The right side of a teal green checkbook with a pen laying on top and a background of blurry dollar bills to show that a corporation is ready to use their checking account

What is a Corporate Checking Account?

Every business needs a bank account, and a corporate checking account could be the type your corporation needs. This overview can help you understand what a corporate business checking account is, whether or not it’s right for your business, and how to get one. 

Authority

Starting a corporate checking account is difficult compared to a personal or business bank account because you need a special level of authority. To open a corporate checking account, the board of directors has to approve the decision and there must be evidence of a corporate resolution. This document is a record that the shareholders or board of directors have actually made the decision to open a corporate bank account. This is starkly different from a business checking account, which allows anyone with authority to initiate an account without approval from a board or shareholders.

Documentation

You need a lot of documents to open a corporate checking account. First, you’ll need the company’s federal taxpayer identification number and a copy of the articles of organizations. Depending on the state where the company is organized, there may be another document required such as the certificate formation. Sometimes, the articles of organization do not provide sufficient information regarding the authorized signatures, which may require additional limited liability company documents. 

Independence

A corporation is considered an independent legal entity under law, so it is authorized to do most of the things a person can do. Even though it’s independent, a corporation must designate a person to act on its behalf—which requires someone to be appointed to open a corporate checking account. Most often, the person who opens the account in the name of the company is the treasurer of the board of directors, but it can also be the president of the company or a shareholder. A corporate business checking account also requires a list of authorized signers giving permission to control the account. These are most often individuals on the board of directors and shareholders.

Liability

One of the main features of a corporation is limited liability, or the separation of business assets and liabilities from the assets and liabilities of the owners. A corporate bank account offers a level of protection to business assets that a regular account may not offer (depending on the type of account opened). For example, a business bank account may be attached to personal creditors and can reflect on the credit rating of the business owner. 

Credit Rating

As an independent entity, a corporate checking account is opened under the corporation’s Employee Identification Number (EIN). The conduct of the account accrues to the company’s credit rating, and not the credit rating of the individual owners. This is different from a regular business checking account, which can be opened using the business owner’s Social Security number. This means that the bank account will reflect on his or her credit rating. A business checking account can still be associated with the owner's’ personal credit if they open the account using an EIN because the business entity is not independent.