How to open a business bank account for your LLC

Learn why your LLC needs a bank account and how to open one to maximize the benefits for your business.

A person looking at graphs on their computer

What is a limited liability company (LLC)?

A limited liability company (LLC) is a type of business structure. It provides the business owners with legal separation between their business and personal assets. It also offers some liability protection. An LLC can be a single-member business or have multiple members. An LLC also provides options for taxation, and this can change over the life of a business.

Types of business structure

Every business has a business structure. For small businesses, the three common business structures are:

  • sole proprietor
  • partnership
  • corporation (either a C-Corp or an S-Corp)

If you don’t form a legal entity for your business, it defaults to a sole proprietorship if you are the only owner, or a general partnership if there are two or more owners.

For tax purposes, if you’re an LLC with one member, the IRS treats you as a sole proprietorship by default. If you have more than one member, you’re treated as a partnership. Or you can elect to be taxed as a C corporation or S corporation.

When forming an LLC, paperwork and fees have to be submitted to state authorities. A sole proprietor doesn't have to file any paperwork to create an entity. They just pay the relevant permits and licenses and file an additional schedule for their business with their personal taxes.

What is a business bank account?

A business bank account for a company is separate from a personal bank account. A limited liability company (LLC) generally needs a business bank account. Reasons for your LLC to have a bank account include that it:

  • keeps your business finances separate from any personal funds and accounts and provides evidence of that
  • makes tracking your income, payments, and expenses simpler and makes doing your taxes easier

Pros and cons of a business bank account

Opening a separate bank account for your business has advantages over mixing your personal and business finances in the same bank account. Here are the pros and cons of a business bank account:


  • A business bank account helps keep your business activities separate from your personal ones. By not mingling your funds, it’s more likely your LLC will be properly treated as separate from your personal finances if there’s ever a legal issue.
  • Having a business bank account can help simplify your bookkeeping and make analyzing your books easier. It also helps with tax filing.
  • Multiple people may need to have access to your bank account. Having a business account means you can provide access to your bookkeeper or other team members without them seeing or having access to your personal finances.


  • Business bank accounts can have higher fees than other bank accounts, so you need to shop around to find the best options.
  • Some banks ask you to maintain a minimum balance. This can be tricky and may put pressure on your cash flow.

Choosing your bank

More than 4000 banks operate in the United States. Choosing the right bank is key for a small business.

When choosing your financial institution, keep these things in mind:

  • Figure out what you need. Do you need a personal relationship with a small-town bank? Or would a big bank with many locations and ATMs work better for you? Consider the monthly fees, transaction fees, and charges that a bank charges. These can be higher than for personal bank accounts.
  • You might want to consider the rewards available for business banking, as well as the interest rates for checking and savings accounts. This can help with cash flow.
  • Look at the bank’s minimum balance requirements to make sure you’ll have enough cash to avoid costly penalties.
  • Take a look at the technology the bank offers, especially if you plan to do mostly online banking. For example, if the bank connects with your accounting software, you may be able to get automatic feeds of your bank transaction into your accounts.

The four biggest banks offer a variety of services including bank feeds to Xero. Because of the number of branches and size of their operations, they provide some good options for small businesses.:

  • Wells Fargo: Offers three different types of checking accounts for businesses. They provide a mobile app for online services, merchant bank services, and integration with accounting software.
  • Bank of America: Has business bank accounts to suit most business sizes. Their services include integration with accounting software, mobile banking, and merchant bank services.
  • Chase Bank: Offers bank accounts with no minimum opening deposit. Chase Bank’s services include mobile banking, merchant bank services, and accounting software integration.
  • Citibank: Offers four different types of checking accounts for businesses. Their services include unlimited free transactions, mobile banking, and integration with accounting software.

Typical features of a business bank account

The bank account features that you may find the most useful include:

  • debit card
  • accounting software integration
  • online and mobile banking
  • overdraft protection

Consider your banking needs and what type of accounts and features you need. Some of the more common account types are:

  • Business checking account: Can offer you a place to keep your money. This is the most common type of account, with withdrawals and deposits.
  • Business savings account: Can earn you interest as you put money away for future use, keeping cash on hand for cash flow or for general business use.
  • Merchant services account: Allows your small business to accept and process electronic payments, including credit card payments, from customers or clients.

Once you set up your LLC's bank account, you may want to consider getting a business credit card. Some even may offer cash back on credit card spending.

Also, it is important to set up clear documentation and procedures around activities relating to the bank account to mitigate risks of misuse and fraud from employees.

Documents you need to open a business bank account for an LLC

Opening a business bank account for an LLC is straightforward if you have the right documents. The basic documents you will need are:

  • identification for each member of the LLC
  • articles of organization
  • employee identification number (EIN number) and confirmation document

Name and address of business

Banks require the legal name and address of your business. If the business operates under a name other than its legal name, they may ask for your doing-business-as (DBA) certificate. You’ll need to provide the names of all authorized signers.


When you open a business bank account for an LLC, each company owner needs to provide one or more forms of identification. Some examples of forms of ID are:

  • a government-issued ID, such as a driver’s license
  • a passport, social security card, or voter registration
  • secondary forms of ID can include a utility bill, credit card, or debit card in your name

Articles of organization

When an LLC is formed, you file articles of organization with the state government where you choose to set up your business. This document names the members of the company, the business address, and the name of your business.

EIN confirmation document

You must have an employer identification number (EIN) from the IRS to open a business bank account for an LLC. You might have to bring either an EIN confirmation letter or an EIN verification letter.

Additional extra documents that may be required

Some banks may ask for more documents to verify a business, such as:

  • trade name certificate, fictitious name certificate, or doing-business-as (DBA) certificate if the business operates under a name other than the entity’s legal name
  • declaration of beneficial ownership (provided by the bank)

Single-member LLC

The requirements are the same, except sole proprietors will need to use their social security number (SSN) to apply for a business bank account.


Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

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