How to open an LLC bank account: The complete guide
Bank accounts have always been crucial in cash management, book-keeping, and financing. However, many people are unaware that bank accounts other than personal and joint accounts exist.
Small and large business owners open various accounts only to manage their business-related finances. Separate business accounts simplify their recordkeeping and reduce the costs of keeping and handling receipts.
One of the accounts that you can open as a business owner is an LLC bank account. This article will explain an LLC bank account and how to register for it.?
Here is the complete guide.
What is an LLC?
The term LLC stands for Limited Liability Company.
The primary reason for forming an LLC is to protect personal assets.
A Limited Liability Company is a corporate legal structure that protects personal assets if your company is summoned to court.
An LLC is simpler to establish than a business and offers greater flexibility and security to its investors. Any company or individual can form an LLC. If your LLC is sued, creditors can only seize your LLC’s assets, and all your personal belongings will remain safe.
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How to open an LLC bank account?
Opening an LLC bank account should not be difficult if you do your research and bring the necessary documents. By forming an LLC, you create a separate corporate entity that gives you limited liability protection.
While opting for an LLC bank account, the process doesn’t seem as simple as opening a personal bank account but it is also not complicated. Before opening an LLC bank account, you should consider several price structures and service options, such as overdraft protection, issuing checks from the account, and adding a debit card.
Select your bank
The first step in opening an LLC bank account is considering whether you require single or several accounts. Will you need a minimum balance, and what will the total monthly charges be?
Verify that the bank’s branches are conveniently nearby, and also review the various pricing structures and lucrative rewards programmes the bank offers for business customers.
You should also consider the availability of checks, the number of withdrawals each month, and if the account interfaces with merchant services, which will help determine the ideal type of account for your business.?
Some banks may also try to sell you a larger account, but you must decide per your needs.?Review your questions about each bank and determine what bank account is ideal for your business.
Collate documentation
Once you’ve decided to open an LLC bank account, list the necessary documents. Inquire with the bank about the documentation required in their process.?
The following is a list of?documents?most likely to be included in every bank’s paperwork list.
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Your bank may have additional documentation requirements, so checking with them before paying a visit is vital.
Open your LLC account
After confirming all the necessary papers with the bank, visit the bank to open your LLC bank account.
You need to open a particular business checking account for your LLC because an LLC (whether it has multiple members or just one member) is a separate legal entity from its owners.
Having a different business bank account simplifies financial recordkeeping and reduces the costs associated with maintaining such finances.?
A few other advantages are-
After you open the LLC account, you’ll also receive a business debit card and credit card for benefits like cash back, rewards, credit lines, and such. The last step is to fund your LLC account after its activation. You can deposit cash, a cheque, or any deposit method the bank accepts.
What type of bank account should an LLC have?
Although the types of bank accounts an LLC should have entirely depend on the business’ subjective requirements, at least three versions are strongly advised: a checking account, a tax account, and a profit account.
1. Checking account
The checking account is your primary operational account because it monitors your daily cash inputs and withdrawals. These are examples of customer payments, non-sale income, due debts, and purchases.
Many online banks (which allow you to receive as many payments as possible) and traditional banks compete to provide you with such services; the choice is yours.
2. Tax account?
This account is solely to resolve company taxes. Maintaining a separate account for tax management ensures that you have funds to cover your company’s tax obligations.
3. Profit account
The third and most important account in LLC is a profit account, which holds your business’ earnings. You can use this cash to buy new business assets, pay dividends, or reinvest in growth.?
A profit account can also serve as a company savings account because of its versatility. It should ideally be a high-yielding account that pays a reasonable interest rate.
Conclusion
Holding a different business bank account for running your business is undeniably essential. Starting an LLC account is not as difficult as it may appear. In a variety of ways, an LLC account can benefit your firm.?
You can follow the above steps to lessen the complications of an LLC account opening.
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