What is a Business Bank Account?
Opening an LLC is a great idea for anyone who would like to reduce their exposure to liability. Under this structure, the business takes accountability for its actions and is thus liable for its operations. What a good idea, right? No wonder many people opt to go down this route. However, there are some caveats. The law will only recognize the distinction between you and the business operations if you separate your assets. Without this, you will be one as far as fiscal matters are considered. If anyone sues you, the law can come after what is in your personal accounts if that is where you have been directing your revenues. You are thus safer opening a business bank account as we will cover today:
Why does an LLC need a bank account in Texas?
The main reason to open a business bank account for LLC is protection from losing what belongs to you in the event that you face some legal troubles. The law will be fair to you such that it will come after what has accrued from the business. However, it can only do this if the divide is clear between what’s yours and what belongs to the company. That is the beauty of opening a business bank account in Texas. Other than this, here are some other reasons why you might want to set up an account.
- You will have an easier time telling what you have made in a given period. For example, by looking at your records for a given month, you can easily tell what you have collected as revenue and what you have spent in expenses. Given the simplicity of the divide, you will likely not need help to interpret the statements.
- You will not have a challenging time when computing what you owe to the authorities. Even if you bring in a professional to help, they will work through the numbers without the need to separate what belongs to you. The time and money spent on these processes will be minimal.
- You will appear professional and credible in your dealings and more people will be open to working with you. The minute people see that you can separate your monies, they build trust in you and see your establishment as permanent and worth investing in. However, when working with personal accounts, you may come off as not serious, more so where you run the enterprise from home.
- You will build a stable relationship with your finance institution when you open a Texas LLC bank account. If you ever fall into hard times or need a loan to further your operations, getting them to sign the required paperwork will not be so hard.
What is the Difference Between a Business Bank Account and a Personal Bank Account?
The disparity lies in the monies held by the two as follows:
- Personal – this holds monies that are yours and not related to the business operations. For example, when you pay yourself a profit, this money goes into this account. It is yours and as per the law, nobody can come after this even if you have business debts.
- Business – this holds what belongs to the operations. It relates to what accrues from the operations as well as what you spend on the business. Suppose you have liabilities; the law comes after this money. Also, note that by law, this is a requirement as it ensures you can enjoy a corporate veil. Most financial institutions also insist that their members separate their finances.
Best Business Banks in Texas
When choosing a bank, you should take some things into consideration. These include:
- Your fiscal needs. All organizations have different needs. You might find that you run an online shop that requires you to have an account you can easily access online. In this case, you would need an institution with up-to-date technology.
- Your business needs. You have to consider where you are and where you would like to be in the future. Take an example where you would like to borrow financing to grow your business, you are better off in an institution where you can capitalize on personal relationships.
- The features. By going through online reviews and asking around, you can understand what an institution has to offer. Key areas include the customer service, the fees, mobile and online services and other areas of importance to your operations.
- Your future. You should also think about where you would like to see your organization in the future and if an institution can help you get there. Sure, right now all you need might be a simple online account but in future, you may want to adopt a savings account. Does the institution have the tiers you might consider years from now?
These are but some of the things you should keep in mind when selecting from free small business bank accounts in Texas. Here are some ideal options at present:
- For Growing Businesses: Texas Capital Bank
- For Nationwide Access: Chase Bank
- For Branches: BBVA Compass
- Best Business Credit Union in Texas: Texas Trust Credit Union
Can I Open a Business Bank Account Online in Texas?
You can also choose to open your bank account for LLC Texas online where you can get services at the tap of a button. It mostly works for people who are outside the state and would rather get the work done without having to be physically present. When doing this, look up the reviews of several institutions and whether they offer any perks besides the ordinary features. Please note that some services do not have as much support as you would get from brick-and-mortar options.
What does a bank need in Texas to open a business account?
Institutions vary when it comes to requirements and the best way to be prepared is to call before heading there physically. The customer support should take you through what you need, which will likely include the following:
- Your certificate of formation
- Your ID – ideally, you should carry two forms, with at least one of these having your picture
- Your EIN confirmation letter
- Your operating agreement- it should show who has the right to operate the account and you might have to come with a resolution from the members
For added documentation for your bank of Texas business account, you may want to seek clarification with your institution of choice.