I just filed Articles of Organization for a single-member LLC in California. I haven't made any sales yet, but I want to keep things clean. Do I need to open a separate business bank account before the first sale, or can I wait until I actually have income? I keep seeing conflicting stuff online.
LLC banking
Does a California LLC need a separate bank account before its first sale?
You don't strictly need one before the first sale. But mixing personal and business funds is what causes problems later. I'd open one now just to pay the filing fees and in itial expenses from it.
What mossandthyme said. The account doesn't have to exist before income, it just has to exist before you start treating the LLC like a piggy bank.
This might be a dumb question but does a single member LLC really need a separate account? I thought if you're the only owner it doesn't matter as much.
It matters for liability. If you never separate finances, a court can argue the LLC is just an extension of yu. California cares about that.
So the general answer is no hard deadline, but do it early. That helps. I assume I can open it with just the formation documents and an EIN?
Yeah. EIN plus the stamped Articles and your ID usually covers it. Some banks want a business license too but online banks are usually fine with with less.
Do you even need an EIN for a single member LLC with no employees? I never got one for mine.
Legally you can use your SSN in some cases, but banks will often ask for an EIN and it's better to have one. Also keeps your SSN off paperwork.
Okay so separate account, EIN, keep receipts. What about the $800 franchise tax? Does that come out of the business account?
Ideally yes, pay it from the business account. If you haven't opened one yet, you can pay personally but record it as an owner contribution so the books stay honest.
That's the part I was worried about. I'd rather not have a personal payment floating around looking like commingling.
For what its worth, I opened mine about two weeks before my first invoice and it was fine. Nobody asked why there was no revenue yet.
Waiting until after the first sale is the risky order. Do it before, even if it sits at zero for a month.
Also check minimum balance fees. Some business accounts charge monthly if you don't keep enough in there, and that can sneak up on you before you're making money.
Good point. I'll look for a no-fee account to start. Appreciate the help everyone.