Let’s say you start a business with a partner, just like we did around 8 years ago. When you are organized as an LLC, C Corp or S Corp, you can’t have the partners go around paying for stuff out of their own funds. The waters get muddy real quick. Co-mingling funds can open you up to liability, and on a practical level, it can make doing your personal and business taxes a real headache. That’s why you need corporate registered accounts for your business funds.
So how do you start a corporate account, and what do you need in order to do it? It’s not overly complicated, and it will be well worth it for increased professionalism and for keeping business and the rest of life clear and distinct from each other.
Here is what the bank is likely to ask for when you register a corporate account with them:
- Your business employer identification number (EIN)
- Personal identification, like a passport or driver’s license, for everyone listed on the account
- Business license with the name of the business and the owner’s name or names
- DBA or assumed name certification
- Partnership agreement with the name of the business and its partners
- Organizing documents filed with the state
- Monthly credit card revenue (for merchant accounts)
Starting a corporate bank account shouldn’t be an afterthought. As soon as you start accepting or making payments for your business, you should have business accounts to run that money through.
If you’ve been connecting with us for any length of time you know how we feel about bank account interest rates. This is not where you come for the magic of compound interest. These accounts are meant to manage your day-to-day cash flow. That being said, finding the best banks with the best offers on interest rates, transaction fees, and account minimums is time well spent. This is not where you sit money to grow exponentially, but put that money to work for you while it sits in these accounts.
Corporate vs. Business Accounts
You may think you have done what you need to do by establishing a business bank account—that is—an account with the business name on it, separate from your personal bank accounts. But to be clear, a corporate account is a higher level of separation between your personal funds and business funds. A business account that is considered a personal asset of the business owner could get entangled by the owner’s personal creditors.
A corporate registered account has a list of authorized signers on the account and is not considered a personal asset of any principals or board members.
You want to start building a banking relationship with a corporate account so when the time comes to take out a business line of credit, you will have a track record with the bank. It’s important to establish a credit history as a business so you can make the right moves when it is time to scale your business up.
Bottom line, without a corporate registered account for your company you are subject to piercing the corporate veil and opening yourself up to losing personal liability protections. Save yourself the hassles and build respect and credibility among the people you do business with. That is the power of a corporate registered bank account.