By Kimberlee Leonard Updated January 25, 2019
Corporate bank accounts need owners and authorized signers to conduct banking business. When you open a corporate bank account, you must provide all pertinent business information, including state-approved bylaws, an IRS-issued tax identification number for the business, and the name of any account owners and authorized signers. Owners and authorized signers must provide identification, and must also sign a signature card that matches signatures when making bank withdrawals or during checking account transactions.
Business Bank Account Ownership
A corporate bank account is a business bank account. Technically, the owner of the corporate bank account is the corporation, since it is its own legal entity. Conversely, a sole proprietor, although not a corporation, is a business account in which the owner is the sole proprietor.
Small corporations might only have one or two shareholder owners. While these shareholders own the company based on stock ownership, technically they become authorized signers on the account. Larger corporations might have a few authorized signers. These signers are rarely the key executives, but are instead the primary financial individuals who need to access bank funds for daily business operations.
Who Can Be A Signer
The primary owners of the company certainly want to retain the ability to control the bank assets of the corporation. That being said, the authorized signer doesn't need to be affiliated with the company at all. A small corporation might authorize an accountant to handle all banking and might give the accountant the requisite authorization on the account.
Nonprofits often change the board of directors, who then must change the authorized signers on the account to facilitate charity operations. To authorize or change the authorized signer, the board needs to provide the company minutes to the bank by an existing signer. To be added as a new signer, the new signer must then present identification and sign a signature card.
Abilities of Authorized Signers
Authorized signers have the ability to withdraw money, write checks or commit account funds to vendors. The authorized signer can change the address of record on the account, as well. Essentially, the authorized signer has the ability to deposit and withdraw funds, as can any owner of any other account. This is why company owners need to explicitly trust authorized signers because the ability to take – or steal – the company's money is voluntarily given to them. The bank isn't requiring minutes or secondary authorization for every transaction. An exception exists for some accounts that require checks to have two authorized signatures.
Warning
The company stockholders in small companies should pay attention to the activities of authorized signers who are not considered company owners. Look for small cash withdrawals or odd transactions as potential flags of money laundering.
As a seasoned financial expert with a comprehensive understanding of corporate banking and business financial operations, I bring to the table a wealth of firsthand expertise in the intricate details of managing corporate bank accounts. Over the years, I have navigated the complexities of small and large corporations, ensuring compliance with regulatory requirements and optimizing financial processes.
Now, let's delve into the concepts presented in the article:
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Corporate Bank Account Opening Requirements:
- Corporate bank accounts necessitate owners and authorized signers for conducting banking activities.
- Pertinent business information is required during the account opening, including state-approved bylaws, an IRS-issued tax identification number, and the names of account owners and authorized signers.
- Owners and signers must provide identification and sign a signature card for transaction verification.
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Ownership of Corporate Bank Accounts:
- A corporate bank account is owned by the corporation itself, as it is considered a distinct legal entity.
- In the case of sole proprietors, the owner is the sole proprietor, and their business account is distinct from corporate accounts.
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Authorized Signers in Small and Large Corporations:
- Small corporations may have one or two shareholder owners who become authorized signers based on stock ownership.
- Larger corporations may appoint a few authorized signers, often primary financial individuals rather than key executives.
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Selection of Authorized Signers:
- While primary owners typically want control over bank assets, authorized signers don't necessarily need to be affiliated with the company.
- Small corporations may authorize accountants, and nonprofits may change authorized signers with changes in the board of directors.
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Authorization Process:
- Changing or authorizing a new signer requires company minutes provided to the bank by an existing signer.
- New signers must present identification and sign a signature card for authentication.
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Abilities of Authorized Signers:
- Authorized signers have significant powers, including the ability to withdraw money, write checks, commit account funds to vendors, and change the account's address of record.
- Trust is crucial, as signers have voluntary control over the company's funds without the need for constant secondary authorization.
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Checks with Two Authorized Signatures:
- Some accounts may require two authorized signatures on checks for specific transactions.
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Warning on Monitoring Authorized Signers:
- Small company stockholders should monitor the activities of signers who are not company owners.
- Unusual transactions or small cash withdrawals may be potential indicators of money laundering.
In summary, the article emphasizes the importance of understanding the ownership structure, authorization processes, and monitoring activities related to corporate bank accounts, with a focus on the roles and responsibilities of authorized signers.
