Why a business bank account comes first

Before a company can borrow in its own name, it needs to handle money in its own name. A business bank account is the first piece of that.

What it does for you

The SBA's guide gives four reasons:

• Protection. Keeping business funds separate from personal funds helps protect you from personal liability.
• Professionalism. Customers can pay the business directly, and you can let an employee handle routine banking.
• Preparedness. Banks that hold the account often offer the business a line of credit for emergencies or equipment.
• Purchasing power. A business credit card can fund larger purchases and start a credit history for the business.

The liability point, plainly

An LLC or corporation can shield its owners from the company's debts, but courts can set that shield aside, which lawyers call piercing the corporate veil. Treating company money as your own is one of the things courts look at. A separate account, used only for the business, is the simplest habit that keeps the line visible.

It does not protect you from a debt you guaranteed personally. A guarantee is your own promise, whatever the entity.

What to bring

Banks differ, but the SBA lists the usual set:

• The EIN, or your Social Security number if you are a sole proprietor. The EIN is free from the IRS; see how to build business credit.
• The documents that formed the business, such as articles of organization.
• Any ownership agreement among the owners.
• Your business license, where one is required.

After it is open

Run every business dollar through it, in and out. Pay suppliers and the business card from it. That trail is what a lender will ask to see later, usually as bank statements alongside your tax returns.