How to open a business bank account for your LLC

Published Wednesday 4th June 2025

Table of contents

• What is a limited liability company (LLC)?
• What is a business bank account?
• Why is it important to open a business bank account?
• How to open an LLC business bank account
• FAQs on opening a business bank account
• Start managing your business finances more easily with Xero

Key takeaways

• A separate business bank account protects your LLC’s liability status and simplifies your tax preparation.
• At a minimum, you’ll need your LLC’s EIN, Articles of Incorporation, and your ID to open your account.
• Choosing a bank and account type that helps you manage fees, protect cash flow, and facilitate growth.

What is a limited liability company (LLC)?

A limited liability company (LLC) is a legal business structure that protects you and your personal assets from your business debts and other liabilities.

LLCs can be sole proprietorships, partnerships, or corporations. Check out this SBA guide on choosing a business structure to see if an LLC structure is right for your business.

Here’s more info on LLCs, including how to start one.

What is a business bank account?

A business bank account is exclusively for transactions made on a business’s behalf – it is separate from the owner's personal bank accounts. A limited liability company (LLC) generally needs a business bank account to:

• Keep business finances separate from personal funds
• Prove you don't mingle personal and business funds
• Track income, payments, and expenses more easily
• Make it easier to prepare your taxes

Here are some tips from the SBA on how to open a business bank account.

Types of business structures and their tax implications

For small businesses, the three common business structures are:

• Sole proprietorship
• Partnership
• Corporation

Under US law, if you don’t form a legal entity for your business, its structure defaults to a sole proprietorship (if you’re the only owner), or a general partnership if there are two or more owners.

For tax purposes, the IRS treats one-member LLCs as sole proprietors and multi-member LLCs as partnerships. In either case, you can choose to be taxed as an S corporation.

If you form a corporation, you can elect to be taxed as an S-corp if you have fewer than 100 shareholders and meet other criteria.

When forming an LLC or corporation, you need to send paperwork and fees to your local Secretary of State.

A non-LLC sole proprietor doesn't need to file any paperwork to create an entity – they just pay for the relevant permits and licenses.

Why is it important to open a business bank account?

A small business bank account is fundamental to a financially healthy business.

It's especially useful for LLCs for three reasons.

Protecting your limited liability

Keep a separate business bank account for your LLC (and don’t use it for personal expenses) to help draw a clear line between you and your business. Although LLCs are structured to protect owners from their business debts or legal liabilities, a court could rule that you and the LLC are the same if you mingle personal and business finances.

Simplifying bookkeeping and tax filing

When you have all your business expenses in one place, it's much easier to do your bookkeeping and tax prep. You can also link most bank accounts with your bookkeeping software, like Xero, for a streamlined process.

Establishing credibility with banks and lenders

A business bank account gives lenders a clear sense of your revenue and expenses. That’s important if you want to apply for loans in the business's name or get favorable credit terms with vendors.

How to open an LLC business bank account

Here’s how to open an LLC checking account, or any other type of small business bank account.

1. Gather the documents you need

As a start, you need;

• The business's Employer Identification Number (EIN)
• Articles of Organization
• A government ID for the authorized signer on the account.

The process to register your LLC can vary depending on the state of formation. Once you form the LLC, you can get an EIN from the IRS's website in a few simple steps.

2. Choose the right bank

Look for a bank that offers services tailored to small businesses. Review their business account fees and services, and think about their location and operating hours for cash deposits.

3. Choose the account type

Banks offer many types of accounts, (like checking, savings, and money-market accounts), and have options for each type. Look at the account's interest rates, fees, minimum balance requirements, and the number of free transactions per month. A banker will help you decide which account type and options are right for your business.

4. Apply at the bank or online

You usually have to apply for a business bank account in person, but some banks let you open accounts online. Prepare the documents listed above and then get started.

5. Gather extra documents needed for an LLC bank account

Depending on the bank's verification process, you might also need to provide:

• Other certifications, like a trade name certificate and a fictitious name certificate, or a doing-business-as (DBA) certificate if the business operates under a name other than the entity’s legal name
• An operating agreement
• A declaration of beneficial ownership – the bank will give you a form to sign for this.
• Business licenses or permits

FAQs on opening a business bank account for an LLC

What are the legal and tax implications of not opening a separate business bank account for an LLC?

The legal and tax implications could be quite serious. If you don’t separate business and personal finances you could weaken the LLC's limited liability protection – potentially making you personally liable for the business's debts. And although a separate bank account isn’t required for tax purposes, if you don't have a business bank account you could overlook business revenue or expenses within your transactions, leading to errors in your tax return.

How does opening a business bank account for an LLC affect my ability to secure loans or lines of credit?

A business bank account shows that you’re financially organized. It provides clear records of income and expenses that lenders can use to assess your business's creditworthiness.

I share a multi-member LLC. How should I organize its banking access and account management to make it secure and compliant with regulations?

You should do two things. First, in the operating agreement, list the signatories and outline bank account access rules. Second, if more than one person has access to the account, it’s a good idea to require dual authorization for major transactions to keep things transparent and secure.

How can I use my LLC’s business bank account to better manage my cash flow?

Your LLC’s business bank account lets you monitor income and expenses more easily. Also, accounting software like Xero works really well with business bank accounts – you can set up automated payments and connect bank feeds to bring all your business transactions into the software. And if you open multiple accounts, you can separate funds for taxes or savings, for example.

Here’s how Xero can help you manage your cash flow

What happens if I use a personal bank account for my LLC’s transactions?

Using a personal account for business finances blurs the line between you and your business, weakening the LLC structure's liability protections. You’re also more likely to make mistakes when reporting your taxes.

Start managing your business finances more easily with Xero

A business bank account is just the first step in setting up your LLC for success. With Xero you can go even further: track your expenses, send invoices, reconcile bank transactions, and manage your cash flow, all in one place.