When starting a new business, many owners choose a corporation structure. This type of business entity offers legal protection for the shareholders and, in some cases, tax benefits too. To take complete advantage of having an incorporated business, board members, or owners, can create a resolution to open a bank account. Typically, this is done for traditional banks. If you are opening an account at a virtual bank, then you probably do not need a corporate resolution. Certainly, the corporation’s bank account is an essential part of establishing the business as a going concern or independent entity on to itself. In this post, we will discuss how to create a corporate resolution for banking appropriately.
Corporate Resolution Definition
The definition of corporate resolution is officially a written statement created by a board of directors, regardless of whether it is done for a carpet cleaning business or a fortune 500 company. This written statement typically details the names of which officers are officially recognized as able to represent, or act on behalf of, the corporation. The written statement of the corporate resolution is typically found in the board’s meeting minutes. These minutes detail the decisions made during each conference, and will indicate the names of those chosen directors. Now you know what a corporate resolution is, but why is it significant?
Types Of Corporate Resolution
There are actually two kinds of corporate resolution. The one type of corporate resolutions is used for documenting internal records of the details included in executive decision making processes. This is a type of information management that is beneficial to business, but not required. The second type is required for specific transactions within business operations by banks and other third-party organizations. This is important to note, as you will want to follow different procedures for each case.
Corporate Resolution Significance
First off, we must understand the significance of corporate resolutions. They are actions that have been voted on by members of the board of directors, like Owl Creek, for example. Often times, this action is in the form of a legal document that determines the course of action to be taken. When opening a corporate bank account, a legal document can facilitate the process.
Drafting Your Bank Account Resolution
While corporate resolutions may involve a variety of activities, opening a bank account is one of the most popular actions. In fact, some banks will require you to draft a resolution to open a corporate account. Fortunately, there are many corporate bank account resolution templates available online. These are easy to fill out and add to your corporate bylaws. However, you can also draft the resolution yourself.
Your bank account resolution should include the bank where the account is being opened. Second, it must indicate who is authorized to open the account and conduct transactions on behalf of the corporation or Servicemaster franchise. Lastly, it should indicate that the resolution has been voted upon by the board members and approved by the corporation.
Opening A Bank Account
Once the corporate resolution to open a bank account has been written, it is time to make it official before starting a production company. The document should be signed and marked by the corporation seal. These actions will make the document ready to present to the bank. Of course, having all of this prepared in advance shows the bank employees that you are serious company which could be beneficial when securing funding for the corporation. Finally, bring the resolution to the bank along with other incorporation documents, the company’s EIN number or Federal Tax ID and a an official form of photo identification. At the bank, you should be able to open the account with the documents prepared and a few others they may ask you to fill out.
Keeping Your Bank Updated
Like most corporations, the company will change as it grows, declines or operates. In the event that you need to take out a business loan or change an authorized person on the account, keep the bank updated and make use of valuation services. This will ensure that the account is managed smoothly over the life of the company. Some banks will required an update for your protection anyways. However, it is better to be safe than sorry.
To bring it together, corporations can open a bank account by drafting a corporate resolution. These bank resolutions act as legal documents allowing individuals to act on behalf of the company. Once the resolution has been written properly, you can open a account for the corporation at your local bank. After that, be sure to keep your bank updated with the latest documents and keep the account in good standing.
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