The exact requirements to open a business bank account will vary. Unlike a person opening a personal bank account, there are many ways in which your business may be structured.
Starting or growing your business will lead you through many milestones. These milestones can be as exhilarating as selecting your logo, landing your first client, or hitting six figures in sales for the first time. Achieving the right business milestones can be just as important, albeit much less exciting. One question that many business owners have is how to open a new business bank account.
A business bank account is an essential element of a successful business. It has been said that cash flow is king, and a bank account is a tool in your business arsenal to maintain your money and present a professional front to your clients. Perhaps even more importantly, a business bank account creates a separation between work and personal funds, and enables you to qualify for business loans when you need them.
The exact requirements to open a business bank account will vary. Unlike a person opening a personal bank account, there are many ways in which your business may be structured. Here is a quick list of what you need to open a business bank account.
- Tax Identification Number (SSN or EIN) & EIN Documentation (If Applicable). Your tax identification number, or TIN, is the unique identifier for your business. For most businesses, this will be in the form of an EIN (Employer Identification Number). If you have an EIN, you will need to furnish the original documents that the IRS sent you when you applied for your EIN.
While it is, generally speaking, prudent for a business to apply for an EIN from the IRS, some businesses like sole proprietorships will not have an EIN. This is where the TIN may be a social security number.
- Business License. A business license is issued by a state or local government and certifies that you can lawfully conduct your business in a given area. Local requirements for a business license may vary, but possessing a copy at signup is important.
- Certificate of Assumed Name or DBA (Doing Business As). Sometimes businesses will operate under what is known as a trade name that differs from their legal business name. If this is the case for your business, bring a copy of the DBA documents that are filed with the Secretary of State.
- Organizing Documents & Partnership Agreements. Businesses that have multiple owners should furnish a copy of their partnership agreement. For corporations, these are called bylaws and for an LLC it may be an operating agreement. This agreement is a document that formulates the structure of the partnership and how it will conduct its business.
The requirements for organizing documents may vary depending upon the state that the business is registered in. These documents commonly outline crucial components of each business such as the business name, business address, business owners, management structure, business activities, and the registered agent. The registered agent is responsible for the organization’s paperwork.
For a corporation the primary organizing document will be the articles of incorporation. An LLC’s organizing document is known as the articles of organization. Either way, you will need to provide a copy of this document, if applicable to your business.
- Your Proof of Identification. Last but not least, you will need to identify who you are and that you possess the necessary authority to open this account on behalf of the business. Do not forget to bring your own identification, such as your Driver’s License. Certain types of businesses will also need to provide identification documentation for beneficial owners (persons owning at least 25% of the business) and a control person (one person responsible for making decisions for the company such as a President).
There are often a number of hoops to jump through when starting a business. While opening a business bank account is one of those hoops, bringing the right documentation and information with you from the start can make the process much easier. The effort and paperwork required to set up a business account may even come in handy again at tax time or when your business begins to grow. The ability to manage, track, and organize your hard-earned money is invaluable.
Check out the Business Checking accounts offered at First Palmetto Bank or connect with your local office to get started on opening your business bank account today!
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