Getting a banking resolution document is essential if you are running a business and now want to open a bank account.
What is a Banking Resolution in 2022: Comprehensive Guide
What is a Banking Resolution?
A banking resolution is a legal document that authorizes an individual or corporation to open bank accounts, write checks, and sign contracts on behalf of the company.
This document is also referred to as a power of attorney and is often used for financial transactions. The most common way to use a banking resolution is to allow an authorized signer to open a bank account for the business.
Bank resolution documents are generally not filed with clerks in government offices, so they probably won’t appear in public records searches. However, they should be kept on file at the business location with a copy stored in the personal files of each owner or director.
The owners of an LLC or the directors of a corporation can create this document and provide any rules, restrictions, or guidance to the authorized signer.
Why is a Banking Resolution Needed?
When a company opens a bank account, they need the proper documentation to satisfy the bank that they say they are. This is usually accomplished with a banking resolution.
A banking resolution is required to correctly record company decisions and prove to financial institutions that the person applying for an account is authorized to act on behalf of the company.
What are the Elements Included in a Banking Resolution?
A banking resolution should include the name and address of the LLC as it is filed with the state (not any other information).
It should also list the legal names of all employees and officers authorized to make transactions through the company account, including authorizing and depositing checks, borrowing money, and handling other financial dealings.
How to Adopt a Banking Resolution
A Limited Liability Company (LLC) is automatically vested with the power to pass resolutions directly after formation and continuing as long as the LLC can carry on business in the state LLC incorporated it. It usually takes a vote of the members at your first meeting.
A Limited Liability Company is wise to ensure its liability protection by complying with its operating agreement. If the Operating Agreement of an LLC doesn’t specify another procedure, then the members of an LLC can usually approve a resolution without a formal meeting.
The voting formula defines how many votes are needed to pass a resolution. It’s usually detailed in the Operating Agreement.
How to Get a Banking Resolution
Almost every bank provides you with the banking resolution document for free when you open your bank account. There are also free banking resolution templates available online.
In this comprehensive guide, I contain almost every information about the banking resolution document, including What is banking resolution, Why is a banking resolution needed, What elements are included in a banking resolution, How to adopt a banking resolution, and How to get a banking resolution. I hope this guide will find helpful for you.