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Business Checking account with no PERSONAL guarantee?
Business Checking account with no PERSONAL guarantee?
I have a new company (LLC) and want to open a business checking account. All the terms and conditions I have found online require the business owner and any authorized signers be PERSONALLY liable for any debts, etc.
I'm sure if Microsoft wants to open a checking account, Bill Gates is not asked to personally guarantee the account.
Are there ANY banks that you know will give a new company (LLC or INC) a checking account without needing that personal guarantee?
(I'm not talking about business credit, just a plain checking account.)
Thanks!
Answers:
Frank - Wachovia Banker: Great question.
Since the patriot act, you're going to have a tough time with this one. In the past, banks used to request a corporate resolution from an LLC. This acted more as a signature card than a liability for the managing members. However now, banks are also requiring deposit certificates / authorization agreements. This is the document that you are really referring to. I called a good friend of mine that works for a small credit union in Tampa, FL to ask this question to him. Apparently even small community credit unions are requiring the same thing. As far as your example, Bill wouldn't necessarily have to sign himself, but one of his division managers would. For example, lets say that Microsoft's customer service division needed a corporate checking account. Let's assume that the division had a separate tax id from the holding company. The chair of the customer service department would act as a principal signer, or guarantor of the account.
That being said. You are an LLC. That means that liability is in theory limited to only those things which are created under the LLC.
It is a bit of a grey area. That is why there is corporate law. To sort this stuff out on a case by case basis.
I have a family member who is an attorney that says that she can break an LLC binder in pretty much any case by making the mananging members "interests" a part of a judgement claim. She has done to real estate holding companies a few times in Saint Petersburg as part of her time with the state's Fair Housing division.
In defense of the banks. Corporate accounts tend to be the most succeptible to terrorist money laundering. Layering - a process of integrating illegal funds with legal funds in theory can be more quickly detected and deterred if these agreements are in place. Without these documents, it makes it more difficult to prosecute individuals who scam the bank out of cash. Ask any bank compliance officer how hard it is to prosecute individuals who open corporate accounts, then swindle the bank out of money and then leave the country. They all have examples. More money that gets taken from the bank means less interest paid out to our customers means less customers making large deposits means less money in reserves for lending.. you get the idea.
Now there may be a bank or credit union or something out there that will allow you to do this. I have a feeling it is going to be in Puerto Rico or on one of the outer islands though. I don't really know what there account opening processes are.
2007-07-14 07:27:07
Since the patriot act, you're going to have a tough time with this one. In the past, banks used to request a corporate resolution from an LLC. This acted more as a signature card than a liability for the managing members. However now, banks are also requiring deposit certificates / authorization agreements. This is the document that you are really referring to. I called a good friend of mine that works for a small credit union in Tampa, FL to ask this question to him. Apparently even small community credit unions are requiring the same thing. As far as your example, Bill wouldn't necessarily have to sign himself, but one of his division managers would. For example, lets say that Microsoft's customer service division needed a corporate checking account. Let's assume that the division had a separate tax id from the holding company. The chair of the customer service department would act as a principal signer, or guarantor of the account.
That being said. You are an LLC. That means that liability is in theory limited to only those things which are created under the LLC.
It is a bit of a grey area. That is why there is corporate law. To sort this stuff out on a case by case basis.
I have a family member who is an attorney that says that she can break an LLC binder in pretty much any case by making the mananging members "interests" a part of a judgement claim. She has done to real estate holding companies a few times in Saint Petersburg as part of her time with the state's Fair Housing division.
In defense of the banks. Corporate accounts tend to be the most succeptible to terrorist money laundering. Layering - a process of integrating illegal funds with legal funds in theory can be more quickly detected and deterred if these agreements are in place. Without these documents, it makes it more difficult to prosecute individuals who scam the bank out of cash. Ask any bank compliance officer how hard it is to prosecute individuals who open corporate accounts, then swindle the bank out of money and then leave the country. They all have examples. More money that gets taken from the bank means less interest paid out to our customers means less customers making large deposits means less money in reserves for lending.. you get the idea.
Now there may be a bank or credit union or something out there that will allow you to do this. I have a feeling it is going to be in Puerto Rico or on one of the outer islands though. I don't really know what there account opening processes are.
2007-07-14 07:27:07