Why an LLC Needs a Business Bank Account
Protect Your Personal Assets
LLCs are designed to separate your personal finances from your business. But that protection only works if you treat the business like a separate entity. Commingling funds could void your liability protection.
Simplify Your Taxes and Bookkeeping
One account for business transactions makes it easier to track income, expenses, and deductions. Come tax season, you’ll thank yourself.
Look More Professional
Using a business account helps you build trust with vendors, clients, and customers. It also positions your business for growth when you’re ready to scale.
What You’ll Need to Open a Business Account
Here’s a quick checklist of what most banks (including Midland) will ask for:
- Official business name
- U.S. address for the physical location of the business
- Business Tax Identification Number or Employer Identification Number
- Personal and contact information for the account opener
What Type of Bank Accounts Could an LLC Benefit From
An LLC may benefit from several types of bank accounts, depending on the size, structure, and needs of the business. Here are the most common types:
- Business Checking Account: Can help you receive payments from customers or clients, pay bills and partners, keep business finances separate from personal, and simplify bookkeeping and tax prep.
Good for: Daily business transactions and financial organization, and can even be free with no minimum balance or monthly charge free with no minimum balance or monthly charge.
- Business Savings Account: Ideal for setting aside money for future investments, taxes, or emergencies. May earn interest and useful for short-term savings goals.
Good for: Earning interest on idle cash and building reserves.
- Money Market Account: Combines features of checking and savings with potentially higher interest rates. Some may allow limited check-writing or debit card use.
Good for: LLCs with higher balances looking for a savings account that helps them earn more interest account that helps them earn more interest while maintaining access to funds.
- Certificate of Deposit (CD): Offers a fixed interest rate in exchange for locking in your funds for a set period (e.g., 6 months, 1 year, 2 years, 2 years). Usually offers higher returns than savings accounts.
Good for: Businesses with excess cash that won’t be needed for a while.
- Merchant Services Account: Not a traditional bank account, but a service that allows your LLC to accept credit card and electronic payments allows your LLC to accept credit card and electronic payments. Often linked to your business checking account.
Good for: Industries in the education, healthcare, nonprofit sectors, and more that accept non-cash payments.
FAQs
Does an LLC need a business bank account if I’m the only owner?
Yes. Even single-member LLCs benefit from a separate account for legal and financial clarity.
Can I use my personal bank account for LLC expenses?
You can, but it’s not recommended. It risks your liability protection and creates a mess during tax time.
What happens if I don’t open a business account for my LLC?
You risk “piercing the corporate veil,” which could expose your personal assets to lawsuits and debts.
Ready to Simplify Your Business Finances?
At Midland States Bank, we make it easy to open a business bank account that fits your LLC’s needs, with personalized support and local expertise.
