Why you need a bank account

We're glad you asked because – and we can't stress this enough – you really need a business account if you're going to do any real business.

Commingling your own funds with those of your business by using your personal checking account will mangle the income taxes for you and your business. The IRS demands a separate account for businesses. And commingled funds can be legal grounds for “piercing the veil” of a corporation, allowing you to become personally, financially responsible for your company's liabilities even if you've formed a corporation or a limited liability partnership.

Use one. If you have a reason to use more, use more.

The technical, financial term for what we generally think of as a checking account is a demand deposit account. That’s a bank account from which you can make withdrawals without giving the bank any prior notice.

Banks vary, but some requirements are universal:

• A business tax ID number from the state and from the IRS. A Social Security number will work only if you're operating as a sole proprietorship.
• Articles of Incorporation or Certificate of Incorporation if you've incorporated.
• A corporate resolution identifying authorized signers if officer names are not listed on Articles of Incorporation or Certificate of Incorporation.
• A business organizing document filed with and certified by state officials, such as Certificate of Limited Partnership or Certificate of Limited Liability Partnership, showing business name and names of partners, if you've organized as an LP or LLP.
• A business name filing document, such as a Fictitious Name Certificate or Certificate of Trade Name, showing both the corporate name (or the business owner's name) and the name the company does business under.

An employer ID number is optional for sole proprietorships, but effectively it's a requirement for everyone. It's near impossible to get a loan or do much business without one for ambitious companies.

An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. This EIN is your permanent number and can be used immediately for most of your business needs, including: opening a bank account, applying for business licenses, and filing a tax return by mail. However, no matter how you apply (phone, fax, mail, or online), it will take up to two weeks before your EIN becomes part of the IRS's permanent records. You must wait until this occurs before you can file an electronic return, make an electronic payment, or pass an IRS Taxpayer Identification Number matching program.

You may apply online here. This is a free service offered by the Internal Revenue Service. You must check with your state to make sure you need a state number or charter. You should apply for an EIN early enough to have your number when you need to file a return or make a deposit.

A few pointers:

Shop around. Competition is fierce.