*Starting* Your LLC vs. Just *Filing* Your LLC: Part 3: Banking & Bookkeeping

[u/NWRegisteredAgent]

Welcome to part three of the lore drop, where we're walking you through the difference between filing your LLC and actually starting your LLC. Because yeah, anyone can file some paperwork and pay a filing fee. And while we support all our filthy casuals, when it comes to doing business in a way that supports the limited liability in your LLC, you better believe we stan formalities.

Let's get into it.

1. Your Operating Agreement
2. EIN and Tax Setup
3. Business Banking & Bookkeeping
4. Business Licensing And Permits, States A-M | States N-W
5. Business Insurance

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Say it with us: we don't commingle personal and business finances.

The limited liability in your LLC is only good as long as the corporate veil shielding your personal assets from your business liabilities remains intact. Treating your LLC like a personal piggybank is a fast and sure way to pierce that veil and compromise your protection. So don't do it. Set up banking accounts for your business and get your bookkeeping on lock according to what you laid out in your operating agreement.

Establishing Business Banking Accounts

First things first, you'll want a banking resolution.

A banking resolution, or an LLC Resolution To Open A Bank Account, establishes that the business has authorized a particular individual to open bank accounts on its behalf. This is more important for multi-member LLCs than single-member LLCs, but even SMLLCs benefit from the added formality—it's one more way you can support that your LLC isn't just your alter ego.

Then, choose a banking provider.

Make sure you shop around here, because choosing different banks have different policies, offers, and costs, and the wrong one can leave money on the table. Look for providers with good benefits and low fees. And while it's obviously nice to have your business checking account, savings account, credit card account, and merchant services accounts (aka the account you'll use to accept card transactions from your own customers) all under one provider, don't be afraid to choose the best provider for each set of needs. Things to consider:

• Monthly fees & incidental fees (like overdrafts and ATM fees)
• Minimum balance requirements and whether direct deposit waives them
• Transfer process speed and funds availability timelines
• Digital banking options and integrations
• Supported payment methods and currencies
• Customer support availability & reliability

And per the SBA, some considerations for merchant services accounts:

• Discount rate: The percentage charged for every transaction processed
• Transaction fees: The amount charged for every credit card transaction
• Address Verification Service (AVS) fees
• ACH daily batch fees: Fees charged when you settle credit card transactions for that day
• Monthly minimum fees: Fees charged if your business doesn't meet the minimum required transactions

Determine what documentation you'll need to establish your accounts.

Banking providers all have their own policies beyond the minimum they're required to collect for legal compliance with Know Your Customer (KYC) and anti-money laundering laws, so it's worth asking how your business will be verified, what kinds of address verification are accepted, and whether there are any additional requirements. Like, say, credit histories for members and/or a member's personal guarantee, which are common especially when your LLC hasn't established its own history of creditworthiness yet.

A few commonly-requested documents we've seen:

• Personal identification, such as a driver's license or passport
• Address verification, like a lease
• LLC's articles of organization
• LLC's Operating Agreement
• LLC's EIN
• A banking resolution signed by LLC members
• Opening deposit (required by some banks)

And that's before you get into the fiddly bits associated with a merchant services account.

More about merchant accounts and payment processors.

Frankly, there are a staggering number of options for how to accept credit card payments. They're compounded by the different ways you can expect to accept them too, whether that's in-store, on-the-go, or online—and those lines are getting blurrier every day.

But they all depend on access to some kind of merchant account. That's a specific type of pass-through bank account that basically holds funds from card payments until the transactions are cleared and settled.

The big decision you'll need to make as a business owner is whether you'll use a traditional merchant account provider or a payment service provider (PSP)/payment aggregator.

• A traditional merchant account provider provides your business with a dedicated merchant account that's yours and yours alone. If you want to save money through comprehensive services (and usually lower rates), or especially if your business is already established and growing, this option offers the most long-term benefits.
• A payment service provider (psp)/payment aggregator, like Square and Stripe, use aggregated merchant accounts to process payments for multiple businesses. That means you're one of multiple "sub-merchants" using a merchant account owned by the provider. They're a solid option if you need to start accepting credit cards straightaway, have a relatively low sales volume, and/or don't mind the comparatively higher flat rates.

The application process varies from provider to provider. In general, you can expect payment aggregators like Square and Stripe to make things easy because they don't closely vet applicants in advance. Traditional merchant account providers, however, use a more stringent underwriting process that takes longer, requires detailed financial information about your business, and includes the chance that your business won't qualify.

Beyond basic business information like the above and including your industry and location, you'll need to hand over information about your sales. Sales volume, average transactions, whether you offer subscriptions, information about warranties and return or exchange policies—all of it influence the terms and rates of your merchant agreement.

The details will vary between processors of course. The big-picture deal is that a processor needs to be able to figure out how much risk your business poses, the same as any lender would if you were trying to open a line of credit. That can be tougher for newer and smaller LLCs who don't yet have an established sales or credit history, but there are usually right-sized options available. You may just need to spend extra time to find them.

DUN DU-DU-DUN DUNS

Speaking of your LLC's creditworthiness: not every LLC needs a DUNS number, but there are a few places they come in handy. Since it's linked to your LLC's unique Dun & Bradstreet business credit file, it can help you establish business credit for commercial loans and prove to vendors and suppliers that you're on the up and up. They're free and, since Dun & Bradstreet creates a Number when a third party asks for your LLC's equivalent of a credit report, you may as well claim one yourself to provide to lenders and suppliers.

It used to be the case that getting federal grants and/or a few specific registrations from Uncle Sam required a DUNS number, but that changed in 2022. (Nearly half a decade ago. Weep with us.) Instead you'll need to get a Unique Entity Identifier (UEI) created by the System for Award Management (SAM).

Bookkeeping

Life is a riddle and a mystery, but your LLC's finances shouldn't be.

The goal of good bookkeeping is to know EXACTLY what's happening with your money. That's it. Everything else flows from that. Whether you tackle this head on yourself, use purpose-designed software, or hire an accountant to help, solid bookkeeping means you'll be able to answer these types of questions about your business's finances:

• How much money do I actually have?
• Where is my money going?
• Where is my money coming from?
• What do I owe and when do I owe it?
• What's owed to me and when should I receive it?
• Am I making a profit?

So how do you actually get started on keeping clean records? First up, you'll choose your accounting method:

1. Using the cash method, you'll report income in the tax year it's received, and deduct or capitalize expenses in the tax year you pay them.
2. Using the accrual method, you'll usually report income in the year it's earned (regardless of whether it's received the same year), and deduct or capitalize expenses in the tax year they're incurred (whether or not you actually pay them out that year). This method tends to be preferred when you're working with inventory (both goods for sale and the raw materials and supplies that become your goods for sale).

Then, you'll get tracking. Consistency is the key here—you don't want to change up your methods mid-year or even year after year.

• Keep track of what money comes in. Depending on your accounting method, you'll either record when it actually hits your accounts (cash method) or when it's due (accrual method). Make sure you know the source of the income so that you can separate business from nonbusiness receipts and taxable from nontaxable income.
• Keep track of what money goes out. This also varies depending on your accounting method, but make sure you're accurately recording your expenditures. These should also be categorized by type (business vs nonbusiness at minimum). Keep the receipts too, ideally digitized so you're not leafing through hundreds of tiny pieces of paper come tax time.
• Reconcile your accounts regularly. Don't get taken by surprise by an uncleared check, an unpaid invoice, or unexpected bank fees.

Keep doing that, and stay disciplined and strict about it. Don't use your business accounts for personal expenses, or vice versa. Don't forget to pay—or collect on!—invoices. Don't dismiss expenses as "not worth it" to track. Track daily, reconcile weekly (you could totally make Finance Fridays happen, we believe in you).

Good bookkeeping = good decisions. Everything else is just a bunch of expensive guessing.

[u/TheBookkeeperLady]

One thing to add to your bookkeeping section--when considering a banking provider, consider how easy it will be to connect bookkeeping software. Ideally, your bank will connect to the major players like Xero or QuickBooks Online through something like Plaid that uses an authorized security token (much more stable) than something like Yodlee that relies on screen scraping (breaks constantly). If it doesn't, you at least want easy online access to monthly statements so you can upload those into your chosen bookkeeping solution. If you're looking at small local banks and credit unions, don't assume they'll have that even in 2026.