What is the best LLC business checking account?
If you’ve established a Limited Liability Company or LLC, or you’re thinking about doing so, you may be well aware of the many benefits of this type of business structure, including:
- Tax advantages: The IRS automatically classifies LLCs as either partnerships or sole proprietorships, depending on whether they have one owner or more than one owner. This means that LLCs can take advantage of “pass-through” taxation, in which the LLC’s income and expenses pass through to the owners’ personal tax returns, and the owners pay personal income tax on any profits.
- Limited personal liability: Your personal assets are protected, in case your business faces any legal issues. In order to get this protection, you must have a business bank account that is not your personal checking account to prove that you and your business are separate financial entities in the event of a lawsuit or large liability.
- Management flexibility: An LLC can be member-managed or manager-managed.
It’s important that you leverage these advantages to the best of your ability. One way to do so is to find the best business checking account and bank for an LLC.
What should LLCs look for in a bank?
We all have a favorite bank—perhaps the one you’ve had your personal bank account with for years. But when you need to choose the best business account for your LLC, loyalty isn’t enough. The business bank account you use will allow you to separate your personal and business finances, which is critical for limiting your personal liability and accurately managing your books. It will also have a profound effect on the way you manage your day-to-day business operations.
With all of the small business checking accounts on the market today, there’s no doubt that you may be able to find a few options that will serve your business well. However, in order to truly find the best business checking account for your LLC, you’ll want to evaluate your needs, priorities, and budget with regard to your LLC bank account. Here are a few things to consider:
- Online banking and mobile banking will allow you to keep track of your business account balances and transactions at all times, and from any location. If you travel a lot for your business, the convenience of automatic deposits and transactions on the go will be very helpful.
- Being able to make check deposits from your home or office can be very important. If your business deals frequently in paper checks, this type of service can cut out trips to the bank.
- Online bill-pay services can help reduce paper waste and automate recurring payments.
- If you need additional services such as payroll and employee benefit services, merchant services and even tax preparation services, be sure to make inquiries. Many banks, credit unions and other financial institutions offer these services at a discount when linked to a business bank account.
What else should you look for from your business bank?
Most banks are tailored to large businesses. As a small business owner, you don’t necessarily need all the wiz-bang features that a big business might be looking for. But you do need:
- Easy access to key information about your checking account
- An FDIC-insured company to work with
- Simplicity: an easy-access debit card, as well as mobile banking and online banking
- Good terms: no ATM fees, low or no monthly fees, no minimum opening deposit, no minimum balance requirement, free transactions and a high interest rate
- Free business checking account: If the terms are good enough, your checking account will be free. Just be careful when you see an advertisement for free business checking, because oftentimes there are fees—they’re just hidden.
Be sure to check the financial institution’s website, or call them, to learn more about each of these important banking elements.
What documents are needed to open an LLC bank account?
As an LLC, you’ll need the following items to open your business bank account:
- EIN (Employer Identification Number)
- Personal identification
- Business license
- Certificate of assumed name/DBA (Doing Business As)
- LLC operating agreement with the name of the business and its partners
- Articles of organization
- Monthly credit card revenue (for merchant accounts)
Most banks require all LLC members to be present when opening a bank account.
To learn more about how Kabbage can help your LLC, please visit https://www.kabbage.com/checking/.