I opened a business checking account last year using my SSN. If I get a federal EIN, can my bank update this or do I need to open a new account?

Basically, at the time I opened the checking account, I did not have a Federal EIN and did not need one as a sole proprietor.

I'm getting ready to work with some new clients and will first apply for an EIN to protect my SSN, I'm hoping US Bank can just update that information. Does anyone have experience with this?

Is there anything else I need to know about obtaining an EIN after running the business for 3 years using my personal SSN?

Also, my business checking and personal checking are both with the same bank, and I can see both accounts in my online banking portal. The advantages are in the ease of transfer of funds to and from the business, but what are the disadvantages?

Bank Account EIN Sole Proprietorship

asked Jan 16 '12 at 06:05

James Mortensen
363 points

I suggest you call your bank and ask them. That's the quickest and most reliable way to answer your question. Also, I would consider whether this is even an issue. Can't you give your new clients your EIN and continue to use your SSN with your business bank account? Is there a reason why they have to match? Does the payment method require that? – Zuly Gonzalez 13 years ago
Will call the bank. As for the other questions, I'm afraid I don't know the answers, and those are the questions I'm hoping someone can answer who has been in these shoes before. While I'm sure there are no pitfalls, it doesn't hurt to ask and be sure :) – James Mortensen 13 years ago

2 Answers

I have done this so yes it's possible to have it changed all though it may be bank specific based on their rules. Worst case you close your original account and open a new one with the EIN number.

On the other part of your question concerning the same bank for commercial vs personal accounts I have thought about this a lot and have gotten advice from different people in different professions and the overwhelming response from business owners was to have it all separated using different banks. The bank personnel I talked to said it didn't matter but they just want your business. The reality is that if you are ever audited you can show the auditor that you have a clear distinction between your different accounts and can show an easy to follow money trail from your business activities, so based on this I would highly recommend using a separate bank for your commercial account. Its just a better way of doing business. As for the transfers you can always write a check which is an easy way to track that money as well.

Also, if you're banking with US Bank, just take your EIN letter into them, and they can update your account right there on the spot.

answered Feb 15 '12 at 23:48

Tim
670 points

I definitely don't like that my personal accounts are linked to the business account. It does make it easy to blur the lines. I was thinking of asking them to remove the ability to instant-transfer. I do like doing business with this bank though and wouldn't want to change. I also deposit business funds directly in the business account, either electronically, or by directly depositing the check in that business account. I do have to do some thinking here because you do make a valid point about the blurred lines... – James Mortensen 13 years ago
Yeah, it seems that with proper discipline we could keep these accounts separate and it's possible to do so but it still leaves the opportunity to more easily blur the lines vs keeping the accounts at separate banks. If you could absolutely guarantee yourself that they could remain separated through a strict set of rules per say and also pass those rules to whoever else may have access to these accounts then you could probably operate under this sort of paradigm successfully, but, it seems like a big old pain to have to maintain this all when using a different bank would solve the issue. – Tim 13 years ago
Agreed on the pain part. My first choice is separate the accounts so I login with 2 different userId's. I really don't want to do business with a majority of the other banks out there. The only exceptions would possibly be an online, private bank where there are no fees. :) – James Mortensen 13 years ago

Give your clients your EIN and have them write the checks to your business name.

The checks from your clients won't have the EIN, so it won't be a problem to deposit them as long as your business name is on the bank account.

If it was me I'd fix the bank account at my leisure; though your accountant might disagree.

answered Jan 16 '12 at 19:51

Ask Bjørn Hansen
141 points