A business bank account is a critical tool for business owners. A separate account gives you an opportunity to divide your personal finances from your business transactions, which can make your life easier.
But in order to open a business bank account, you’ll need the right information on hand. Let’s explore if you can open a business bank account with an EIN only.
Why Is An EIN Important For Your Business?
An Employer Identification Number (EIN) is a nine-digit number that is assigned to you by the IRS. Whether or not you have any employees, the number is used to identify your business for tax purposes. With that, an EIN is an essential component of running your business because paying taxes is an unavoidable part of running a business.
An EIN provides ample benefits. The primary benefit is that this separate tax identification number gives you an opportunity to separate your personal finances from your business finances. Additionally, you cannot hire employees without this key number.
Steps To Obtain Your EIN
If you are a business owner without an EIN, it’s time to obtain one. You can follow the steps below to get an EIN for your business:
- Go to the IRS website: Click here to visit the official IRS. There are paid services that will do it for you but it’s not necessary. It’s easy to do yourself.
- Gather your documents: The applicant must provide a valid taxpayer identification number, a business address, a mailing address, the name of your business, and when it was formed. Also, you’ll need to share what business structure you’ve chosen, so make sure to explore those options in advance.
- Fill out an application: You can apply for an EIN directly on the IRS website. Within the application, you’ll need to provide a reason for requesting an EIN.
- Save your EIN: You will receive your EIN right away, you will need to save it for future use.
Understanding The Role Of EIN In Business Banking
If you want to open a business bank account, the financial institution will likely require you to provide an EIN. An EIN is like your business” social security number. It’s the number that the government uses to identify the business as separate from you.
When you open a bank account with an EIN, both you and the bank can easily separate your personal banking activity from your business banking activity. This presents a worthwhile advantage because separation makes it easier to stay on top of your business transactions.
It’s worth noting that an EIN is just one document you’ll need to provide when applying for a business bank account. In general, banks require more information about your business to give your application the green light.
For example, you’ll likely be required to provide the legal name of the business and any DBA (doing business as) name. Depending on the type of business structure you choose, you might need to provide an LLC operating agreement, partnership agreement, state business license, or corporate bylaws. Come prepared with your business information to facilitate a smooth application process.
Related: Guide To Opening A Small Business Bank Account
Guidelines For Opening A Business Bank Account With Your EIN
A business bank account can make it easier to manage your business finances and provide more legal protection for your personal assets. If you are ready to open your business bank account, use the steps below to move forward.
Explore Business Bank Account Options
You’ll quickly realize you have no shortage of business bank account options. Before you dive into the application process for a particular bank account, it’s important to explore all of your options.
Some factors to consider include business bank account fees, customer support availability, online banking feature, account types available, and extra perks. Ideally, you’ll find a bank account that strikes the right balance of features and fees for your business.
10 Best Business Checking Accounts
Gather Your Documents
Once you’ve decided on the right business bank account for your needs, it’s time to gather the documentation you’ll need for the application.
Most banks require your full legal name, physical address, email, phone number, and EIN. Additional information might be required based on your business structure. For example, partnerships may need to provide a partnership agreement while an LLC might need to provide articles of incorporation.
Submit An Application
Depending on the financial institution you choose to work with, you may need to complete your application online or in-person.
You might receive an approval within a matter of minutes or days. If your application is rejected, consider asking the bank why it made this decision. You can use that information to improve a future business bank account application.
Once your account is open, you can start using it immediately to handle your business transactions.
Is It Possible To Open A Business Bank Account Without An EIN?
While most banks require an EIN to open a business bank account, there are some exceptions. If you are operating a business as a sole proprietorship, you might be able to open a business bank account with your Social Security Number instead of an EIN.
Although it might be possible to open a business bank account without an EIN, it’s often more complicated. Since EINs are free and easy to get, it might be best to just go ahead and get one.
An EIN is an important piece of identifying information for your business. Without an EIN, it might be possible to open a business bank account. But you’ll face fewer challenges if you have an EIN available to include in your business bank account application.
If you are ready to move forward with a new bank account for your business, consider exploring the top business checking accounts today.