You can open a business bank account without an employee identification number (EIN) if your business is organized as a sole proprietorship or a single-member limited liability company (LLC). In both of those cases, you would use your personal social security number to open the account. However, if your business is organized in any other way, or if you plan on hiring employees, you must obtain an EIN from the IRS before opening a business bank account or filing business taxes.
Even if your business is eligible to open a business bank account without an EIN, there is no reason not to get one. Getting an EIN from the IRS is free, and it can be applied for online, by fax, or by mail. Both sole proprietors and single-member LLCs can get an EIN. If your plan is for your business to grow, you will eventually need one.
What an EIN Is & How to Obtain One
An EIN is a nine-digit number assigned by the IRS to identify your business for filing taxes, opening bank accounts, getting business financing, and performing other business activities.
You can apply for an EIN through the IRS website, which is the easiest and fastest way to getting an EIN. You will answer a series of questions and receive your EIN online after completing the questionnaire. The process takes about 10 minutes, and you’ll be able to file taxes on that new EIN about two weeks later.
You can also choose to fax or mail in IRS form SS-4 to apply for an EIN.
Pros & Cons of Opening a Business Bank Account Without an EIN
| PROS | CONS |
|---|---|
| Allows you to keep taxes simple for your sole proprietorship | Opens yourself up to identity theft as your Social Security number is tied to your business accounts |
| Business loan repayment taken out in your Social Security number could help strengthen your personal credit | Some banks won’t do business with companies without an EIN |
| Separation of business and personal finances is harder when both accounts are opened under your Social Security number | |
| Personal credit could be damaged if something goes wrong with the business | |
You might not be able to open an account at your local bank without an EIN. And even if you can get a business checking account, you might not get business loans without one.
Also, separating your business and personal finances is harder when both accounts are opened under your Social Security number. This can make tax time very difficult and open you up to audits by the IRS. Another way you could get in trouble with the IRS is to find out that you should have filed for an EIN but never applied for one. There can be tax penalties involved with incorrect filing.
Moreover, because your business is being conducted under your Social Security number, your credit is on the line. Your personal credit could be damaged if something goes wrong with the business. It’s also why you should never use a personal checking account for your business.
Having an EIN will give your business credibility with banks and vendors. It will help speed up obtaining a business loan and allow you to build your business credit. In addition, you can hire employees, which will help your business grow.
Who Is Required to Have an EIN
The IRS requires businesses to obtain an EIN unless they’re organized as a sole proprietor or a single-member LLC. You must also obtain an EIN to file taxes if any of the following apply to you or your business:
- You have employees
- You operate your business as a corporation or partnership
- You file any of the following tax returns: employment, excise, or alcohol, tobacco, and firearms
- You withhold taxes on income, other than wages, paid to a nonresident alien
- You have a Keogh plan
- You are subject to a bankruptcy proceeding
- You purchase or inherit an existing business that you operate as a sole proprietorship
In addition, you must obtain an EIN if you are involved in any of the following organizations:
- Trusts, except certain grantor-owned revocable trusts, individual retirement accounts (IRAs), and exempt organization business income tax returns
- Estates
- Real estate mortgage investment conduits
- Nonprofit organizations
- Farmers’ cooperatives
- Plan administrators
How To Open a Small Business Bank Account Without an EIN
If you are a sole proprietor or a single-member LLC, you may be able to open a business bank account at your local bank. While we recommend obtaining an EIN before opening an account, here is how to open a small business bank account without an EIN:
Step 1: Gather Required Documents
You will need to provide your bank with certain documents to open an account. They may include:
- Social Security number
- Fictitious business name certificate or doing-business-as (DBA) certificate
- Business formation documents
- Organization documents, including your ownership agreements
- Business licenses
- Government-issued photo ID, such as a passport or driver’s license
- Contact information for you
- Business revenue and tax information, if available
Step 2: Select a Business Bank Account Type
There are many choices when it comes to the best banks for small businesses. You’ll need to find a bank that allows you to apply for an account without an EIN. Check out the table below for several types of bank accounts you can choose from.
Account Type | Feature | Our Recommended Financial Institution | For More Information |
|---|---|---|---|
Free business bank account | Fee waivers or fee-free accounts | Bank of America | Read our Bank of America business checking review |
See the top free business checking accounts | |||
Traditional business checking | A wide variety of business services | Capital One | Read our Capital One business checking review |
See the best small business checking accounts | |||
Online business checking | Limited fees and unique features provided by financial technology (fintech) companies | Bluevine Novo | Read our Bluevine business checking review Read our Novo business checking review |
See the leading online business banks | |||
Business savings | Interest-drawing, allowing reserve funds to grow | Live Oak Bank | Read our Live Oak Bank business savings review |
See the best business savings accounts | |||
Step 3: Compare Potential Costs
While the most obvious cost with any business bank account is the monthly fee, some accounts charge other fees, such as for paper statements. Others even limit the amount of free monthly transactions and free cash deposits each statement cycle. It’s important to understand what type of transactions you’ll have each month and calculate the actual costs of the bank account.
Step 4: Open Your Account Online or In Person
Once you pick a bank and a bank account, you can open your account. Most institutions will allow you to open accounts entirely online without ever stepping inside a branch. Others require you to visit a branch, so make sure your business is located near there.
Step 5: Deposit Funds
When you open the account, you will want to deposit funds into your new account. Some business bank accounts require a minimum deposit when opening the account.
Frequently Asked Questions (FAQs)
While the documents required may vary depending on how your business is organized, you will generally need the following items:
- EIN or Social Security number if you’re a sole proprietor
- Fictitious business name certificate or DBA certificate
- Business formation documents
- Organization documents, including your ownership agreements
- Business licenses
- Government-issued photo ID, such as a passport or driver’s license
- Contact information for you
- Business revenue and tax information, if available
If you don’t have an EIN and your business is a sole proprietorship or a single-member LLC, you can use your social security number to open an account. However, even if you are a sole proprietor or a single-member LLC, you can get an EIN.
Getting an EIN will protect your personal finances, especially as an LLC. You can get an EIN from the IRS website or can apply for one via fax or mail. If your plan is for your business to grow, you will eventually need an EIN.
Regardless of how you obtain an EIN, it’s free. You can fill out IRS Form SS-4 and fax or mail it to the IRS to obtain an EIN. You can also apply for an EIN from the IRS website directly. The online questionnaire takes about 10 minutes, and there are no forms to fill out. You’ll receive an EIN right away online, and it can be used immediately for most business purposes. However, you’ll need to wait about two weeks before you can use the EIN to file taxes electronically.
Unfortunately, no. Banks, credit unions, and other financial institutions will also require you to submit your personal and business information, including specific IDs and business documents depending on your business organization structure. You can review and download our business bank account required documents checklist before opening an account.
No, the IRS doesn’t require single-member LLCs to get an EIN. However, there are several benefits associated with having one, such as simplified tax filing and stronger business credibility.
Bottom Line
It is technically possible to open a business bank account without an EIN, but it is not recommended. Sole proprietors and single-member LLCs can use SSNs instead of EINs to open accounts, but it can open your business up to many problems. Obtaining an EIN is free and can be done in 10 minutes on the IRS website. If you plan to see your small business grow, get your EIN before opening any business bank accounts.
