How to setup Holding and Subsidiary LLC bank accounts

Question

Hi,

I have formed a holding/parent LLC company and a subsidiary/operating LLC company which is 100% owned by the holding/parent LLC.  The idea is to buy rental property in the name of the subsidiary/operating LLC.

I was able to setup a business bank account for holding/parent LLC company, however when I tried to setup a bank account for the subsidiary/operating LLC company, it is asking for my information for the owner, SSN number etc. I tried to set up a CapitalOne Spark Business account. I called them and they said they cannot open a bank account in such a way that the owner of one bank account is another LLC entity (holding/parent), it has to be a person owning the account.

How do you open a bank account in this situation, which banks have you opened an account with the above setup?

Thanks in advance.

Saran

David Ainger · Answer

When you opened up the holding company LLC you obtained an EIN for that LLC.  When you filed for the operating LLC you should have named the Holding company LLC as the owner of that new LLC.  You are then Holding Co LLC dba as Operating LLC you will get two different Secretary of State filing numbers.

You would go to your bank and open up a second account under Holding Co LLC dba as Operating LLC.  You would want to check with your CPA/accountant to see how he would like you to set up the second LLC.  You can use 1 EIN for both since you are DBA under holding co LLC or if he believe you should get a second LLC EIN number for tax purpose.

The bank will need to add you as a signer just like they did for the original holding co LLC and used your companies EIN number not your SS #.  All LLC companies should have an EIN number (not required but suggested) not your SS # and if a bank wants to use your SS # find a new bank.

Jeff Filali · Answer

I have a holding company LLC as well and a few other LLC's underneath as operating companies with the holding co being the "sole member" of the operating LLC's as you've described.  My bank did this with no problem.  Now they will require your SSN as the "signer" on the bank account, which would be required by every signer on the account, but the account should be listed under the LLC's EIN, not your SSN. Even your holding co account should be under an EIN, not SSN. At least that's the way mine are all set up.  They will probably require all the articles of organization and EIN paperwork proving everything is legit.

Jennifer Caravalho · Answer

I'm riddled with questions.  Help, BP Community!

I have a similar set up as Saran.  My holding company is in one state(S1), the LLC is in a different state(S2), and I manage these out of a third state(S3).  I hit a roadblock with Capital One Spark as well, and I'm running into hesitant local bankers.  I've been resisting BofA, Wells Fargo, Chase and other like banks.  Maybe that's my best route?

I'm establishing a bank account for the holding company in S1, where it's registered.  I've gone to two local banks so far in S2 to open up a local account.

1. One bank told me I had to establish a bank account for the holding company in S2 before they set up an account for the LLC in S2.  Does this make sense?  Have others done this?

2. The other bank says they needed to see the articles or organization, EIN, etc. of the holding company.  They're more creative in thinking of ways to open the account while mitigating any risks of fraudulent activity.

Both say I must be present for them to open an account.

What is the most expedient way to open a local business account for my local LLC?

I want to do this to pass the sniff test of operating as a local LLC.  It's about asset protection.

And time is of the essence.  I've got a property I want to purchase now.

Saran Mandhadapu · Answer

These are two separate LLC entities with their own EIN numbers. The operating agreement of the subsidiary LLC lists the parent LLC as the sole member with 100% ownership.

Yennifel Pena · Answer

I am just seeing this question. Did anyone answer?

Saran Mandhadapu · Answer

Yes, I think I have to try banks with physical locations like Wells Fargo etc. CapitalOne Spark business did not have this facility.

How to setup Holding and Subsidiary LLC bank accounts

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