When an LLC tries to open a business bank account, the bank may ask for a document called a banking resolution. The need for a banking resolution — yet another document — isn’t always obvious to entrepreneurs. After all, Articles of Organization and an Operating Agreement are usually in place by this point.
We’ll cover what a banking resolution is, whether you might need one, and how to prepare one if you indeed do. This is a simple document to prepare if your LLC’s bank requires it.
What is a banking resolution?
A banking resolution is an official document that authorizes specific individuals to bank on behalf of the LLC. They’re typically authorized to open accounts, sign checks, apply for loans, transfer funds, and otherwise manage the business’s money.
The resolution is primarily for the bank’s reference. It serves to verify that the person who’s signing the LLC’s checks or loan applications is actually authorized to.
Financial institutions generally must be able to show that they’ve identified the individual(s) managing a business’s accounts. They have legal obligations under anti-money laundering laws, and often have internal know your customer (KYC) expectations. An LLC banking resolution is one way that banks meet these.
LLC banking resolution vs. corporate banking resolution
Banking resolutions are also called a(n) “LLC resolution to open a bank account,” “corporate resolution,” “account resolution,” or “bank authorization form.” These terms are largely used interchangeably.
Some banks have different forms for limited liability companies (LLCs) and corporations. The primary functional difference is how the form gets approved. An LLC banking resolution is approved by its members or managers. A corporation banking resolution is approved by the board of directors. Your bank will provide the appropriate form if it requires one.
Do I need a banking resolution for my LLC?
Your bank will let you know if a banking resolution is required.
Some banks treat a banking resolution as a standard item on their business-account checklist and won’t proceed without one. Others are satisfied with your Articles of Organization, your operating agreement, and your EIN confirmation letter, and never mention a resolution at all. Neither approach is wrong — each bank sets its own documentation policy based on its compliance program and risk tolerance.
That said, banks are more apt to ask for a resolution in certain situations:
- Not in operating agreement: Who’s allowed to manage funds isn’t stated in the Operating Agreement — or your LLC doesn’t have an OA at all. (This is one of several good reasons to create an Operating Agreement for your LLC).
- Third-party access: A third party needs access to your LLC’s accounts, such as a bookkeeper or accountant. This could also apply to an employee or office manager who needs access to accounts.
- Authority verification: The bank’s compliance team might want additional verification for any number of reasons.
- Complex structure: For a multi-member LLC, multi-manager LLC, or LLC owned by another entity, a resolution identifies who exactly can do the banking.
If you run a single-member LLC, a banking resolution can feel redundant — you’re essentially authorizing yourself to do something you were always going to do. Even so, some banks still request one. Having a signed document keeps their records consistent, and it’s a minor inconvenience for you.
You can always check with the bank before preparing your documents. Call the branch, contact its business banking department, or review the bank’s account-opening requirements online.
What does an LLC banking resolution include?
The exact format of an LLC banking resolution will vary slightly from one template or bank to the next. It generally includes several standard items:
- Business’s official name
- Type of business entity (LLC)
- LLC management (member-managed or manager-managed)
- Date the resolution is adopted
- Names and titles of authorized signatories (individuals)
- Signatures of authorized signatories
- Specific banking powers granted*
- Any limitations on banking powers*
- Statement that the resolution has been properly approved
- Specimen signatures (example signatures, only if requested)
*The banking privileges granted can be general, or they can be limited to certain actions. You might fill out the form with something like “any and all,” explicit functions or explicit limitations. Consult an attorney if you have questions about what to authorize for an individual.
Some banks have their own forms for LLCs to use. If they don’t, then you can draft one or use a premade template for banking resolution documents.
How to prepare an LLC banking resolution in 5 simple steps:
Preparing a banking resolution doesn’t have to be complicated. The process generally follows these steps.
Step 1: Check what the bank requires
Contact the bank before drafting anything. Confirm whether it requires a resolution, whether it has its own form, and what specific information it wants. Ask what signatures are needed, too.
Step 2: Identify the authorized signatories
Decide which members or managers will have banking authority, and what level of authority each person holds. Not everyone needs the same powers. One manager might have full authority to open accounts, transfer funds, and sign checks, while another person might be permitted only to make deposits.
For an additional safeguard, you can stipulate that certain actions require two authorized signatures. Two people might be needed when making transactions above a certain amount, for instance. Applying for loans or lines of credit could be another example.
Step 3: Draft the resolution
Use the bank’s form if one is provided. Otherwise, prepare a document containing the LLC’s legal information, the date, authorized individuals, banking powers, limitations, adoption statement, and required signatures. Again, you can write this yourself or rely on a template. Just be sure all information from Step 1 is included.
Step 4: Adopt the resolution
For a multi-member LLC, the resolution should be approved according to the procedures in your Operating Agreement. Depending on what the agreement says, this can happen at a formal meeting with recorded minutes or through a written consent signed by the members without a meeting.
If you have a single-member LLC, where you’re the only owner, you can typically just sign the form.
Step 5: Sign and retain
Double-check that all needed signatures are on the form, including those of the approving members or managers and any authorized individuals. Keep a copy of the banking resolution with your LLC’s foundational documents (Articles of Organization, Operating Agreement, etc.).
The resolution should also be updated whenever authorized signatories change. This usually involves little more than completing and submitting a new form that contains the appropriate changes.
When should an LLC update its banking resolution?
Banking resolution documents should be updated when there is a change in who handles the LLC’s banking. For example, the docs should be updated if:
- A member or manager with banking authority leaves the LLC
- A new member, manager, or employee is granted banking authority
- The LLC changes banks or opens accounts at an additional institution
- A signatory’s banking authority changes (e.g. adding that they can apply for loans)
Not updating a resolution when necessary can cause problems with the bank, especially if a signatory leaves the LLC. This could just be a minor paperwork snafu, the bank might freeze the account until things are corrected, or the bank might continue honoring the former signatory’s requests.
LLC banking resolution vs. operating agreement
A banking resolution and an operating agreement serve different purposes, although they can overlap.
The operating agreement governs the LLC’s internal management. It establishes how the business is run, how decisions are made, how profits are shared, and who has authority to manage the company broadly.
A comprehensive operating agreement will state who has banking authority, especially for a multi-member LLC. This section of the agreement is for internal purposes, though.
A banking resolution is narrower and directed outward, at the bank. It identifies the specific individuals authorized to act on the LLC’s behalf for banking purposes and describes the powers they hold.
An operating agreement should be written when creating the LLC, while a banking resolution can be completed when a bank requests one. If you’re still in the early stages, our guide on how to start an LLC walks through the formation steps, including when to put your operating agreement in place.
Complete a banking resolution
A banking resolution isn’t complicated. Its entire purpose is to state clearly who is authorized to manage the LLC’s banking on the business’s behalf, so the bank can open accounts and process transactions with confidence.
If your bank asks for one, simply complete the form with the required information. This is a simple document, and not one to fret over.
Not always, but some banks request one anyway to keep their records consistent. Check with your bank.
No. Whether an LLC needs a banking resolution depends on the financial institution’s requirements. Some banks require one, while others accept an operating agreement or don’t require anything.
Functionally, yes. “Corporate resolution” is a very similar document for corporations to complete.
No. A banking resolution is given to your bank and kept with your LLC’s records. It isn’t filed with the Secretary of State.
Requirements vary by bank, but they commonly ask for your Articles of Organization, your EIN confirmation, your operating agreement, a government-issued ID for each signer, and sometimes a banking resolution. Check with your bank for its exact list.