Once an LLC is established, one of the company's first resolutions will be to define its banking activities. In this sense, an LLC Banking Resolution defines each member of the LLC's privileges, obligations, and roles as relates to the company's bank account.
An LLC Banking Resolution is used to open the LLC's bank account. It also serves as proof of authority to financial institutions.
An LLC Banking Resolution is a formal document needed for an LLC to establish a bank relationship. It defines the representatives who are authorized to manage the company's bank account, including their roles and privileges.
Depending on your state, an LLC Banking account may also be known as:
Limited Liability Company Banking Authorization Resolution
Corporate Resolution to Open Bank Account
You may need an LLC Banking Resolution to open a business banking account. This document defines the relationship with the banking institution and persons within the company who can access the account.
Other reasons for an LLC to have a business banking account are the ease of tracking business expenses, audit prevention, and financial record-keeping (including reserves and the payment of taxes). Opening a business banking account also makes your business more credible and professional. For instance, your customer can write a check in your LLC's name rather than your personal name.
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To create your document, please provide:
Effective date: The date when the LLC Banking Resolution goes into effect.
State of formation: The State where your LLC is established.
Resolution: Select if the managers, members, or both are to pass the resolution.
Type of meeting: For the passage of the resolution, define if the session is regular, annual, or particular.
Date of the meeting: Specify the date of the meeting.
Signing representative title: The signing representative can be the CEO, treasurer, president, vice-president, or another person of authority in the LLC.
Signing representative name: Only the full legal name is needed, with no other personal data.
Date of the resolution certification: To be filled in when the resolution is certified.
Bank name: Full name of the banking institution with which you want to work.
The address: The full street address of the bank or branch location.
Authorized signatories: The people who are authorized to transact with the bank.
Permissions: Select if the authorized signatories can establish a night depository and safe deposit box on behalf of the company.
Safe-deposit box: Kept in a bank vault, this deposit box is typically used to hold valuables and essential documents.
Night depository: When a company needs to deposit their daily receipt outside of regular working hours, it can establish a night depository.
LLC: The limited liability company is the entry-level company structure removing the owner's liabilities, which can also be for a non-profit.
Resolution adoption: An LLC Banking Resolution can pass resolutions with or without a meeting, depending on the agreement.
Resolution certification: Certification is optional if the bank doesn't require it. However, it might be useful if the bank has to work with other organizations in your name.
An LLC Banking Resolution needs to be signed by the authorized signatories. They are the only representatives allowed to access the company's bank account. Representatives are usually the president, vice president, CEO, treasurer, or members of the management.
After reviewing the document, your LLC Banking Resolution should be certificated if the bank requires it. During this process, one or more LLC representatives would be signing the certificate.
Your LLC keeps a copy of the certified resolution in its corporate records book, together with the rest of its official records. It may be presented to financial authorities if so requested. Keep an electronic copy of the LLC Banking Resolution as a backup.
A copy of the resolution is sent to the designated bank, which uses it to open an account and defines the authorized users' list.
When opening a bank account as an LLC, the bank representative may ask for your DBA (Doing Business As). You would only have to explain that your LLC is operating under its legal name, so it doesn't need a DBA. However, there is an exception in the event that your LLC is registered under one name but operates under another one, in which case you will need to bring the DBA approval when opening the bank account.
If you are only starting your LLC, you might think there is no need to open a business bank account. However, you have to do it as the LLC is a separate entity that provides you with limited liability protection. Using your personal bank account may blur the line and make it easier for claimants to go after your personal assets.
There are other benefits to having a separate bank account for your LLC, and the most important is credibility. Other companies may want to work with you more if you pay in your company's name. Also, keeping your business and personal account separate makes it easier to calculate taxes owed. If you are paying an accountant, the fees will be lower if the business account is separated.
If you represent a single-member LLC, you can use your SSN, and some banks will recommend that option. However, your LLC’s EIN is a better option as the record-keeping is easier, and it protects your privacy. To receive your EIN, wait for the approval of your LLC and then apply for one with the IRS or your state’s department of taxation and finance. This service is free of charge as you’ll need it to file taxes for the LLC or to collect sales tax (assuming that your state charges sales tax). If you are the only member of the LLC, you will be the person responsible for the EIN. If the LLC has more members, you have to decide who will be the EIN Responsible Party. Only one person in an LLC can be the EIN Responsible Party.
Every bank handles its business clients differently. That's why it's important to ask several questions before deciding to work with them. Ask the following for a start:
What time of the day guarantees the quickest service?
What documents are required to open the account?
Should all LLC members be present when signing the contract?
Are there any monthly fees?
What is the minimum monthly balance?
What is the minimum initial deposit?
Is there anything else that I need to know?
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