By Frank Orlando; June 22, 2017
Just formed your business? Need to open up a bank account? When starting a new business one of the main requirements to operate will be to have and maintain a bank account and while it may seem a simple task, it can often be a trying experience. We have been, on an increasing basis, receiving calls from clients that are having issues with the documentation and information required by their bank. With this article, we hope to provide you with some basic information to make the process easier and, in the end, save you time. With that said, please note that all banks are different and may have varied rules and requirements. We suggest that you contact your bank prior to visiting to make sure that you are prepared to satisfy their business banking internal and “law-mandated” (USA Patriot Act of 2001) requirements, most notable being the “know-your-customer” (KYC) requirement, which we will discuss first. We will then review various business type documentation requirements and touch on opening accounts for customers and companies that do not have a physical presence within the United States.
Banking “know-your-customer” (KYC) requirements are implemented to prevent banks, intentionally or unintentionally, from being used for criminal activities; such as money laundering. KYC requirements are easy to comply with and include, but are not limited to, providing banks with the following documentation and information for the business and all business owners, operators, and signers on the account:
You should note that documentation and information of this nature are retained in banking records and are available for inspection by banking regulators.
In addition to the KYC requirements the bank will require specific documentation based on the type of business entity that you operate. This is where a lot of the account opening issues occur. Business owners are not sure what documentation is required and become confused as to where they obtain it (Accumera suggests that you keep all such documentation in your company kit). Further banking officers can confuse the situation if they do not understand that different states and entity types may have different names for the same type of documents. (For example, they request a copy of your Articles of Organization (these are the formation documents specifically for an LLC; however, you are registered as a Corporation and have a Certificate of Incorporation.) Remember that most banking officers are reading from a list of documentation needed which does not account for these variations. Following, please find the various types of business registrations and the associated documentation that your bank may request for each.
Sole Proprietor (If conducting business in this manner you will only need the following documentation if conducting business under a name other than your personal name)
General Partnership (If you do not have one of the documents listed below, simply provide a written statement signed by all partners indicating no written Partnership Agreement exists.)
Corporation (Inc, Corp, Ltd)
Limited Liability Company (LLC)
The above documentation is normally provided by your business formation provider, such as Accumera, or attorney. It can arrive to you blank, and require you to complete to make it valid, or it may already have been completed for you and just require your signature. If you are still unsure how to obtain these documents you should be able to contact your provider for additional assistance.
If the principal office of your business and its owners, operators, and signers on the account are not located within the United States the KYC banking requirements become increasingly difficult to comply with. This has always been an issue with international companies looking to extend their reach into the US market. First, banks require that all account signers are present in the US to sign the associated signature card. Second, the bank requires that the company have a physical presence within the US with a principal office that can be visited to verify identity and to use as a mailing address. Due to associated costs to comply with these restrictions smaller startups may not be able to open a US bank account. However, all is not lost in this respect. Companies like Accumera can provide Virtual Office Services which include, a physical office presence, mail forwarding and phone and fax numbers.
We hope that the above information will make it easier when opening your new business banking account. Please contact us with any questions. Thank you!