How to Get an EIN and Open a Business Bank Account
Two of the first practical jobs for a new US business are getting an Employer Identification Number and opening a business bank account. Done in the right order, with the right documents in hand, both can be quick. This guide walks through each step. It is general information, not legal or tax advice, and requirements differ by state and by bank, so confirm the details with the IRS, your state and your chosen bank.
Key takeaways
- An EIN is a federal tax ID for your business, and the IRS issues it free, with an online application available.
- Sole proprietors without employees can often use their Social Security number, but many banks and clients still ask for an EIN.
- Form your business with your state first if you plan an LLC or corporation, then get the EIN, then open the account.
- Banks usually ask for your EIN, formation documents, personal ID and information about the owners.
Keeping business money in a separate account makes bookkeeping easier, gives you a clean record for taxes and helps you look professional to customers and suppliers. For LLCs and corporations, a separate account is also an important part of keeping the business distinct from its owners. To open one, most banks will want a tax ID for the business, and for many owners that means an EIN.
The process below covers the usual order of steps. Your situation may differ depending on your business structure, your state and the bank you choose.
What an EIN is and who needs one
An Employer Identification Number is a nine-digit number the IRS assigns to identify a business for federal tax purposes. Despite the name, you do not need employees to get one. Think of it as a Social Security number for your business.
Whether you must have an EIN depends on your structure and activities. As a general guide:
| Situation | EIN usually needed? |
|---|---|
| Sole proprietor, no employees | Often optional: many can use their SSN, though banks and clients may ask for an EIN |
| Business with employees | Generally yes |
| Partnership | Generally yes |
| Corporation | Generally yes |
| Multi-member LLC | Generally yes |
| Single-member LLC, no employees | Depends on tax situation; banks often ask for one |
The IRS sets the rules on who must have an EIN, and they can change. Check the IRS website or ask a tax professional about your own situation.
Pro tip
Even if you are a sole proprietor who could use your SSN, an EIN lets you give clients a number for their tax paperwork without sharing your Social Security number. Many freelancers get one for that reason alone.
Step 1: Set up your business structure first
Your EIN is tied to a specific legal entity. If you plan to form an LLC or corporation, do that with your state before applying for the EIN, so the number belongs to the entity and not to you personally. Business structures and state registration rules vary by state, so check with your secretary of state or equivalent office.
- Choose your structure. Sole proprietorship, partnership, LLC or corporation.
- Register with your state if required. LLCs and corporations file formation documents with the state. Sole proprietors and general partnerships may not need to.
- Register a trade name if you use one. If you trade under a name other than your own or your entity's legal name, you may need to register it, often called a DBA or assumed name. Rules differ by state and county.
- Keep the approval documents. You will need them for the EIN application and the bank.
Common mistake
Getting an EIN as a sole proprietor and then forming an LLC later. A change of structure can require a new EIN, and your bank account may need to be reopened in the entity's name. If you already know you want an LLC, form it first.
Step 2: Apply for your EIN with the IRS
The IRS issues EINs free of charge, and you can apply online. Before you start, gather the information the application will ask for:
- The legal name of the business, and any trade name
- The business mailing address and physical location
- The type of entity, as registered with your state
- The name and taxpayer ID of the responsible party, usually an owner or principal officer
- The reason for applying, such as starting a new business
- The start date and main business activity
- Whether you expect to have employees
When the application is approved, you receive your EIN and a confirmation notice. Save it as a PDF and print a copy. Banks, payroll providers and some clients will ask for proof of your EIN, and the confirmation is the simplest way to show it.
Watch out for paid lookalike sites
Some websites charge a fee to "file" your EIN application for you. Because the IRS issues EINs free, there is no need to pay a third party. Make sure you are on the official IRS website before entering any details.
Step 3: Choose a bank and account
With your EIN in hand, choose where to bank. Think about how your business will actually use the account:
- How you get paid: card payments, transfers, checks or cash deposits.
- How many transactions: some accounts limit free transactions or deposits.
- Fees: monthly fees, minimum balance rules and transfer charges vary widely between banks.
- Integrations: whether it connects to your accounting and payment tools.
- Branch access: whether you need to deposit cash in person.
- Extra users: whether a partner or bookkeeper needs access.
Comparing account types in detail is a topic of its own. For this guide, the key point is to choose the account before you gather documents, because each bank has its own list.
Step 4: Gather the documents banks usually ask for
Requirements differ by bank and by business structure, but most banks ask for some combination of the following:
| Document | Sole proprietor | LLC | Corporation |
|---|---|---|---|
| Government-issued photo ID for each signer | Yes | Yes | Yes |
| EIN confirmation or SSN | EIN or SSN | EIN | EIN |
| Trade name (DBA) registration, if used | Often | If used | If used |
| State formation documents | No | Yes | Yes |
| Operating agreement or bylaws | No | Often | Often |
| Resolution authorizing account signers | No | Sometimes | Often |
| Business license, if required locally | Sometimes | Sometimes | Sometimes |
| Information on owners and controllers | Yes | Yes | Yes |
Banks are required to verify who owns and controls the businesses they serve, so expect questions about every owner with a significant stake and anyone who manages the business. Have names, addresses, dates of birth and ID numbers ready.
Example
Imagine two friends who form an LLC to run a mobile coffee cart. They file formation documents with their state, apply for an EIN online the same week and download the confirmation. Before applying for a bank account, they check the bank's document list and see it asks for the operating agreement, which they had not written yet. They draft and sign one, then open the account online with both of them as signers in a single session.
Step 5: Open the account and set it up properly
- Apply online or in a branch. Upload or bring your documents and answer questions about your business activity and expected transactions.
- Make the opening deposit. Some accounts require a minimum deposit to open.
- Set up online banking and users. Add co-owners or a bookkeeper with the right access level.
- Order a debit card and checks if needed.
- Connect your tools. Link the account to your accounting software and payment processors.
- Update your payment details. Give clients and platforms the new account for payments, and move business subscriptions to the business card.
Pro tip
From day one, run every business transaction through the new account and nothing personal. If you need money from the business, transfer it to your personal account as an owner's draw or salary, as appropriate for your structure. A clean separation saves hours at tax time.
Once the account is running, store your EIN confirmation, formation documents and account opening paperwork together in one secure folder. You will need them again when you apply for a loan, set up payroll, open a merchant account or register with a new supplier. Review the account's fees after the first few months as well: if your transaction volume turns out higher or lower than you expected, a different account type at the same bank may suit you better.
Your EIN and bank account checklist
- Choose your business structure
- Register your LLC or corporation with your state, if applicable
- Register a trade name if you will use one
- Apply for a free EIN on the official IRS website
- Save and print your EIN confirmation
- Pick a bank and check its document list and fees
- Gather ID, formation documents, operating agreement and owner details
- Open the account and add the right users
- Connect accounting software and payment tools
- Move all business income and expenses to the new account
Frequently asked questions
Can I open a business bank account without an EIN?
Some banks let sole proprietors open a business account with their Social Security number. LLCs with more than one member, partnerships and corporations will generally need an EIN. Check with the bank before you apply.
Do I need a new EIN if I change my business?
Sometimes. Changes such as moving from a sole proprietorship to a corporation can require a new EIN, while some other changes do not. The IRS publishes guidance on when a new number is needed, so check it or ask a tax professional.
Can I use my personal account for my business?
A sole proprietor may legally be able to, but it makes bookkeeping and taxes harder and can blur the line between personal and business spending. For LLCs and corporations, mixing funds can weaken the legal separation between you and the business.
Is this the same in the UK?
No. The UK has no EIN. Sole traders register with HMRC for Self Assessment, and limited companies register with Companies House. Many UK banks also ask for proof of registration and ID when opening a business account.
Related reading
The bottom line
Getting an EIN and opening a business bank account are quick wins that set up clean finances from the start. Form your entity first if you need one, apply for your free EIN directly with the IRS, choose a bank that fits how you get paid, and gather the documents it asks for before you apply.
Rules for EINs, business registration and bank documentation vary and change over time. Check the IRS, your state's business registration office and your bank for current requirements, and ask an accountant or attorney if your situation is not straightforward.
