Can I Open A Business Bank Account Without An EIN?

By
Leela Hopkins
VPM Staff
Updated
August 24, 2020

Starting up a new LLC is often an exciting time. You feel like a ROCKSTAR the moment you see your company name on official documents.

You feel good, as you should!

Now after that brief celebration, it’s time to get back to work. Short lived, but hey, you’re starting a business. There’s lots to do and no time to waste.

After the LLC process is complete, the next step is to apply for an Employer Identification Number (EIN).

During this process, it can be easy to overlook certain details or face difficulties and stumbling blocks. A big question we’ve seen is if you can open a bank account for your business without an EIN.

The Quick Answer

So, is it possible to open a business bank account without an EIN?

The quick answer is - sometimes, but rarely.

A majority of large and small banks require an EIN when applying, but there are exceptions and overall, it will depend on the individual bank and its policies. Make sure to research the bank before applying.

Technically, single-member LLCs and sole proprietorships are not required to have an EIN as they are taxed as individuals. It might not be worth getting a unique business tax ID if that is the case. Instead, you can simply open a bank account without an EIN.

Also, some institutions may be open to using your Social Security Number (SSN) to register so it is worth checking first.

For other business entities, it may be possible to use other types of documentation instead of an EIN. But remember, it could be more time-consuming than just applying for one.

Why an EIN is Needed to Open a Business Bank Account

Due to banking regulations, an EIN is used to confirm details such as your identity, business operations, and dealings. This includes your revenue, employees, and how your business is legally classified.

Banks need to confirm the identity and legitimacy of your business before allowing you to open an account. This is to protect them from any potential legal issues. They want to make certain that you are authorized to open an account for the business.

An EIN is often not the only official document that banks require to set up a bank account. They will also ask for licenses and other documents.

What are the Required Documents?

Always check with the bank before deciding to set up your business account to find out which documents are needed, as they vary depending on the bank. However, to start a new business bank account, most banks will at the very least ask for the following documents:

  • Your LLC’s certificate of formation: This shows that your business is registered legally and correctly in the right state. Think of it as a birth certificate for your LLC.
  • Your LLC Operating Agreement: This shows the legal authorization to open bank accounts for your business. Think of this as your mini business plan on internal operations.
  • Federal Tax ID Number (EIN): As an LLC, it is subject to federal taxation. You will need to present an EIN from the IRS before opening any business bank account.
  • Your Business Office Address: You will need a physical address registered to your business before opening an account. It can be either a residential or commercial street address. You cannot use a PO box.
  • Doing-Business-As Name (DBA): This is sometimes called a “fictitious name.” It is a name under which you can conduct business that is different from your actual business name.
  • Mailing Address: This will be an address to which all your business documents, statements, and notices will be sent for communication. It can be any address.
  • Valid ID of Owners or Members: This requirement is the same for any type of bank account. Valid ID is required to open your bank account.

These are the documents that are generally required, but be aware that they can differ depending on the state in which you live and work.

Separate Business and Personal Finances

It’s always a good idea to keep your business and personal finances separate. Not doing so can expose you to all kinds of liabilities in the future.

Separating your finances makes it much easier to keep track of everything, from business expenses to tax reporting. This is important as it makes accessing these documents in the future much simpler. Establishing clear lines of division between these different aspects of your life can help protect you from lawsuits.

The best way to separate your personal life from your business operations is to get an EIN and open a business bank account.

Your EIN Recap

So what have we learned about EINs so far?

EINs are nine-digit numbers assigned to businesses in the United States by the IRS that act like a social security number for your business.

Your business will be asked for its EIN while tax forms are being filled out to ensure that the correct tax information is associated with the right business.

They help separate your personal and business financial lives.

What Else is Your EIN Used For?

Other reasons that an EIN could be useful for you include:

  • Applying for Business Loans: Even if you are a small business when starting out, you should start good business practices early. Start by using an EIN, and it can help when seeking business financing in the future.
  • Getting Business Licenses: Having an EIN associated with your business can help your organization appear more legitimate, which can help with obtaining licenses in the future.
  • Hiring Employees and Contractors: To hire employees, you must have an EIN to use on tax returns and various other documents.

Remember: Having an EIN is the number one way to protect yourself from identity theft.

Example: If you don’t have an EIN, you’ll be using your SSN for everything (your office space agreement, business loans, insurance, credit cards, etc.) The more it’s shared, the higher the probability that it will get stolen. As a business, this is not wise since you’ll be filling out multiple documents, and your business information will consistently be on public records. Hackers will be thanking you...you don’t want that. It’s important to protect your privacy.

Is There an Option to Open A Business Bank Account Without an EIN?

Simply put: yes, but there’s a caveat.

If you are a single-member LLC or sole proprietorship, an EIN is not required to open a business bank account because you are technically still classed as an individual in the eyes of the IRS. You can then use your standard SSN to open a business bank account if this is the case.

However, even if you are a sole-proprietorship or working as a single-member LLC, you will need an EIN to submit tax returns or if you decide to hire employees.

For other types of businesses, it is possible to use different documentation rather than an EIN, but you must check with the banks first to see what they will accept. This can often take longer than just applying for an EIN!

Final Conclusion: Do You Really Need an EIN to Open a Business Bank Account?

The final answer is - sometimes!

This is because there are so many variables when it comes to the type of business you are, and there are different rules and guidelines depending on your situation.

Basically, if you are looking to open a business bank account, expect to apply for an EIN.

However, there are exceptions. If you are a single-member LLC or sole proprietorship, then you can operate under your own SSN (unless you hire employees than you will need an EIN).

For the most part, there are far more advantages to getting an EIN for your business, especially if you are expecting your business to expand in the future. Our advice is to call your preferred bank and ask for their advice based on your particular situation.

Do You Need A Physical Address to Open U.S. Business Bank Accounts?

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