Open a business bank account the right way

The most common mistake new owners make is not a filing error. It is running the business through their personal bank account for "just a few months".

Why it matters

**Liability protection.** An LLC separates your personal assets from the business's debts. Courts can set that separation aside when an owner treats the company's money as their own. Mixed accounts are exhibit A.

**Taxes.** One account that holds only business money is already most of your bookkeeping. Every deposit is income to review; every payment is a possible deduction.

**Credibility.** Customers paying "Your Business LLC" instead of a personal name trust you more, and lenders want to see a business account history before they will lend.

What the bank will ask for

Usually: - Your formation document (articles of organization or incorporation). - Your EIN confirmation letter from the IRS. - An operating agreement or a document showing who can sign for the company - often called a banking resolution. - Photo ID for each person who will be on the account.

If you formed with Busy Firm, your formation documents are kept in your account under My Formations.

Choosing the account

Compare monthly fees and how to avoid them, transaction limits, cash deposit options if you take cash, and how well the account connects to your invoicing and accounting. A business that takes card payments should check payout speed too.

The habits after opening

• Pay yourself by transfer, never by spending from the business card on personal things.
• Put money aside for tax in a second account as it comes in.
• Keep the account for one business. A second business gets its own.

When you are the only owner

Single-member LLC owners often ask whether this really applies to them. It applies most to them, because there is no partner to object when the lines blur. A separate account is the simplest, cheapest protection you will ever buy.