal liability protection. However, that protection can be compromised if you mix personal and business finances—a concept known as commingling. When courts see blurred lines between you and your company, they may “pierce the corporate veil” and hold you personally liable for business debts and lawsuits.

Key Benefits Include:

• Legal Compliance: Helps reinforce the LLC as a separate legal entity.
• Accurate Tax Reporting: Maintains accurate records for bookkeeping and IRS filing.
• Professionalism: Demonstrates that your business is organized and credible.
• Efficient Accounting: Makes tracking income, expenses, and profits easier.
• Audit Defense: Provides a clear paper trail in the event of an audit.

What You Need Before You Apply

To open an account, banks require specific documentation. While requirements vary slightly by institution, you will likely need the following documents:

Employer Identification Number (EIN)

This is your LLC’s federal tax ID. It’s like a Social Security number for your business.

Articles of Organization

Also known as a Certificate of Formation, this is the official state-issued document that confirms the existence of your LLC.

Operating Agreement

Even if it’s not legally required in your state, banks often request it. This internal document outlines ownership structure and member responsibilities.

Business License (if applicable)

Some states or localities require certain businesses to have licenses or permits.

Photo Identification

Banks usually require a government-issued ID (e.g., a passport or a driver’s license) from the authorized signers.

Bank Resolution (for Multi-Member LLCs)

If your LLC has multiple members, you may need a banking resolution authorizing specific individuals to open and manage the account.

Choosing the Right Bank for Your LLC

The right banking partner can directly impact your bottom line. Consider the following:

LLC-Friendly Services

Go for banks that offer business checking accounts specifically for small businesses or LLCs.

Low Fees and Minimums

Look out for monthly maintenance fees, transaction limits, and ATM charges. Some banks offer fee-free accounts if you meet a minimum balance.

Online and Mobile Banking

Most businesses today need digital tools for deposits, bill pay, and real-time transfers.

Business Credit Card Options

Choose a bank that can grow with your business. Having access to a business credit card can help establish credit and separate personal spending.

Integrated Accounting Support

Banks that integrate with accounting software, such as QuickBooks or Xero, can save you hours of manual data entry and tracking.

Local vs. National Banks

Local banks and credit unions often offer more personalized service, while national institutions may provide broader access and features.

Best Practices When Opening an LLC Bank Account

1. Open the Account in Person If Possible

Although many banks allow online applications, visiting the bank in person may speed up the process and clarify any doubts.

2. Name the Account Properly

Use your full LLC name as registered with the state. Avoid using trade names or abbreviations unless registered as a DBA (Doing Business As).

3. Add Authorized Signers

Designate who can access the account, write checks, or perform transfers. This is vital if your LLC has multiple members.

4. Keep Records Organized

Maintain a binder (physical or digital) that includes:

• EIN confirmation
• Operating Agreement
• Articles of Organization
• Bank account details and contact

5. Avoid Using Personal Funds Post-Setup

Once the business account is open, deposit only business income and pay expenses strictly from this account to preserve liability protection.

Expert Tips From NCH

• Use Your EIN from the Start: Even if you’re a single-member LLC, don’t use your Social Security number. Always use your EIN for business banking.
• Create a Business Banking Resolution: If your LLC has more than one member, a resolution (even if informal) helps designate who can manage the account.
• Start Building Business Credit Immediately: Open a business credit card or line of credit to begin establishing your LLC’s credit profile.
• Separate Payment Gateways: Connect merchant services (like PayPal, Stripe, or Square) only to your business bank account.
• Watch for Minimum Balance Requirements: Many banks charge monthly fees if you don’t maintain a minimum daily balance. Read the fine print.
• Schedule Regular Account Reviews: Revisit your banking relationship annually. Ask about new services, fee waivers, or better credit offerings.

Frequently Asked Questions (FAQs)

1. Can I use my personal bank account for my LLC?

No. This can expose you to legal liability and make tax preparation extremely difficult.

2. Can a single-member LLC open a business account?

Yes. Even solo LLCs must separate business and personal finances.

3. Do I need an EIN to open an LLC bank account?

Yes, most banks require it—even for single-member LLCs.

4. Can I open an LLC bank account online?

Some banks allow it, but many require in-person verification, especially for multi-member LLCs.

5. What’s the minimum deposit for a business account?

It varies, but may range from $25 to $100.

6. Can I have multiple bank accounts for one LLC?

Yes. You might use different accounts for operations, savings, taxes, or payroll.

7. Can my LLC account earn interest?

Some business savings or checking accounts offer interest-bearing options.

8. What happens if I mix personal and business finances?

You risk losing your liability protection and complicating your tax filings.

9. Do I need a business license to open an account?

It depends on your state and industry. Check local requirements.

10. Should I get a business credit card too?

Yes. It helps build business credit and further separates personal finances.

Open One for Your LLC Today

A business bank account allows you to protect your personal assets, stay compliant, and set your business up for long-term success. Avoid shortcuts, keep records tidy, and operate properly. Your future self and your accountant will thank you.

Let’s Make It Legit

NCH will ensure your business banking reflects the legitimacy and structure of your company. Our team will reinforce the foundation of the LLC and give it the professionalism it deserves.

Call us at 1-800-508-1729 to schedule your complimentary consultation!

DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.