Opening a business bank account with just an EIN through a traditional bank can be challenging due to strict banking regulations that require specific documentation based on your business structure. However, the process is much simpler when done online, where you can use either your Social Security number or EIN to open an account.
With Bluevine, you can easily open your business bank account using only your EIN. Start your application today.
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4 Steps to Open a Business Bank Account With EIN Only
Opening a business checking account is straightforward and should only take a few minutes. Ensure you have the primary documents handy and be ready with the applicable fees unless you intend to open a fee-free business banking account. Here are four steps to complete the process.
Step 1: Get Your Documents in Order
The documents you need to open your business bank account depend highly on the form of your business organization. You’ll need your Social Security Number or an equivalent identification such as your business’s EIN (Employer Identification Number).
An EIN is a unique identification number for your business. The IRS issues this nine-digit number and works pretty much like your social security number. You will need your EIN to file your annual business taxes, and you can look up your EIN through the IRS website. You should also gather the following documents depending on your type of business organization.
- Sole Proprietorship — DBA certificate
- Partnership — Business partnership agreement and business license if you operate an eatery or healthcare facility
- Corporation — Certified articles of incorporation, corporate bylaws, a signed corporate resolution, business license, and IRS 501(c) letter if you are a non-profit corporation
- Limited Liability Company (LLC) — Certified articles of organization, operating agreement, and business license
Step 2: Choose a Bank and Bank Account Type
If you want to open a business bank account with EIN only, your best bet is to stick to fintech and online business bank accounts instead of traditional land-based banks. These offer relatively affordable services, making them ideal for businesses that handle all online transactions. Also, they have fewer restrictions and bureaucracies, making the account opening process easier and faster. If you are a new business, there are also banks that are fit for startups.
There are different types of business bank accounts designed to match specific needs. The most common include checking accounts, savings accounts, and credit unions for business banking accounts. Also, you can get a credible fee-free business bank account without worrying about monthly fees or minimum balance requirements.
If you want to open a fee-free business account, here’s a detailed Bluevine review and Novo review packed with information about the pros, cons, and alternatives to both FinTech companies.
If you’re starting an LLC, find the best bank accounts for LLCs here.
Before opening an account, you must compare your options. Compare the fees, the financial tools and features, and the range of integrations different platforms allow. Also, check out the available bank account options and ensure that your business will have adequate room for growth as you expand and your financial needs increase.
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Step 3: File an Application to Open Your Account of Choice
Once you have researched and identified the most suitable bank and bank account for your business, it’s time to apply. Most banks allow the entire process to take place online conveniently. The process should only take a few minutes if you have the correct documents.
Even fee-free business bank account providers must comply with federal regulations. While they streamline the application process, approval is only sometimes guaranteed. To avoid potential rejections or future IRS complications, carefully complete all requirements and contact the support team if needed.
Step 4: Start Managing Your Account
Once your application is approved, you can now start managing your new business bank account. Deposit funds using checks, invoices, wire transfers, or cash, where you purchase a money order from a vendor authorized by your bank. The bank will automatically deduct any applicable fees and give you access to various financial tools to help you manage routine banking tasks.
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Reasons to Open a Business Bank Account
Opening a business bank account with an EIN only protects your SSN from unnecessary exposure. The benefits of applying for an EIN and opening a business bank account include but aren’t limited to the following perks.
Protect Your Personal Assets and Finances
Your EIN is your business identification number. It establishes that your business is an independent entity and even allows you to open a bank account for it, separate from your personal bank account. You can further distance yourself from business debt liability by registering your business as a corporation or LLC.
Keeping your business affairs separate from your personal finances ensures that creditors cannot legally reach for your personal assets without breaking the law if the company cannot pay its debts. By keeping your company money separate from a business bank account, you also make bookkeeping more straightforward and legally distance yourself from any business liabilities.
Using an EIN instead of sharing your social security number can help reduce the risk of identity theft. Although your EIN can also be stolen, cases of SSN theft are more rampant.
Simplify Tax Preparation and Accounting Tasks
A separate bank account makes tax preparation tasks easier because your business income and expenses run through a single account. You could use tax preparation software to connect to your bank account data and automate various processes to eliminate blunders and maintain a clean tax trail. When your personal and business monies mix, it’s easy to make tax mistakes that can leave you in IRS trouble.
Whether you intend to hire a tax preparer or are comfortable handling your bookkeeping in person, a business bank account can make tax preparation tasks easier and less time-consuming. You can eliminate the trouble of separating your business and personal expenses at that point when you need to put your books in order.
Apart from avoiding the risk of being audited by the IRS and enjoying the perks of using accounting software, you can also take advantage of other programs. There’s helpful software that can also simplify business budgeting and invoicing. Unfortunately, you cannot maximize the use of such programs if your personal and business finances are mixed up.
Benefit From Tax Deductions
All expenses incurred when running a hobby are subject to business taxation. However, you can enjoy tax deductions if you show the IRS that your venture is more than just a favorite pastime. The easiest way to make the intended statement is to apply for an EIN and open a business bank account. Also, ensure that you maintain all financial records in a “businesslike” fashion.
Enhance Your Professional Image
A business bank can enhance your professional image, primarily if you transact money with your customers using invoices and wire transfers. Sending or receiving funds from a personal account needs to be more professional. It can make clients feel insecure and could even give your operations an illegitimate vibe.
In contrast, customers will perceive you as well-established if they receive invoices or wire transfers from an account branded with your business name. The branding shows that your venture is more than a hobby, and you have attempted to maintain the highest standards of professionalism.
Build Business Credit
A business account allows you to maintain clean records of all cash flow. It’s easy to point out money received from customers, company expenses, taxes, etc. Such records can be quite helpful when seeking out business loans. A lender can easily find out whether you qualify for a loan and the ideal repayment plan by going through your banking data.
Any lender will want to see your cash flow statements before approving a loan. A statement tainted with personal expenses is less likely to work in the best interests of your business.
A business line of credit is handy whenever you want to expand your operations or invest in more assets. A business account makes you appear severe and legitimate, even in the eyes of potential creditors. If you have an appealing credit history, this could provide grounds for favorable interest rates.
Qualify For a Business Credit Card
Keeping your business finances separate makes qualifying for a business credit card easier. You will again need an EIN to apply for the card. It’s also important to note that customers can pay for goods or services using both debit and credit cards if they open a business account. Clients may be limited to using cash or checks if they only have a personal bank account.
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Why Open a Business Bank Account With EIN Only?
Obtaining an EIN opens more banking options for your business. You’ll be able to take full advantage of the features and perks offered by different financial institutions. Whether you seek the services of a credit union or a well-established online or land-based bank, your business will have an easier time qualifying for the available options.
If you don’t have an EIN, you must enter an equivalent alternative: your social security number. While the option may seem okay at first, it’ll likely cause unnecessary exposure of your SSN to other institutions, including the IRS.
With an EIN, your business assumes an identity separate from your personal I.D. This allows you to keep your personal finances and affairs distant from your company. If your business bumps into legal trouble, you don’t have to worry about your personal assets being seized.
Opening a business bank account with EIN only makes it easier to build business credit. This can give you an upper hand when seeking loans from credit unions because the institution will only need to worry about how responsible your business is with settling debts. This will not tamper with your business affairs even if you have a poor personal credit score.
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Frequently Asked Questions (FAQs) for Opening a Business Account with EIN Only
The following are some frequently asked questions regarding opening a business account with EIN only.
How Do I Obtain an EIN For My Business?
If you want to apply for an EIN, just visit the IRS website and be sure to have your social security number or taxpayer identification number handy. Because the EIN does not expire, you will also need to have any EIN you have applied for in the past. Before you start applying, make sure you have all the information you need because sessions expire in 15 minutes of inactivity.
Why Does the Bank Need My EIN to Open a Business Account?
There are state and federal banking regulations that banking and financial institutions must abide by. Therefore, even online banking companies will want to verify your legality before agreeing to help you manage your business finances. An EIN proves your business identity and the legality of your business dealings.
Can I Open a Business Bank Account If I Don’t Have an EIN?
If you run a business that has hired at least one person, you must obtain an Employer Identification Number. Generally, you need an EIN to open a business bank account, corporation, non-profit organization, or partnership. The number allows your business to file tax returns and pay its employees. However, if you run a sole proprietorship, single-member LLC, or a single-person enterprise and have no employees, EIN may not be necessary.
Final Thoughts on How to Open a Business Bank Account With EIN Only
It’s advisable to open your business bank account using only your EIN. Even if you plan to keep meticulous financial records and pay your taxes on time, using your business’s ID ensures that your company’s finances remain separate from your personal ones.
This approach simplifies maintaining a clear audit trail for the IRS, helps build business credit, and can open doors to loans that could propel your business forward.
>> Open Your Business Bank Account With Bluevine >>
Best Business Bank Accounts by State
Below you will find an interactive U.S map that can help you locate and compare different banks and financial institutions that offer business accounts in your area.
