As real estate investors, we all share the following visual close to our hearts...the one where we are posing for a photograph with our first big check in hand…all those zeros as evidence of the tremendous efforts we put forth to result in a successfully completed deal. That day will come with the right action and efforts in place for your real estate investing business but in order to cash that big check, you need to be sure you are ready for that deposit by having a bank account set up for your business!
After your LLC is correctly filed & established, the next step is to obtain an Employer Identification Number (or EIN). The EIN is like the Social Security Number for your business as it uniquely identifies your business in the eyes of the IRS and should, therefore, be kept in a secure place. Your company will need this EIN in order to open a bank account. Obtaining an EIN for your company is a relatively simple task when done online by following these 3 steps: (Please note, I can’t professionally advise but these are the exact steps I followed to complete filings as a brand new entity; there are alternative selections for renewing an EIN if your LLC has already been operating for some time, or if you are running a business entity other than an LLC, etc.)
Here Are The Steps I Followed To Obtain An EIN:
#1): Go To The IRS Link:
Copy and paste the link below and select “APPLY ONLINE NOW”. (http://www.irs.gov/businesses/small/article/0,,id=102767,00.html).
TIP: Once you begin the online application, you must complete the entire application; allocate about 15 minutes. (You can always quit and start over but information you are inputting can’t be saved along the way unfortunately.)
#2): Have Your Information Ready To Enter:
Be sure you know your entity structure type (LLC for example), the number of members in your LLC, the address you would like to be associated with your business and the month/year you began operating (I selected the same month I registered my LLC since I did this in a short timeframe).
#3): Receive Confirmation:
Once your EIN is successfully established, you will receive a 2-page confirmation notice from the IRS with a clearly labeled “Employer Identification Number”. (This notice will only be issued once, so I recommend saving it as a pdf in addition to printing it for permanent records).
Opening An Account For Your Business:
You are now ready to go to your chosen bank to open an account for your business. You will need to bring this EIN confirmation letter from the IRS with you to the bank. You should also bring with you to the bank any state papers confirming your LLC/entity’s filing status, (such as a “filing endorsement” from your state confirming receipt of your Articles of Organization.
TIP: Helpful bank personnel can look up this document for you!). Also, don’t forget to bring some cash as well to make an initial deposit to establish the account.
A Few Other Points To Mention:
I opened my business bank account at a different bank from where I do my personal banking. I simply wanted to establish some customer history at an additional financial institution. Also, make sure you are aware of any requirements to maintain a minimum balance or find out the number of times you must use your debit card on this account each month to avoid penalties/fees! You should be well on your way now to having a bank account for your business ready to accept your first check – no matter how large or small initially – it will be evidence of your progress!