Business Bank Accounts: How to Set Up and Why It Matters

When you form an LLC, you’re not just filing paperwork—you’re creating a legal entity that’s supposed to be distinct from you. But if your business and personal finances are all swimming in the same pool, that distinction doesn’t hold up. And neither does your liability protection.

This is why every LLC in Oregon or Idaho—no matter how small—needs a dedicated business bank account.

Let’s break down why it matters, how to set one up, and the common mistakes that put business owners at risk.

Why It’s Not Optional

The entire point of an LLC is to separate you from your business. That separation is what limits your personal liability. But courts and the IRS won’t respect that wall if you’re not respecting it yourself.

Mixing business income and expenses with your personal accounts is called co-mingling. And co-mingling is how you end up “piercing the corporate veil”—which is legal shorthand for “your personal assets are now fair game in a lawsuit.”

It doesn’t take fraud or bad faith to pierce the veil. Just sloppiness. Using your personal debit card to buy supplies. Depositing customer payments into your personal checking account. Paying your rent from the same account you use for client invoices.

When that happens, you’re no longer running a business. You’re just pretending to—and hoping no one calls your bluff.

What Can Go Wrong

Consider a Eugene wedding photographer who forms an LLC but continues accepting payments through her personal Venmo and pays business expenses from a personal checking account. If a client sues her for breach of contract, her LLC’s liability shield might not protect her—because she didn’t treat the business like a separate legal entity.

Or take the small Boise web agency with two partners—one of whom handled all the money through his personal accounts “for convenience.” When they hit a contract dispute, they lost their liability protection and were held personally responsible for the judgment.

These aren’t edge cases. They’re normal mistakes. And they’re avoidable.

How to Set Up a Business Bank Account

Opening a business account is simple—but only if your LLC formation paperwork is in order. Here’s what most banks in Oregon or Idaho will ask for:

• A copy of your Articles of Organization

• Your EIN (Employer Identification Number) from the IRS

• Your Operating Agreement

Some online banks have looser requirements, but traditional banks and credit unions want clean documentation. That’s another reason DIY filings with incomplete or outdated documents can come back to bite you.

When you open your account, make sure:

• The account is in your LLC’s name—not your personal name

• The EIN is listed as the tax ID—not your Social Security Number

• You plan to use the account for all business income and all business expenses

And once it’s open, use it consistently. That means:

• No mixing in personal purchases—even small ones

• No depositing business income into your personal account “just this once”

• No using the business account to pay your mortgage or buy groceries

What About Single-Member LLCs?

Yes, even if you’re the only owner. Even if the income is modest. Even if you’re “just getting started.” The law doesn’t give you a pass for being small. The more you treat your business like a real business, the more likely the courts, the IRS, and lenders will too.

And when tax season rolls around, your clean bank records will save you time, headaches, and possibly audits.

Why Not Just Use a Second Personal Account?

Some owners try to get clever by opening a second personal account and treating it “like” a business account. It’s better than full-on commingling—but still not good enough.

If the account is in your name and tied to your SSN, not your LLC and EIN, it doesn’t give you the separation you need. Plus, you’ll miss out on basic banking features like merchant services, online invoicing tools, and the chance to build business credit.

And if you ever face a lawsuit or audit, the legal distinction could crumble fast.

Credit Cards, Bookkeeping, and Clean Records

If you qualify for a business credit card tied to your LLC, use it—wisely. Even if you have to personally guarantee the card, it still helps create a financial wall between you and the business.

Once you’re bringing in regular revenue, layer in bookkeeping software like QuickBooks, Xero, or Wave. When all of your income and expenses run through your business account, keeping clean books becomes much easier—and far more defensible.

Real-World Consequences

A Southern Oregon bakery had an LLC—but no business bank account. They used personal credit cards, reimbursed themselves inconsistently, and didn’t keep formal books. When one partner left and demanded a buyout, they had no reliable records. The exit devolved into months of attorney emails, disputed receipts, and confusion over whether the electric bill was for the bakery or someone’s home.

A dedicated business account could’ve solved most of it. Instead, they paid lawyers to sort out three years of financial slush.

Bottom Line

If you’ve gone through the effort of forming an LLC, don’t stop short. A business bank account is the first, easiest, and most essential step to actually protecting yourself.

In Oregon and Idaho, you don’t need to wait until you’re “legit” or “big enough.” You just need the right paperwork and the discipline to keep business and personal finances separate.

Your future self—and your tax preparer—will thank you.

Want to talk through your setup?
Track Town Law works with business owners across Oregon and Idaho to get their legal and financial structure right from the start. You can book a consultation or explore pricing anytime.

And if you’d rather listen than read, check out the Doing Business As podcast wherever you get your podcasts.