Having a business checking account is absolutely crucial when it comes to running a business efficiently and successfully. Not only does a business account help keep your records and expenses organized, but it also keeps track of both your personal and professional expenses so when tax season comes, you do not have to worry about which expense belongs in what category. With that said, in order to properly handle your income, expenses, bills and any Government issued documents, you would most definitely have to meet a few requirements prior to open a new business checking account. With that said, this article will provide you with a list of documents, licenses and identification you may need to start. If you would like to learn more, be sure to continue reading for more detailed information.
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Requirements of a Business Checking Account
Although it is true that you do not have to have a business checking account to run a business, it is still within your best interest of both you and your business to do so. There is nothing wrong with being organized and staying on top of both your personal and professional expenses. In fact, doing so can most definitely prove beneficial in the long run.
No matter your reason for opening a new business checking account, you would still have to provide a few documentations. With that said, here are a list of requirements that will need to be met prior to opening an account.
Determining Your Type of Business-
When starting a new business banking account, you would have to provide the type of operation in which your business falls under. With each different type, you would have to provide a different list of documentations.
Sole Proprietorship
Sole Proprietorship would mean that the business is currently operating under you and you only. In this case, you are the sole owner of the business which means that if the business name does not include your legal first and last name, you will have to provide the following documents:
- Fictitious Name Certificate or Statement
- Certificate of Assumed Name
- Business License
- Registration of Trade Name
If you have no filed papers to be a Limited Liability Company (LLC) or Corporation, I would advise you to do so immediately. You will need your social security number as well as 2 separate forms of personal ID in order to open a business bank account. Valid types of IDs would be a driver’s license, passport, and social security card.
You might also need a “Fictitious Business Name” certificate known as a “doing business as” certificate (DBA certificate) if your business operates under a different name from your own.’
Limited Liability Company (LLC)
Your business would be considered an LLC if you have filed articles of organization with the state and are in good standing. With LLC, you would typically need to have an LLC operating agreement. To successfully open a business bank account under LLC, you will need your Federal Employee Identification Number (EIN) as well as the following listed belowL
- Statement of Qualification
- Limited Partnership document
- Limited Liability Partnership Election
On top of the documents, you might also have to provide a signed operating agreement or a Declaration of Unincorporated business, such as what you would see with restaurants ownership.
C-Corporation
C-Corporations have to file articles of incorporation with the state and stating that you are in good standing. Similar to LLC, you will need to provide your Federal Employees Identification Number (EIN) to open a business account. In addition to the EIN, you would also have to provide the Articles of Incorporation as well as Certificate of Good Standing. You’ll receive these documents as part of your incorporation process.
In some cases, your articles of incorporation might not provide sufficient information regarding who is authorized to sign. In cases like these, you will need to provide an additional corporate documents such as your 501C letter from the IRS or other tax-exempt documentations.
General Partnership
A general partnership in the most simple term would be an arrangement between two or more persons in which you share all assets, profits and financial liabilities of the business with one another. In order to open a business account under this category, you would have to provide at least one of the following:
- Partnership Agreement
- Fictitious Name Certificate or Statement
- Certificate of Assumed Name
- Business License
Personal Identification and Professional Licenses-
Similar to the way you open a personal checking account, the first thing you would have to do for a business account is provide a form of personal identification proving that you are currently affiliated with the company in which you are opening the account for. The identification can be either your drivers license, passport and so forth. However when doing so, be sure to keep in mind that any and all individuals associated with the company will also need to provide a form of personal identification as well.
If you are opening the business account under a different name other than your own legal first name, you will have to bring the proper documentation of your Doing Business As (DBA) name. However, no matter which form of personal identification you chose, you will also need to provide your business licenses, which states whether you are an LLC or an individual proprietor.
Employment Identification Number (EIN)-
The next item you would need to open a business checking account is to provide your tax identification number, which would be a nine-digit number issued by the IRA to individuals who must have an identifying number but who are not eligible for a Social Security Number or an Employer ID Number. Depending on how you set up your business, the bank might also require a name registration.
Articles of Incorporation and Banking Resolutions-
It is absolutely essential and vital to bring a state-filed articles of incorporation in order to successfully open a new business banking account. Articles of Incorporation are typically documentations used to form and register your business with the state and other entities.
If you are a part of a general partnership or are one of the multiple owners of the business, you will need to bring a resolution from all the other owners or board members granting you permission to transact financial business for the company and gaining control of the actual account.
Expected Cash Flow Figure-
When opening a business checking account, it is often within your best interest to have all the documentations in line to ensure everything runs as smoothly as possible. In order to get your business banking relationship off to a good start, definitely provide as much information as possible in regards to your financial transactions, such as your anticipated cash flow as well as credit cards you might require for your business. In fact, the more information you provide to the bank, the better it is!
Tax Identification Number-
Tax Identification Number would be your business’ employment identification number in which you use to do tax management and paying your employees. Definitely make sure to bring this number when you are scheduling an appointment to open the checking account. For sole proprietor, simply use your SSN for business tax purposes. Although the requirements in regards to the TIN varies by state, you can easily determine which type of proper documentations and number you will need to handle and open your company’s checking account.
Conclusion
If you are looking to expand your business beyond its current state and would like a new account that not only helps you manage your company’s expenses but keep track of all activities conducted by the account, then I would suggest opening a new business checking account. The requirements between banks would vary slight depending on the type of business you are operating, where you reside and whether you are a sole proprietor or a partnership. However, not matter which category you fall under, the list of requirements above are essentially the information you will have to provide when you want to successfully open a business checking account. At the end of the day, if you found this article to be helpful, then I would suggest checking out our other tutorials such as recognizing the differences between a Credit Union or Bank, How to wire transfers, Benefits of a business checking account, or simply How to open a business checking account. If you would like to check out the list of business bank promotions, be sure to see our complete list of Best Business Bonuses for all your banking needs!
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