Do I Need an EIN to Open a Bank Account?

An Employer Identification Number (EIN) is a unique nine-digit tax identification number assigned to business entities by the Internal Revenue Service (IRS). It functions much like a Social Security Number (SSN) for individuals, serving as a distinct identifier for tax purposes. For many new business owners, understanding the necessity of an EIN, particularly when opening a business bank account, is a common inquiry. It plays a fundamental role in how a business interacts with tax authorities and financial institutions.

EIN Requirement for Business Bank Accounts

Most formalized business structures require an EIN to establish a dedicated business bank account. This includes corporations, partnerships, and multi-member Limited Liability Companies (LLCs). Banks mandate an EIN for these entities to ensure proper tax reporting and identification.

An EIN is mandatory if a business has employees, operates as a corporation or partnership, or files certain tax returns. Non-profit organizations, trusts, and estates also must obtain an EIN.

For sole proprietorships and single-member LLCs that have not elected to be taxed as a corporation, there is an exception to the EIN requirement for banking purposes. These business types can often use the owner’s Social Security Number (SSN) to open a business bank account, provided they do not have employees and are not otherwise required to have an EIN for other tax obligations. Despite this allowance, many sole proprietors and single-member LLC owners choose to obtain an EIN. This decision often stems from a desire to clearly separate personal and business finances, enhance the business’s professional image, or prepare for future growth that may necessitate an EIN.

How to Get an EIN

Obtaining an EIN is a straightforward process, typically completed without fees when applying directly through the IRS. The online application via the IRS website is the most common method, usually resulting in immediate EIN issuance.

Applicants will need to provide specific information about their business during the application process. This includes the legal name of the entity, its mailing address, the type of business entity (e.g., corporation, LLC, partnership), and the reason for applying. Additionally, details about the responsible party, such as their name and Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), are required. Other application methods include faxing or mailing Form SS-4, “Application for Employer Identification Number,” to the IRS. International applicants without a U.S. presence can apply by phone.

Additional Documents for Account Opening

Beyond securing an EIN or using an SSN, banks require a comprehensive set of documents to open a business bank account. These requirements are in place to verify the legitimacy of the business and its authorized representatives. The specific documents needed can vary slightly depending on the bank and the legal structure of the business.

Commonly requested documents include:

• Articles of Incorporation for corporations
• Articles of Organization or Certificates of Formation for LLCs
• Partnership Agreements for partnerships
• Fictitious Business Name Statement or Doing Business As (DBA) registration, if operating under a name different from its legal name
• State or local business licenses and permits
• Operating Agreement (for LLCs) or Bylaws (for corporations) for multi-owner entities, to identify authorized signers
• Government-issued photo identification, such as a driver’s license or passport, for all authorized signers
• Proof of the business address, like a utility bill or lease agreement

It is advisable for prospective account holders to confirm the exact documentation requirements directly with their chosen bank prior to their visit.

Opening Your Business Bank Account

Once documents, including the EIN or SSN, are gathered, the process of opening a business bank account can commence. The initial step involves selecting a suitable financial institution, considering factors such as account fees, available services, and branch convenience. Researching different banks can help identify one that aligns with the business’s specific operational needs.

After choosing a bank, the business owner can either contact the bank directly or visit a local branch to initiate the account opening process. During this stage, it is essential to present all the previously prepared and completed documentation, which includes the EIN confirmation or SSN, business formation documents, relevant licenses, and personal identification for all authorized signers. The bank will provide its specific account application forms, which will need to be accurately completed at the time of opening. An initial deposit is typically required to fund the new account, though minimum amounts can vary by bank and account type. Upon successful completion of the application and funding, the business can expect to receive debit cards, checks, and access to online banking services, allowing for immediate management of business finances.