Colorado Business Bank Account

How to Open a Bank Account for Your Colorado Business

Whether your business is looking to accept payments from customers, or make purchases with vendors, you’re going to need to set up a Colorado business bank account. Opening a bank account for your business is a pretty important step, but with a little research, organization, and planning, the whole process will be relatively straightforward.

Get an EIN for Your Colorado Business

Your first step to opening a business bank account in Colorado is to get an employer identification number, or EIN, from the IRS. The primary purpose of an EIN is for the IRS to identify your business when you submit federal filings. Banks, however, also tend to require EINs, which they use to verify the legitimacy of your business and prevent identify theft or fraud.

In most cases, particularly if you have an LLC or corporation, the bank will require an EIN. You may be able to provide your personal social security number in lieu of an EIN(particularly if you have a sole proprietorship) but that can potentially put your personal information at greater risk.

To get an EIN you can visit the IRS website, complete a questionnaire, and if you have a US social security number you’ll have your EIN in under an hour. Don't feel like doing all that? When you hire Colorado Registered Agent for your Colorado company formation , we can get you an EIN for a one time fee of $50. You won’t have to lift a finger.

What Documents Will You Need to Open a Business Bank Account?

You can’t just waltz into a bank empty-handed and open a business bank account. In fact, it is a good idea to call the bank ahead of time in order to confirm exactly what documentation they require. No point in going all the way down to the bank and trying to open an account only to realize you don’t have your paperwork in order. Most banks will need the following information:

Social security number or employer identification number (EIN)
Driver’s license, passport, or other accepted personal identification
Business license with the name of the business and the owner’s name or names
Organizing documents that have been filed with the state
Bylaws, operating agreement or partnership agreement—especially if your business has multiple owners.

In some cases, you may also want a resolution to open a bank account. If your formation and organizational documents don’t explicitly give the power to open a bank account to a particular person or position, it often helps to draft a formal resolution granting someone this power.

How to Choose a Bank for Your Colorado Business Bank Account

While you probably already have at least one personal account with either a local or national bank, that doesn’t mean you have to stick to who you know. When choosing a bank, you’ll want to consider factors such as:

Interest rates for lines of credit: As your business grows, you might want to look into getting a loan or line of credit from your bank. Make sure you choose one that offers competitive interest rates, so that you don’t end up paying an arm and a leg.
Minimum account balance fees: Is there a minimum deposit to open the account? Will you be able to meet the daily or monthly requirement of minimum account balance required by the bank? Double check the bank’s offering to make sure you won’t be surprised by extra fees.
Transaction fees and caps: Business checking accounts may place limits on the number of monthly transactions and total cash deposits. Accounts with transaction limits will also incorporate fees for exceeding them. As a small business, every penny counts, don’t waste your hard earned money on fees if you don’t have to.
Interest rates for savings and checking accounts: You’re going to want to find a bank that offers competitive rates for their interest-bearing business checking account and savings accounts. Finding the business bank account with the best rate possible means your money has more opportunity to grow.
Additional business services available: Need a credit card processor? Regular notary services? Frequent currency exchanges? Some banks are better equipped to offer niche services that may benefit your business.
Any special offers the bank may have for new businesses: Some banks offer interest on business checking accounts. It might be a good idea to look around for one that does. Who doesn’t like free money?

Once you’ve found the bank that best suits your needs, and you have all your paperwork in order, you’re good to go!

Benefits to Opening a Business Bank Account

Why is it so important to open a business bank account for your Colorado business? Sure, opening an account will help you with accepting payments and paying bills. But a business bank account will also help your Colorado business with so much more.

Protect Your Liability

LLCs and corporations are designed to protect your personal assets in the event of bankruptcy or legal action. Business owners can lose liability protection if they co-mingle personal and business finances, which can result in creditors, and even the IRS going after personal assets to collect on a debt or judgment. A separate bank account for your business finances will bolster liability protections for you and your business.

Keep Your Accounting Organized

Separating your business funds from your personal funds is important. Not only will it make your monthly accounting easier, it also will keep you in the good graces of the IRS. Another issue with co-mingling your business and personal accounts is that it will make it harder to claim and deduct “business expenses” come tax time, and the IRS may look at your tax return side eyed. The last thing you want is the IRS on your back, which is another reason why setting up a separate bank account for your business is necessary.

Look Legitimate

Wouldn’t you feel more comfortable making a check out to Mary’s Lawn and Landscaping versus making the check out to a person? Between being able to pay vendors with business checks and having customers be able to write checks to your business or see your business name on their credit card transactions, you’ll just look more professional and legitimate if you have a business bank account. Note that if you have a sole proprietorship or general partnership, you’ll need to get a DBA before you can operate your business under any name other than your own.

Take Advantage of Banking Services

Opening a business bank account means you are starting a relationship with the bank. As time goes on and your business grows, your bank may offer special services or low cost loans that will allow you to expand your business. For example, something as simple as a business credit card can offer your business a way to build credit, make on the fly purchases, and even earn rewards points or cash back on purchases.

Weigh Your Businesses Needs

Setting up your business bank account for your Colorado LLC or corporation brings you that much closer to fully realizing your business's potential. Business startup can be hectic, and a business bank account may not seem necessary when you’re just starting out, but trust us when we say it is one of the most important tasks you can perform in order to set you and your business on the road to success.