Are you starting a business for the first time? If so, you probably have a lot of questions and a lot of things you are confused about.
It can be daunting to start a business because you want to ensure you do everything the right way. You don’t want to get into trouble later on.
That’s why many new businesses want to form an LLC right away. It offers protection for the owner of the business, creating a layer of separation between the owner, their personal assets, and the business. But do you need a bank account for LLC applications and filings?
If not, what do you need in order to form an LLC for your company?
Aside from the LLC, you also need a business bank account. So what is needed in order to open one? Keep reading for answers to all your LLC, business banking, and other related questions.
Why You Need an LLC
First off, let’s discuss the importance of filing an LLC. LLC stands for limited liability company. That means that the liability, or risk, is limited for you as the owner.
In the event that your business suffers some sort of loss, the LLC can protect your personal assets. So if you have a loan that you can’t repay, the lender can only come after the business assets.
They won’t be able to come after your personal assets, such as your home, your car, your bank accounts, and so forth. Likewise, in the event of a lawsuit, the same holds true.
Having this type of legal structure in place can save you from certain disasters, especially as business litigation is so common.
Having an LLC also creates credibility for your company. Consumers are more likely to choose to patronize an LLC as opposed to a business without any formal legal structure.
And LLCs are ideal for new businesses because they are very affordable to set up, and they are easy to maintain. They don’t have complex requirements as other legal structures do. So you can form an LLC before you even begin operating your business.
Do You Need a Bank Account for LLC Filings?
So what does it take to form an LLC for a new business? Do you need a business bank for LLC filings?
Legally, you aren’t required to have a separate bank account specifically for your business. Of course, it’s a good idea to do so. But to file for an LLC, you won’t need to have one in place.
What is required? Most businesses will need to have an employer identification number (EIN). You need to get this from the IRS and it’s free after completing the necessary documentation.
You’ll also need to obtain any licenses needed to conduct business in your area. This can include a general business license, sales tax license, health code certifications, and so forth.
And there may be specific tax forms that you need to fill out and submit along with your LLC paperwork.
Why You Need a Business Bank Account
While you don’t need to have a business bank account in order to open an LLC, it’s a good idea to have one anyway. Just like you need a personal bank account to receive funds, save money, and make purchases using debit or credit cards, your business needs a bank account in order to conduct business.
But it’s vital that you separate business from personal finances. And the easiest way to do this is with separate bank accounts. Otherwise, your finances become jumbled together, which makes tax time a nightmare.
It can also make managing your business very difficult, as you don’t know how much money your business is making, how much money your business has on hand, and what you are spending the money on.
So you need to open a separate account. But you shouldn’t just go to a local bank and open a personal account to use for your business. You need a business-specific checking account.
A business bank account will let you get a debit card and credit cards that use your business name rather than your personal name. A business bank account may also come with terms and fees that are more business-friendly than personal accounts.
Plus, if you want to even accept credit or debit cards payments from your customers, you’ll need a business account as personal accounts cannot receive these payments.
How to Open Bank Account for Your Business
So what is required to open a dedicated business bank account? Businesses will typically open a checking and a savings account, and may also choose to apply for a dedicated credit card.
The good news is that you can probably open a business bank account with the same bank that you have a personal account with. This can make logistics easier for you.
Whether or not you have an LLC, you can get a business bank account. Some banks may have stricter requirements, meaning you might need an LLC in order to open an account, requiring an EIN. Others can be opened by sole proprietors and independent contractors.
For example, if you want to open a Wyoming LLC bank account, you’ll need to have your EIN ready to go in order to open the account.
So what else is needed in order to open a business bank account? You’ll need your business licenses in place. You’ll also need to supply ownership agreements if there are multiple owners in the business.
And you need to bring your certificate of assumed business name. So if you operate under a doing business as (DBA) name, you’ll want to bring the certificate that you received from your city or state.
If you have a projected monthly credit card revenue, your bank will want to know this as well.
Getting Your Ducks in a Row
Now that you know all about forming an LLC, and opening a business bank account, it’s time to start getting these tasks in order. No, you don’t need a bank account for LLC filings, but you’re going to want one regardless.
So plan on filing for an LLC and opening a proper business bank account as soon as possible.
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