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If you need to Open a business bank account it does require some documentation depending on your business entity. Regardless of whether you’re a sole proprietor, partnership, or LLC or corporation, having the correct documents available will save you time and ensure the process goes smoothly.
In this article, you’ll learn exactly what documents you need to open a business bank account , how requirements differ by business type, and how to get everything in order before walking into the bank or applying online.
What Documents Are Required to Open a Business Bank Account
1. Employer Identification Number (EIN) or Social Security Number (SSN)
An EIN or a Federal Tax Identification Number is a number that the IRS issues to identify a business for taxation. It is like a Social Security Number for business. To open a bank account, the majority of businesses, including corporations, limited liability companies, and partnerships, require an EIN. Although sole owners without staff are permitted to use their SSN, it is nevertheless advised to have an EIN in order to keep personal and business finances apart. The IRS website offers a free online EIN application.
2. Government-Issued Photo ID
These include items like a driver’s license, passport, or state ID card. Photo identification is used by the banks to verify the identity of the business’s owner(s) or authorized signers. It must be current (not expired) and must match the name on the other documents being presented.
3. Business License or Permit
A business license is issued by your city, county, or state and allows you to legally operate your business in a particular location or industry. Not all businesses need a license, but if yours does, banks will usually ask to see it to confirm your business is compliant with local regulations.
4. DBA Certificate (Doing Business As)
If your business operates under a name that is different from your legal name (for sole proprietors) or legal entity name (for LLCs or corporations), you’ll need to file for a DBA and show that certificate to the bank. This allows you to receive payments and open an account under your brand name.
5. Articles of Organization (LLC)
For Limited Liability Companies, the Articles of Organization is a legal document filed with the state to officially form the LLC. It outlines key details like the company name, address, and structure. Banks need this to verify the legal formation of the LLC.
6. Operating Agreement (LLC)
An Operating Agreement details how the LLC will be managed, including roles, responsibilities, and how profits or losses will be shared among members. It’s especially important for multi-member LLCs. Some banks will ask for it to confirm who has authority to make decisions or open accounts.
7. Articles of Incorporation (Corporation)
This is the legal document filed with the state to create a corporation. It includes details like the business name, registered agent, and share structure. It proves the legal existence of the corporation and is required by banks when opening a corporate account.
8. Corporate Bylaws
Corporate Bylaws are the internal rules that govern how the corporation operates—covering meetings, voting, officer roles, and more. While not always required by law, banks may request a copy to ensure proper governance and identify authorized signers.
9. Partnership Agreement
A Partnership Agreement outlines how a partnership will operate, including partner roles, capital contributions, profit-sharing, and what happens if a partner leaves. Banks use this to determine who is authorized to access the business account.
10. Certificate of Good Standing
This document is issued by the state and confirms that your business is properly registered and in compliance with all state regulations. It’s usually requested if your business is older or if you’re opening an account in a different state from where your business was formed.
11. Banking Resolution
A Banking Resolution is a document that authorizes specific individuals to open and manage a bank account on behalf of the business. It’s typically used by LLCs and corporations, especially when there are multiple members, officers, or shareholders.
Required Documents by Business Type
a. Sole Proprietorship
A sole proprietorship is type of business structure and it is a single-owner company, with no legal distinction between the owner and the business. That means that the owner receives all earnings but is personally liable for any debts or legal obligations incurred by the business. It’s actually rather simple to establish, usually requiring simply a business license or DBA registration if the business name is not the same as the owner’s legal name. Taxes are submitted using the person’s tax return, which keeps things simple but provides no liability protection.
- EIN or SSN: Most banks require your Employer Identification Number (EIN), though some may accept your Social Security Number if you’re operating under your own name.
- DBA Certificate: If your business name differs from your personal name, you will require a “Doing Business As” (DBA) certificate.
- Government-issued ID: A valid passport, driver’s license, or other official photo ID.
b. Partnership
A partnership is a form of business in which there are two or more owners. Each partner contributes to the business whether it is money, property, skill, or effort and shares the profits and losses. In a general partnership, all partners are equally liable to manage the business and bound by its debts. Partnerships typically operate on the terms of a written contract in which each partner’s liability and share of profit is described. While partnerships are relatively easy to form, they do not provide personal liability protection unless as a limited partnership or limited liability partnership.
- EIN: Required to identify your partnership for federal tax purposes.
- Partnership Agreement: A legal document outlining ownership and operational responsibilities.
- Business License (if applicable): Depending on your state or city.
- IDs of all partners: All named individuals may be required to present identification.
c. Limited Liability Company (LLC)
A Limited Liability Company, or LLC, combines the simplicity of a sole proprietorship or partnership with the liability protection of a corporation. It is a separate legal entity from its owners, who are members. This allows members to avoid their own responsibility for corporate debts and lawsuits. The LLC can have one or more members and allows for flexible taxation treatment—it can treat itself as if it were taxed as a sole proprietorship, partnership, or corporation. To form an LLC, the owners will need to file Articles of Organization with their state and potentially an Operating Agreement to decide how the company will be managed.
- EIN: Mandatory for opening an account.
- Articles of Organization: Filed with your state when forming your LLC.
- Operating Agreement: Defines how the LLC is run and who has authority.
- Business License: If your city or state requires one.
- Owner IDs: All members or authorized signers must provide identification.
d. Corporation (C-Corp or S-Corp)
A corporation is a more complex business structure that is legally separate from its owners, providing the highest level of liability protection. A C-Corp pays corporate income tax on its profits, and shareholders are taxed again on any dividends received, which leads to double taxation. An S-Corp avoids this by allowing profits (and losses) to pass through to the shareholders’ personal tax returns, but it has more restrictions, such as a limit on the number of shareholders. Corporations are owned by shareholders, governed by a board of directors, and operated by officers. Starting a corporation involves filing Articles of Incorporation, creating bylaws, and adhering to strict reporting and compliance rules.
- EIN: Needed for tax and banking purposes.
- Articles of Incorporation: Proof of your business’s legal formation.
- Corporate Bylaws: Internal rules about how the corporation operates.
- Business License: Required in certain industries or locations.
- ID of corporate officers: Usually includes the president, treasurer, or any authorized signer.
Conclusion
Opening a business bank account in the United States is a significant step towards building credibility, simplifying accounting, and protecting your personal finances. Knowing the specific documents required for your business type and having all the paperwork in order beforehand, you can make it simple and hassle-free. Always check with your chosen bank for exact requirements, and don’t hesitate to ask questions. The proper bank account can offer the equipment and services your business needs to thrive and grow.
