How to open a bank account for your startup and avoid the pitfalls


Congratulations on registering your new business! Or if you are still thinking of starting your own business and are just trying to better understand the steps required to have a bank account under the company name, you are in the right place. Make sure you have consulted our guide Lloyd & Mousilli on incorporating here for a step-by-step analysis.

Having a bank account under the name of the company has many benefits: checks printed under the company name, business credit cards with many benefits, accounts on PayPal and other online processors and receiving payments from your customers under the name of your company. .

But beyond the benefits of opening a bank account in the name of a company, it is actually a necessary step for legal compliance. Having a business bank account helps to prove that the company does not mix the personal funds of the shareholders with the cash generated by the company. A company that does not open a bank account under its name seriously jeopardizes the company's limited liability company status.

The opening of a bank account in the name of the corporation establishes that the corporation operates as a separate legal entity from the shareholders of the corporation. That's why it's an important step in starting a business. We generally advise our clients to follow the steps below to simplify the process of opening a bank account.

Write a company resolution

The company resolution tells the bank the people authorized by it to open the bank account of the company and to sign the checks. The persons listed in the company's resolution have full authority to act on behalf of the company with respect to the company's bank account. Some banks require a resolution from the company to open an account on behalf of the company.

Provide an ID with photo

Anyone authorized by the company's resolution to control the bank account of the company must provide the bank with a piece of photo ID. This allows the bank to verify the identity of each person authorized to carry out transactions for the company. An acceptable photo ID includes a national identity card or driver's license.

A common problem that many startups encounter is the non-consideration of the fact that different types of entities have different signature requirements, which can lead to a number of problems when opening the account. banking. For example, if your startup is configured as a Limited Liability Company (LLC) and it is managed by a member, all members must be present to open the company's bank account. You must first check with the bank.

Current Employer Identification Number (EIN)

Present the Employer Identification Number (EIN) of the company assigned by the Internal Revenue Service. The EIN number is a 9-digit number used to identify a company for tax and banking purposes. Most banks will not open a business account on behalf of the company without an EIN.

You can request an EIN by following this link to the IRS website.

Seal

Show the seal of the company at the bank. The seal of the company contains information about a company, such as the date the company was incorporated, the status of the constitution and the legal name of the company. Banks may require a corporation to use the corporate seal as the signature of all its banking records.

Articles of Incorporation

Present the statutes of the company to the representative of the bank. The articles of association contain information about a company, such as the number of shares that the company is entitled to issue, as well as the legal name and address of the company. The articles of the company provide evidence that the company has been incorporated as a separate legal entity.

You will often be required to submit a copy of your articles of incorporation stamped by the office of the Secretary of State in the state in which the corporation was registered.

Entity type checklist

The specific documents the bank may need often vary depending on the type of entity for which you are opening an account. Below is the documentation often requested depending on the type of entity in your company.

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  • Business Tax Identification Number
  • Articles of Incorporation or Certificate of Incorporation
  • Company Resolution identifying authorized signatories if the names of officers do not appear on the Articles of Incorporation or the Certificate of Incorporation

Limited liability company

  • Business Tax Identification Number
  • Organizational statutes or training certificate
  • Company Resolution Identifying Authorized Signatories If Officer Names Are Not Listed on Articles of Incorporation or Certificate of Training

Professional Corporation

  • Business Tax Identification Number
  • Articles of Incorporation or Certificate of Incorporation
  • Company Resolution identifying authorized signatories if the names of officers do not appear on the Articles of Incorporation or the Certificate of Incorporation

General partnership

  • Business Tax Identification Number
  • Partnership agreement indicating the business name and the name of the partners, and
  • Business Name Filing Document, such as a fictitious name certificate or business name certificate, indicating the business name and the name of the business partners

Limit partnership

  • Business Tax Identification Number
  • Limited Partnership Agreement showing the business name and the names of the partners, and
  • Company organization document filed and certified by a state representative, such as a limited partnership certificate, indicating the business name and the name of the partners

Limited Partnership

  • Business Tax Identification Number
  • Limited Liability Partnership Agreement stating the business name and the name of the partners, and
  • Company organization document filed and certified by a state representative, such as the limited liability company certificate, indicating the business name and the name of the partners

Links to the bank's requirements

Further details are available from the banks themselves. We have provided you with the following links to help you choose the one that best suits your particular needs and goals:

If you encounter any problems, do not hesitate to contact us at www.lloydmousilli.com. We can provide you with the business resolution templates you may need. Good bank!

Feras Mousilli

Feras Mousilli

Technology Lawyer

Feras Mousilli is a founding partner of Lloyd & Mousilli (www.lloydmousilli.com) and advises clients on technology law issues. He specializes in advising Fortune 100 start-ups on intellectual property matters. He has served as Senior Legal Counsel for Apple & Dell and as a Patent Attorney with DLA Piper.
Mr. Mousilli was president-elect of the Austin Association of Corporate Counsel and a guest lecturer at the University of Texas and the University College of Law, Berkeley. He is the proud recipient of the Covington Pro Bono Award and has been selected by the Texas Monthly as a rising star in Super Lawyers.
Feras holds a Bachelor's degree in Biomedical Engineering and Computer Science and a Master's degree in Computer Engineering from Johns Hopkins University. He obtained his doctorate in law from the law faculty of the University of Texas.