LLC Banking Resolution: Why Your LLC Needs One (And Probably Doesn't Have It)

Your bank may not have asked for a banking resolution when you opened your LLC's account. That doesn't mean you don't need one.

A banking resolution is a formal governance document in which the members or managers of an LLC authorize the company to open, maintain, or close bank accounts and designate who can sign on the LLC's behalf. It is one of the most important governance records an LLC can have — and one of the most commonly missing.

This guide explains what a banking resolution is, when banks and lenders require one, why the document matters far beyond banking, and what happens when your LLC doesn't have one.

What Is an LLC Banking Resolution?

A banking resolution is not the signature card you filled out at the bank. It is not a form the bank provides. It is an internal governance document created by the LLC itself — a written record that the company formally authorized a specific banking relationship and designated specific individuals to act on its behalf.

The resolution typically identifies the bank, the type of account, and the authorized signers. It includes authority language confirming that the LLC's members or managers approved the action. And it is signed and dated as part of the company's permanent governance records.

Think of it this way: the bank's signature card protects the bank. The banking resolution protects the LLC.

When Banks Require a Resolution — and When They Don't

Some banks ask for a banking resolution when you open a business account. Many don't. The inconsistency is misleading because it suggests the resolution is optional. It isn't — at least not from a governance perspective.

Banks that skip the resolution at account opening almost always require one later, when the stakes are higher:

Business loan applications. Lenders routinely require a resolution proving the LLC authorized the borrowing and designated who can sign the loan documents. Without one, the loan stalls.

Adding or removing authorized signers. When someone new needs access to the LLC's accounts — or someone needs to be removed — banks expect formal authorization from the LLC, not just a request from an individual.

Lines of credit and commercial credit cards. Credit facilities almost always require a formal authorization document from the LLC.

Wire transfers above certain thresholds. Compliance departments may request authorization documentation for large outbound transfers.

Ownership changes. If the LLC adds or removes members, banks expect updated authorization documentation reflecting the new ownership structure.

In each of these situations, the bank is asking a straightforward question: did the LLC authorize this? If you don't have a resolution, the formal answer is no.

Why a Banking Resolution Matters Beyond Banking

The banking resolution is not just a banking document. It is a governance document. And that distinction has consequences far beyond your relationship with your bank.

When courts evaluate whether to pierce the corporate veil — to disregard your LLC's liability protection and hold you personally responsible for business debts — they look for evidence that the LLC operated as a real, separate entity. One of the things they examine is whether major business decisions were formally authorized by the company.

Opening a bank account is a major business decision. It establishes the financial infrastructure of the entity. It designates who can move money on the company's behalf. If that decision was never formally documented, it looks like the owner simply opened a personal account under a business name — which is exactly the kind of behavior that supports an alter ego argument in court.

This is especially critical for single-member LLCs. When there is only one owner, the line between the person and the company is already thin. Courts scrutinize single-member LLCs more closely because the opportunity for the owner and the entity to blur together is greatest. A banking resolution is one of the simplest ways to draw that line clearly.

What a Proper Banking Resolution Should Include

A banking resolution that serves both its banking purpose and its governance purpose should contain specific elements:

The authority language and separate-existence language are what elevate the document from a bank form to a governance record. Without them, you have a piece of paper that satisfies a banker. With them, you have a document that satisfies a judge.

The Loan Scenario: When Missing Resolutions Cost Real Money

Your LLC needs a loan — SBA financing, a line of credit, or equipment financing. You apply. The lender's underwriting team sends a document checklist. On it: "LLC resolution authorizing the borrowing and designating authorized signers."

If you don't have one, you are scrambling. An attorney charges $300 to $500 and takes days. Something you write yourself may get rejected by the lender's legal team for missing required language. The loan closes late or stalls entirely.

If you do have one — if your LLC has been maintaining defensible governance records — you pull it from your vault, send it over, and move on. The loan closes on schedule.

The same dynamic plays out with commercial leases, vendor agreements that require proof of authority, insurance applications for larger policies, and due diligence during a business sale. The LLC that keeps its records moves faster and negotiates from strength. The LLC that doesn't is always reacting.

Banking Resolutions and IRS Audits

The IRS does not require a banking resolution. But during an audit, the IRS examines whether business deductions were legitimate business expenses — not personal spending run through a business account.

A banking resolution that formally designates the LLC's accounts and authorized signers helps establish the boundary between business and personal finances. It is part of the paper trail that proves the LLC maintained separate financial operations — the same separation the IRS expects when evaluating whether business deductions are valid.

Combined with other governance gaps — commingled funds, undocumented distributions, missing annual records — the absence of a banking resolution contributes to a pattern that undermines the LLC's credibility as a separate entity.

What to Do If You Don't Have a Banking Resolution

If your LLC has been operating without a banking resolution, you are in the same position as most LLC owners. The document was never required at account opening, so it was never created. That does not mean it is too late.

Create a banking resolution now that authorizes your existing banking relationships. Include the bank name, the account type, and the authorized signers. Include the authority and separate-existence language that gives the document its governance weight. Date it, sign it, and store it permanently.

If your LLC has been operating for years without one, consider including ratification language — a clause that retroactively confirms and approves the banking relationships already in place. This formally memorializes the LLC's authorization of actions already taken.

Going forward, create a new resolution any time the LLC opens a new account, changes banks, adds or removes authorized signers, or takes on a loan or credit facility.

Generate Your LLC Banking Resolution in 60 Seconds

Minutes.llc generates bank-ready, court-ready banking resolutions through a guided workflow. Every document includes authority statements, separate-existence clauses, and reliance language automatically — the specific elements banks expect and courts look for.

SHA-256 hash verification. Immutable audit trail. Secure storage. No legal knowledge required. Your first document is free.

Create your LLC banking resolution now — free to start →