Can I Open a Business Bank Account Without an EIN?
There’s something strangely exciting about setting up a business bank account as a new business. It’s cool to have something with your company’s name on it—it feels totally legitimate. As you go through the process, though, you could run into a few stumbling blocks with the details, with questions including Can I open a business bank account without an EIN?, or simply not knowing which business bank account to pick.
You’re absolutely not alone. Without answers to these questions, your quest to open a business bank account without an EIN—or open one at all!—could come to a screeching halt. Bottom line? It’s important to know a few things about that business tax ID number you’ve (hopefully) gotten your hands on, and how it affects whether or not you can open a bank account.
Here’s everything you should know about opening a business bank account without an EIN, and some other helpful information on EINs and business bank accounts in general.
Can I Open a Business Bank Account Without an EIN? The Quick Answer
Sometimes—though not often, and mostly only for single-person enterprises.
We don’t mean to equivocate just because; rather, it’s due to a large portion of banks requiring you to provide an EIN when you inquire. It depends on the bank and their policies. So, you’re best off calling them to find out if you do need one.
But, before you hop on the phone, you it’s extremely important to understand why some banks won’t allow you to open a business bank account without an EIN. Here’s more.
Why an EIN Matters to Open a Business Bank Account (and Matters in General)
Let’s do a super-quick refresher on EINs in general so you can get a sense for why they’re important to open a business bank account—and, sometimes, required.
An EIN stands for an “employer identification number.” You may also know it as a “business tax ID.” (They’re the same thing.)
You know how you have a social security number as an individual? You’re best to think of an EIN as an SSN for a business—a unique identifier. And, you know how you also provide your SSN on individual tax forms? You can probably see where we’re going with this: You’ll be asked for your EIN for lots of business purposes but, primarily, for tax reasons.
Why an EIN Is Important to the IRS
We mentioned taxes, which is why we’re now going to mention the IRS. The United States Internal Revenue Service—i.e. the tax collecting government agency—requires nearly all businesses to have one of these.
The IRS needs this nine-digit number in order to tax your business correctly based on its revenue, workers, classification, etc. (Don’t worry—you don’t need to keep track of this info to report to them. They do it on their end.) If you have or are planning to employ workers or contractors; file as an LP, LLC, S-corp, or C-corp; have a Keogh plan; or are involved in certain types of businesses and trades, then you’ll need an EIN.[1]
Without it, the IRS sees you as an private individual taxpayer. (Relatedly, you don’t need an EIN if you’re a sole proprietor or single-member LLC—those are the exceptions.)
How to Get an EIN
If the reason you’re asking Can I open a business bank account without an EIN is because you haven’t gotten around to getting one yet, then stop. Go ahead and apply for an EIN—it’s probably a much easier, less time-consuming process than you think.
Here’s a detailed breakdown on how to apply for an employer identification number (EIN). But the abridged version is put aside about a half hour and go to the IRS’s site to fill out a Form SS-4.
Can I Open a Business Bank Account Without an EIN? The Rest of the Answer
With those EIN basics out of the way, let’s get back to the question at hand.
Why Would a Bank Require Your EIN?
Banks are very, very concerned about legality. They want to make certain that your business is legitimate and also confirm your identity as the party opening up this business bank account. If they don’t, they open themselves up to risk about whether or not you’re actually authorized to conduct business and the legality of the business you’re conducting.
As the EIN confirms details of your identity and business dealings, many banks prefer to have this information.
It’s important to note that an EIN is not the only documentation most banks require to open a business bank account; sometimes, they’ll need to see licensure or other documents to comply with their regulation and governance principles.
What exactly do you need to open a business bank account? Click for more info.
Options to Open a Business Bank Account Without an EIN
As we mentioned before, single-person LLCs and sole proprietors aren’t technically required to have an EIN, since they’re still taxed as individuals. In that case, you may not want to get a unique business tax ID (more on that in a moment) and just want to open a business bank account without an EIN.
And it’s possible. To double check, you’ll have to call a few different financial institutions and find out their policies. Some may be open to just using your SSN to register due to your business entity setup.
And for other business entities? Again, it’s possible you can show other documentation in lieu of an EIN—but we’ll stress that the amount of time you’ll spend calling different places to find one that doesn’t require an EIN will probably take more time than just applying for one.
Should I Just Open a Non-Business Bank Account, Then?
No. Again, you can, but your business finances should not only be separate from personal finances, but should be delineated as so.
A Note on Separating Business and Personal Finances
Especially if you’re just starting your business, it’s time you hear the refrain: Separate your personal and business finances. There are a ton of reasons why this is important (that link has them in there).
But, simply, you can get in trouble come tax time if you’re not reporting your business income correctly—even if it was just an honest mistake from not keeping good track of what’s personal cash versus business cash. Plus, tax time becomes an even bigger headache for you or whoever is doing your taxes if they have to start parsing your finances on, say, April 10.
Most importantly, however, if your business finances are tied up as personal, you could be liable personally for anything bad that could happen to your company (say, a lawsuit). In other words, do yourself a favor and not only open a business bank account, but get that EIN, too.
Other Benefits of an EIN (Besides Opening a Business Bank Account)
Are we on a mission to convince you to apply for an EIN? It doesn’t matter! You should come to the conclusion yourself that applying for an EIN is the right move for your business. On top of not having to worry about opening a business bank account without an EIN, here’s some other great stuff you can do with an EIN:
Apply for a business loan.
Sometimes it’s hard to see down the line if you’re just starting your business, sure. But, if you’re planning to grow your business—or, hey, maybe even if you don’t anticipate it—you want to consider how you’d potentially obtain business financing. Lenders don’t require an EIN, but you can speed along your process with one.
Apply for a business credit card.
Speaking of keeping your business and personal finances separate, you’ll want to make sure that you have a business credit card in hand for your spending. An EIN will enable you to apply for a credit card for your company. (Which you should really do ASAP to start building business credit.)
Secure your identity.
Even if you’re not in the market for a credit card or loan, you are into the idea of preventing identity theft, right? Surprisingly enough, an EIN can help you protect yourself. Without an identification number for your business, you’ll be using your personal identification number, i.e. your SSN. The more you use that number and share it around, the higher the probability it could be stolen. Although, yes, a stolen EIN could happen, it’s not viewed nearly as big of an issue as a stolen social security number. For that reason alone, get an EIN.
Legitimize your operation.
Businesses without EINs are, of course, legitimate operations. An EIN, however, enables you to hire contractors or employees, which takes your business to another level. Additionally, when you’re providing services to vendors, you can come off as a more serious, established operation if you use an EIN on a Form W9, for instance, instead of your social security number.[2]
Opening a Business Bank Account Without an EIN
So, can you open a business bank account without an EIN, just using your SSN? Sometimes, but rarely. Many major and smaller banks require an EIN as part of the normal documentation they collect for opening an account. Freelancers, sole proprietors, and single-person LLCs can sometimes get by with just their personal ID via social security.
That said, there are many of benefits to enjoy for your business with an EIN to make sure you’re set up to thrive now and grow in the future.
Sally Lauckner
Sally Lauckner is the editor-in-chief of the Fundera Ledger and the editorial director at Fundera.
Sally has over a decade of experience in print and online journalism. Previously she was the senior editor at SmartAsset—a Y Combinator-backed fintech startup that provides personal finance advice. There she edited articles and data reports on topics including taxes, mortgages, banking, credit cards, investing, insurance, and retirement planning. She has also held various editorial roles at AOL.com, Huffington Post, and Glamour magazine. Her work has also appeared in Marie Claire, Teen Vogue, and Cosmopolitan magazines.