An LLC bank account is opened immediately after formation of the LLC as it enables your LLC to hold funds separately from the personal finances of its members.
Opening a bank account should be one of the first acts you need to perform as manager(s) or member(s) of the LLC. Here are some initial considerations and requirements for opening an account for the LLC.
Choosing a banking institution is the first step. Each bank offers accounts with different features and benefits, so comparing them is important in choosing the most appropriate one for your LLC. In making your choice, consider the monthly cost and whether there is a minimum balance requirement, the opportunity to earn interest on the balance, or account protections. Having an established lending relationship with a bank is also another factor that could play a role in making your choice.
After choosing the bank and type of account, check with the bank to see what paperwork it requires to open the account. Similar to opening an individual bank account, the bank will require you to provide some basic information. You will need to provide the bank with at least two documents: (1) the LLC articles of organization, and (2) the LLC’s taxpayer identification number.
Some banks will require additional information, such as a copy of the LLC’s signed operating agreement or a resolution by the members of the LLC. The operating agreement may have sections pertaining to the LLC bank account and authorized signatories. In addition, the members of the LLC can execute a resolution designating the bank and signatories to the LLC bank account
The following information will provide you with an overview of the two minimum pieces of information you will need to open an LLC bank account.
The LLC articles of organization that you provide to the bank must be a copy of the signed articles that you have already filed with the California Secretary of State (CA SOS). The California Revised Uniform Limited Liability Company Act (Act) only requires minimal information to be included in the articles of organization: (i) a statement that the purpose of the LLC is to be for a lawful act or activity under the Act; (ii) the name of the LLC; (iii) the address of the LLC’s designated office and/or mailing address, name, and address of the agent for service; and (iv) a statement of whether the LLC will be manager-managed or managed by only one member (if applicable).
A taxpayer identification number (TIN) is required before an LLC can open a bank account. Best practice is to apply for a TIN for the LLC after its formation.
In the case of a single member limited liability company, the LLC is a “disregarded entity” for federal income tax purposes and must use the owner’s Social Security number (SSN) or employer identification number (EIN) for all information returns and reporting related to income tax. For single member LLCs with foreign owners, an EIN must be obtained.
Once you have a copy of the filed LLC articles of organization, TIN, and any other information your chosen bank requires, make and attend the bank appointment with the documents and any members or managers that are required according to your articles of organization to sign for the account. The bank should be able to get you set up with an operating account on the day of your appointment.
Once you have your LLC bank account set up, make sure to use it for all of your business transactions. The benefit of having an LLC bank account separate from your personal accounts is to protect yourself from potential personal liability for the debts and obligations of the LLC.
Simantob Law Group has represented the business and real estate legal needs of individuals and companies, from start-ups to regional and national US corporations for over 20 years. Please contact our California LLC formation attorneys at 310.281.0041 or complete our online contact form to discuss your LLC formation needs.