Business Bank Account Requirements: What You Should Know
September 17, 2013
Opening a business bank account is an integral part of running your business, whether youâ€™re a solo practitioner, entrepreneur or have a full employee roster. The importance of keeping your business funds separate from your personal finances canâ€™t be overstated, and setting up a business bank account early in the life of your company can help make accounting and managing cash flow a much easier task.
With that said, there are some basic business bank account requirements that youâ€™ll need to have prepared before you show up at the bank. Most of these items are things you should already have if youâ€™ve gone through the process of creating a corporation or LLC. However, some of them (like an EIN) Â you may have to apply for beforehand.
Why does the bank need all of this information?
Before we start, however, letâ€™s talk about why banks need this information in order to set up a business account. The Patriot Act, along with other government legislation, requires financial institutions to take extensive steps to ensure the identity of each customer and to cut down on fraud and identity theft. Thatâ€™s why banks will require additional documentation, aside from a photo ID, when setting up a business bank account.
What documents should I have on-hand?
There are a few standard documents that almost every type of company will need to provide as part of their business bank account requirements. These include:
- Employer Identification Number (or EIN) or tax identification code. This is essentially a companyâ€™s equivalent to a social security number and is assigned by the IRS. This number will be mandatory for opening an account with any bank that participates in the FDIC.
- Principal place of business, local office address, or other physical location where you perform business.
Oftentimes, depending on your location, youâ€™ll also need to have a business license that states that youâ€™re allowed to do business in the state or city where youâ€™re located. However, this can vary from state to state.
Hereâ€™s what you need to open a business bank account.
If youâ€™re a Sole Proprietorship
If youâ€™re a one-man show, youâ€™re going to need to bring along your EIN (Employee Identification Number), a Trade Name Certificate, a Business Name Document, and a Business License.
If youâ€™re a Corporation or LLC (Limited Liability Corporation)
For companies classified as corporations or LLCs, youâ€™ll need similar documents, including an EIN, a Certificate of Incorporation, the Article of Incorporation, and your company bylaws (which are generally part of your company operating agreement).
If youâ€™re an LP (Limited Partnership), or LLP (Limited Liability Partnership)
Partnerships (including LPs and LLPs) have minimal business bank account requirements, requiring only an Employer Identification Number and a Partnership Agreement.
While getting these documents organized and set up beforehand can take a lot of planning, it will make opening a business bank account a much easier and quicker process.