Things to consider when opening a business checking account for your LLC
The number of limited liability companies (LLCs) operating today is an ever-increasing one as more folks set up their own businesses and need a quick, economical, and simple solution to safeguard themselves sans registering a corporation.
However, simply owning an LLC may not be adequate. To leverage the security provided by your LLC and simplify your accounting and documentation, you should open a business checking account to separate your personal and business assets.
What are the benefits of having a business checking account?
A business checking account is mandatory for the proper administration and management of a business. Whether you form an LLC in Texas, Florida, or California, it is good to maintain a separate business bank account from the personal accounts of the founders and other investors.
The following are some of the significant benefits of opening a business checking account for your LLC.
1. Credit readiness
Creating a business checking account develops a trusting relationship with your preferred banking partner. It makes it more manageable for securing a loan, business credit card, or business line of credit.
2. Personal liability protection
Even if you’re the sole owner, structuring your firm as an LLC or corporation can shield your personal assets if your company runs into legal or financial problems.
3. Simplified taxation
When it is time to file your taxes, having a separate business account will speed up the process by keeping your professional and personal finances separate.
Having a dedicated business checking account adds a professional touch. Your clients will be more trusting of you if your payment transactions get executed through a bank account in your company’s name.
5. Cash-flow management
Separating personal and business transactions also makes it convenient to monitor and comprehend your finances and how working capital moves in and out of your business.
What factors should you consider while choosing a business checking account for your LLC?
There are various factors to consider while choosing business checking accounts, including-
Account related services and benefits
Features such as check-writing services, digital and offline banking access, bill payment systems, debit card availability, and bank vaults are some of the essential features and perks you may require to manage your business. Considering the full spectrum of business banking services available will help you determine how well a particular bank will match your needs.
Service fees and related charges
Business checking accounts can incur a range of fees such as annual/monthly maintenance charges, charges for maintaining a minimum balance, overdraft fees, wire transfer charges, ATM fees, surcharges, etc.
Contemplate what it implies in terms of the amount you end up paying for running and maintaining your account, given that you won’t be able to manage your account personally.
If you’re looking for an interest-bearing business checking account, peek into the rates that banks provide. Picking the ideal business checking account rate means your capital has a better chance of growing. In addition, you must weigh the interest rate you could receive on deposit accounts against the charges you might incur.
ATM and Branch Banking Accessibility
If you require one-on-one assistance with your business checking account, having one with a bank with physical branches can be comforting. If you make daily cash or check deposits, you may also prefer the accessibility of a physical branch.
It’s also convenient to use an ATM to administer your account or withdraw cash. While online banks may provide this service, it is crucial to consider the scope of the bank’s ATM network.
You could make frequent deposits, transfers, withdrawals, or bill payments between accounts at another bank using a business checking account. When analyzing business checking accounts, it’s vital to look at the transaction limits imposed by the bank.
Banks may also place restrictions on the number of transactions that can be posted to your account in a single day. Alternatively, you may be limited to a certain number of transactions before being charged a fee for each further transaction.
If you typically have a high transaction volume, selecting a business checking account with limitless transactions would be perfect for avoiding charges.
Ease of integration with accounting software tools
If you use accounting software to handle your company’s finances, integrating it with your business checking account could prove to be advantageous. When selecting business checking accounts, investigate the bank’s functionality for synchronizing your accounts with your accounting software.
Other integrations, such as online payroll software or tax preparation software, may also be sought.
How to open up a new business checking account?
A business checking account demands more prerequisites than a personal account, so be prepared to supply supporting information, such as:
- Your Social Security number and photo ID
- Employer Identification Number (EIN)
- Articles of Organization/Incorporation
After completing the application and providing supporting paperwork, the next step is to make your initial deposit, and you are done with the setting up of the account.
If you have decided to set up a business checking account for your LLC, It’s better to visit your bank and chat with a consultant whenever feasible. An initial interaction will help you assess whether the bank’s values and mission are compatible with yours. It also helps to get to know the folks who will be handling your company’s finances.
Some of the top banking partners possess comprehensive knowledge of the ins and outs of the marketing dynamics. Because of their persistent commitment, they are excellent associates who can point you in the appropriate direction whether you need assistance or are facing financial troubles.
Matt Horwitz is the founder of LLC University, a website that teaches people how to form LLCs. Matt is the leading authority in LLC education and is featured in CNBC, Yahoo Finance, Entrepreneur Magazine, and US Chamber of Commerce. Matt holds a Bachelor’s Degree in business from Drexel University with a concentration in business law. LLC University®, established in 2010, was the first company to create free LLC courses in all 50 states.