A bank account is an essential part of starting and running any business, but it’s not always easy to open one with a new company. If you don’t have an Employer Identification Number (EIN), you may wonder if you can still open an account at all – and if so, how you go about doing so. The good news is that there are several options that allow you to create a business bank account without an EIN; the better news is that most of them are relatively easy, inexpensive, and don’t require much effort on your part.
Everything you need to know about opening a Business Bank Account
The first step to opening a bank account for your business is to decide what type of account you would like. There are several different types of business accounts available, with different features and conditions. It’s important to read over the necessary requirements for the type of account that you want, as well as the relevant interest rates and fees.
It might be helpful to know that business savings accounts do not have transaction fees. The benefits of saving accounts for businesses vary based on your individual needs, but in general, you may benefit from high-interest rates, which allow you to make more money if your funds are available for longer periods of time.
Another benefit of a business savings account is its requirement that all employees sign documents agreeing to receive electronic statements. You’ll also receive access to bank wire transfers with these accounts, which can be useful when moving large amounts of money between countries or into and out of businesses.
If you would like to offer more services than just withdrawals and deposits, another good account option is a business checking account. These can help protect your funds in case of theft, fraud, or unauthorized checks written against your business.
Because of these risks, however, you might have to pay higher interest rates for your account or other penalties, depending on what state you live in. You may also be required to sign up for electronic and paper statements and visit your local branch at least once every six months.
Learn why you don’t need an EIN in 3 easy steps
If you have no intention of paying payroll, then registering for a federal tax ID number (EIN) is the last thing on your mind. You can go ahead and open up a business bank account without one. Here are three easy steps to take if you want to do it:
*Step 1 – Look into incorporating.
*Step 2 – Figure out the best place to incorporate it. Whether you’re registered as an LLC, Inc., or Sole Proprietor, it will have a company identification number (for example, for an LLC that number would be 1120). The company identification number should match up with the routing number.
*Step 3 – Obtain your IRS tax ID. If you are not required to have one, then you don’t need to obtain it. All you need is your company identification number. You can get that number from your bank when they ask for additional information when opening up your account. That’s all there is to it!
Information and Documents you will need to provide your Bank before you Open a Business Bank Account
An enterprise identification number (EIN) is the IRS’s numerical identifier for business entities. The IRS assigns one to you if you complete and submit their online form SS-4.
If you are planning on opening a bank account for your new business, be sure to bring your new or existing EIN with you when applying for the account. Even if the business has not been officially recognized as of yet, in most cases the bank will use your social security number or other ID in lieu of your EIN on documents such as the articles of incorporation and ledger sheets.
Understand how your new business banking accounts are linked to your personal accounts
Your personal and business bank accounts are inextricably linked. A simple example of this is the direct deposit process, whereby you will be asked to provide your Social Security Number and Tax ID Number when starting your account with both a personal and business checking account. Your payments will then flow from one account to the other, directly depositing any funds into their respective corresponding accounts. Another instance where you’ll see how closely these two accounts are linked is when it comes time to close them. If you close your business account without first closing your personal account, you could be subject to penalties from federal authorities for tax evasion or identity theft.
Get some advice from expert bankers on how you should use different parts of your new business banking system
A business bank account has many different parts, from the type of account to the types of checks, deposits, and withdrawals you can make. At BB&T, we offer plenty of business banking services tailored to help you manage your finances effectively.
You should also speak with your banker about how you want to use different parts of your new business banking system.
For example, if your plan is to get a few personal loans or lines of credit for short-term expenses before launching your business, then it’s important to know that those decisions will affect the lines or credit you are offered at the bank – as well as limit what you can do with any money in your account that isn’t invested in assets such as stock or bonds.