Open Business Bank Account with EIN Only: Is EIN Your Key to Business Banking?

How to Manage Multiple Bank Accounts for an Ecommerce Business

When starting a business, one of the most crucial steps is setting up a business bank account. Not only does it make tracking business expenses and revenue more manageable, but it also adds legitimacy to your venture. Many new business owners wonder if they can open a business bank account with EIN only. This article provides a comprehensive look into this topic, ensuring you have all the information you need.

What is an EIN?

An Employer Identification Number (EIN), sometimes referred to as a Tax Identification Number (TIN) or Federal Employer Identification Number (FEIN), is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in the United States. It’s used for tax reporting and other business-related purposes.

EIN definition

Here are some key points about the EIN:

Purpose The EIN is used by the IRS to identify a business entity for tax purposes. It’s akin to how an individual’s Social Security Number (SSN) is used, but it’s for businesses rather than individuals.
Who needs one?Most businesses need an EIN. This includes corporations, partnerships, and limited liability companies (LLCs). Even sole proprietorships might need an EIN if they have employees or if they meet other criteria.
How to obtainBusinesses can apply for an EIN online through the IRS’s website. The process is free, and, in most cases, the number is provided instantly upon completion of the application.
UsesBeyond tax reporting, EINs are often required to open business bank accounts, apply for business licenses, and complete employee payroll.
SecurityJust as with an individual’s SSN, it’s essential to keep your business’s EIN secure. While it’s not as sensitive as an SSN, it’s still a critical piece of information that can be used in identity theft if mishandled.
DurationOnce an EIN has been assigned to a business entity, it will not be reused or reassigned by the IRS. Even if the business closes or goes bankrupt, the EIN will not be reused.

In summary, the EIN is a foundational element for many businesses, serving as an identifier for tax and other business-related functions.

Learn how to register your business in the USA

Can you open a business bank account with EIN only?

No. Opening a business bank account typically requires more than just an EIN, even though the EIN is a critical component. The EIN verifies the business’s identity and its legitimacy to operate, but banks often have due diligence measures in place to prevent fraud, comply with regulations, and ensure they have a comprehensive understanding of the business they’re serving.

Here’s what you usually need in addition to an EIN to open a business bank account:

Personal identification

Even if you’re using an EIN for the business, banks will want to know who is behind the business. They typically require personal identification, such as a driver’s license or passport of the business owners or primary operators.

Business documentation

Depending on your business structure, this could include:

  • Articles of incorporation;
  • Partnership agreements;
  • LLC operating agreements;
  • Fictitious name certificates or DBA (Doing Business As) documentation.

Business license

Some banks may ask for proof that you’re authorized to conduct business in your state or locality, which can be shown with a business license or permit.

Organizational resolutions

If there are multiple business owners or key stakeholders, the bank may need an organizational resolution that specifies who is authorized to act on behalf of the business regarding its banking matters.

Physical address

A physical address of a business (not a P.O. Box) is often required. This could be a storefront, office space, or even a home address for some small businesses.

Business information

Details such as the nature of your business, expected annual revenue, anticipated account activity (like average business balance and number of transactions), and more might be needed.

Initial deposit

Many banks require an initial deposit to open a business bank account. The required amount can vary widely between banks.

It’s worth noting that requirements can vary between banks, credit unions, and other financial institutions. Online banks or financial technology companies offering business banking services might have slightly different or streamlined requirements. It’s always a good idea to check directly with the institution you’re interested in to get a detailed list of requirements.

Why can’t you open a bank account with EIN only?

Opening a business bank account with just an EIN (Employer Identification Number) is often not possible due to a combination of regulatory requirements, bank policies, and risk management considerations. Here are several reasons why banks typically require more than just an EIN to open a business bank account:

1. Verification of business identity and legitimacy

While the EIN confirms the business’s tax identity, banks need to ensure that the business is legitimate and operating within legal bounds. Additional documents like business licenses, Articles of Incorporation, or Articles of Organization can help validate the business’s existence and its lawful operation.

2. Know your customer (KYC) regulations

Banks are subject to KYC regulations, which require them to identify and verify the identity of the individuals behind business entities. These regulations aim to prevent financial crimes such as money laundering or fraud. Providing personal identification of the business owners or key stakeholders, in addition to the EIN, helps banks comply with these regulations.

3. Risk management

Banks need to assess the potential risks associated with a new business account. Understanding the nature of the business, its expected transaction volume, and its ownership structure helps banks determine the risk level and ensure they are not unknowingly facilitating illegal activities.

4. Business account protection against fraud

By requiring multiple documents, banks create a more robust barrier against fraudulent activities. If opening an account was as simple as obtaining an EIN, it could become a potential loophole for fraudsters to exploit.

5. Determining signatory rights

Especially for businesses with multiple owners or stakeholders, banks need clarity on who has the authority to make financial decisions and transactions on behalf of the business. Organizational resolutions or partnership agreements can provide this clarity.

6. Proof of business operation in a jurisdiction

Banks often want to confirm that the business is authorized to operate in a specific state or locality. This can be demonstrated with business licenses, permits, or other local registration documents.

Types of business bank accounts

There are several types of business bank accounts, each tailored to meet specific business needs. Here are the main variants:

Business checking account

Purpose: This business account handles daily transactions, receive payments (invoice or other payment options), and pay expenses.

Best for: All businesses, from sole proprietorships to large corporations, for routine financial operations.

Business savings account

Purpose: Set aside and grow excess funds not needed for daily operations.

Best for: Businesses looking to earn interest on surplus funds while keeping them accessible.

Merchant services account (merchant account)

Purpose: Accept credit and debit card payments.

Best for: Retail businesses and e-commerce websites that need to process card payments.

Business certificate of deposit (CD)

Purpose: Invest surplus cash for a fixed term to earn higher interest than a regular savings account.

Best for: Businesses with excess cash reserves looking for a higher interest rate and can commit funds for a set period.

Business money market account

Purpose: Earn a higher interest rate than standard business savings accounts while retaining some transaction capabilities.

Best for: Businesses wanting to earn a higher interest rate while retaining some liquidity.

Business credit account

Purpose: Allow businesses to buy now and pay later, often with a revolving credit line.

Best for: Managing business cash flow, handling unexpected expenses, or taking advantage of business opportunities.

Foreign currency (or international) business account

Purpose: Handle transactions in foreign currencies without the need for frequent conversions.

Best for: Businesses that operate internationally, import/export businesses, or those with clients overseas.

Learn how to manage multiple bank accounts

Steps to open a business bank account for small business

1. Obtain your employer identification number (EIN)

Before approaching a bank, ensure you have an EIN if your business structure requires one.

The EIN, provided by the IRS, is used for tax purposes and is often necessary for businesses with employees or those structured as corporations or partnerships. Sole proprietors may use their Social Security Number (SSN) but can also obtain an EIN if they prefer.

You can apply for an EIN online through the IRS’s website. It’s a free process and, in most cases, you’ll receive the number instantly upon completion.

2. Choose the right bank or financial institution for business account

When selecting a bank for your business, consider:

  • Fees and service charges;
  • Transaction limits;
  • Interest rates (for savings accounts);
  • Online banking services;
  • Proximity to physical branches;
  • Customer service reputation.

3. Gather necessary documentation

When opening your bank account, make sure to have all the necessary documents on hand. The exact documents required can vary, but they typically include:

  • Your EIN or Social Security Number (for sole proprietors);
  • Business license;
  • Business name filing document;
  • Articles of Incorporation (for corporations) or Articles of Organization (for LLCs);
  • Partnership agreement (if applicable);
  • Organizational resolutions (if there are multiple owners).

4. Visit the bank (or apply online)

While many banks prefer to open accounts in person, some offer the option to open small business accounts online.

5. Fill out the application

Provide the requested information about your business and its stakeholders to open your business bank account.

6. Make an initial deposit

Many business accounts require an initial deposit. Check the amount in advance.

7. Review and understand the fee structure

Be aware of potential fees: monthly fees, transaction fees, minimum balance fees, etc. Some banks may waive fees with a specific minimum balance.

8. Set up online banking and other services

Once your business account is active, set up online banking, mobile banking, alerts, or payment processing tools as required.

9. Maintain your account

Regularly monitor your business account to track finances and spot unauthorized activities. Always separate business and personal expenses.

10. Consider additional business banking services

As your business evolves, you might need more banking services like credit cards, loans, or lines of credit.

Reasons to open a business bank account

Opening a business bank account is a fundamental step for entrepreneurs and offers numerous benefits. Here are several compelling reasons to open a business bank account:

Separation of personal and business finances

Using a business bank account conveys professionalism when dealing with clients, vendors, or partners. Keeping personal and business transactions separate simplifies accounting and bookkeeping processes.

For LLCs and corporations, maintaining a clear distinction between personal and business finances is essential to preserving the liability protection that these structures offer. Commingling funds can jeopardize this legal protection.

Tax compliance and simplification

Easier reporting. A business bank account makes it more straightforward to track deductible expenses and report income, simplifying tax preparations. In the case of an IRS audit, having a separate business bank account provides clearer documentation and evidence of business transactions.

Enhanced credit opportunities

Establishing a business banking history can be beneficial when seeking business loans or credit lines in the future. Lenders and creditors often review banking records to assess financial health and stability.

Cash flow management

Business bank accounts, especially those with integrated accounting tools, can help entrepreneurs monitor their cash flow, ensuring that they have enough liquidity to cover operational costs.

Access to business services

Many business bank accounts come with additional services such as merchant services, payroll processing, and business credit cards. These can be invaluable for streamlining operations and expanding capabilities.

Building a business credit profile

Just as individuals have personal credit histories, businesses also have credit profiles. By using a business bank account responsibly, especially in conjunction with business credit cards or loans, a company can build its creditworthiness.

Enhanced features for business needs

Business bank accounts often offer features tailored for business operations, such as higher transaction limits, advanced online banking tools, and the ability to delegate financial tasks to business employees or accountants.

Preparation for business growth

As a business expands, its financial management needs become more complex. Starting with a business bank account lays a foundation for future growth, allowing smoother transitions as the company scales.


While the EIN is a foundational identifier for small business, especially concerning taxation, it is only a piece of the puzzle when opening a business bank account. The comprehensive process is in place to protect both the bank and the business, ensuring that the financial system remains secure, transparent, and compliant with legal regulations. If you’re looking to open a business bank account, it’s essential to prepare and gather all necessary business documents to ensure a smooth and successful process.

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