{"id":4477,"date":"2021-08-19T14:21:07","date_gmt":"2021-08-19T19:21:07","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/business-finances\/what-is-a-banking-resolution.html"},"modified":"2021-08-29T16:11:00","modified_gmt":"2021-08-29T21:11:00","slug":"what-is-a-banking-resolution","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/business-finances\/what-is-a-banking-resolution.html","title":{"rendered":"What is a Banking Resolution?"},"content":{"rendered":"\n<div class=\"fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30  wp-container-core-columns-is-layout-9d6595d7 fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30\">\n    \n    <div class=\"fl-section-main fl-page-articles fl-section-main fl-section-main-full-width\">\n        <h1 class=\"fl-no-margin-top\">What is a Banking Resolution?<\/h1>\n<section class=\"fl-gutenberg-byline\">\n    <div class=\"fl-gutenberg-byline-content\">\n                    By <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/kimberly-lekman-esq\/\">Kimberly Lekman, Esq.<\/a> | Legally reviewed by <a\n                href=\"https:\/\/www.findlaw.com\/company\/our-team\/j-p-finet-j-d\/\">J.P. Finet, J.D.<\/a>\n                | Last updated\n        <time>\n                            August 29, 2021\n                    <\/time>\n    <\/div>\n\n            <div class=\"fl-gutenberg-byline-editorial-note fl-text-sm\">\n            <p>Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n        <\/div>\n    \n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-legally-reviewed\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Legally Reviewed\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>This article has been written and reviewed for legal accuracy, clarity, and style by <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\">FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with <a href=\"https:\/\/www.findlaw.com\/company\/company-history\/editorial-policy.html\">our editorial standards<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n\n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-fast-checked\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Fact-Checked\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>The last updated date refers to the last time this article was reviewed by FindLaw or one of our <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/contributing-authors.html\">contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please <a href=\"https:\/\/lawyers.findlaw.com\/?fli=bylinelink\" target=\"_blank\" rel=\"noopener\">contact an attorney in your area<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n<\/section>\n<p>A banking resolution is a document&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness.html\">businesses<\/a>&nbsp;create when they open a bank account. In this document, the members agree to their banking rights and responsibilities. This includes who can loan money and perform other banking functions.<br>\r\n<\/p>\r\n<h3>Key Takeaways<\/h3>\r\n<ul>\r\n<li><a href=\"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/corporate-structure-directors-to-shareholders.html\">Board members of a&nbsp;corporation<\/a>&nbsp;usually draft a banking resolution at their first board meeting.<\/li>\r\n<li>A&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/llcs.html\">Limited liability company (LLC)<\/a>&nbsp;should also have a banking resolution. This simplifies the process of opening a bank account.<\/li>\r\n<li>Banks often require banking resolutions from companies. They serve as proof that the person opening a&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-finances\/finance-banking-forms-and-contracts.html\">business bank account<\/a>&nbsp;is authorized to do so.<\/li>\r\n<li>Some banks have a standard form that companies must use for their banking resolution.<\/li>\r\n<\/ul>\r\n<h2>Understanding Banking Resolutions<\/h2>\r\n<p>Before a bank opens&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-finances\/finance-banking-forms-and-contracts.html\">an account<\/a>&nbsp;in a company&#8217;s name, they will likely require a banking resolution. It shows a bank that the person opening a bank account in a company&#8217;s name is authorized to do so.<\/p>\r\n<p>The banking resolution gives the bank important information about which members of a company are authorized to make important banking decisions. Typically, it will list who can make withdrawals, who can&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-finances\/loan-package-documents-and-information.html\">apply for loans<\/a>, and who can write checks on behalf of the company.<br>\r\n<\/p>\r\n<p>The minimum requirements for this resolution will vary depending on the financial institution. Some banks have their own standard banking resolution template that companies must use. They often offer these forms for free.&nbsp;<\/p>\r\n<p>Companies should be sure to update their banking resolutions regularly. When a&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/buyout-agreements-changing-llc-ownership.html\">member leaves the company<\/a>, it is a good idea to promptly modify the banking resolution. This can help prevent disputes if a former member accesses a bank account.<\/p>\r\n<h3>Banking Resolutions for Corporations<\/h3>\r\n<p>Corporate&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/corporate-structure-directors-to-shareholders.html\">board members<\/a>&nbsp;agree on several corporate resolutions at their first board meeting. Corporations must create&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/what-types-of-legal-procedures-should-corporations-maintain.html\">resolutions or written documentation<\/a>&nbsp;of any major company decisions. This includes banking resolutions for the creation of bank accounts. These record keeping formalities are critical functions for corporations.<\/p>\r\n<p>Keeping good records is essential so that corporations maintain their corporate status. This status gives liability protections that corporations do not want to risk losing. To make sure they are complying with bookkeeping requirements, corporate officers should check their&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/state-guide-corporation-laws.html\">state corporation laws<\/a>.<\/p>\r\n<h3>Banking Resolutions for LLCs<\/h3>\r\n<p>LLCs are not required to create banking resolutions by law. But their&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/sample-llc-operating-agreement.html\">operating agreement<\/a>&nbsp;might require a banking resolution. Even if an LLC&#8217;s operating agreement does not require a banking resolution, it can be helpful to have one. The resolution&nbsp;officially authorizes members to open a bank account, apply for loans, and make withdrawals in the company&#8217;s name.<\/p>\r\n<p>The banking resolution should include the following information:<\/p>\r\n<ul>\r\n<li>The LLC&#8217;s&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/choosing-your-business-name.html\">name<\/a>&nbsp;and address.<\/li>\r\n<li>The full names of the LLC members.<\/li>\r\n<li>Who can write checks for the LLC.<\/li>\r\n<li>Which members have authority to take out&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-finances\/loans-and-investors.html\">loans<\/a>.<\/li>\r\n<\/ul>\r\n<p>With a banking resolution in hand, an authorized member of an LLC is empowered perform any&nbsp;necessary banking tasks.<\/p>\r\n<h3>Related Articles:<\/h3>\r\n<p><a href=\"https:\/\/www.findlaw.com\/smallbusiness.html\">Small Business Law<\/a><\/p>\r\n<p><a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-finances.html\">Business Finances<\/a><\/p>\r\n<p><a href=\"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/forming-an-llc.html\">Forming an LLC<\/a><\/p>\r\n<p><a href=\"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/checklist-starting-a-corporation.html\">Starting a Corporation<\/a><\/p>\r\n<div class=\"was-this-helpful\">\n    <div\n            class=\"was-this-helpful__question-container\"\n            aria-labelledby=\"was-this-helpful__question\"\n            role=\"group\"\n    >\n        <span\n                id=\"was-this-helpful__question\"\n                class=\"was-this-helpful__question fl-text-lg-bold\"\n        >Was this helpful?<\/span>\n        <button\n                class=\"was-this-helpful__button fl-text-sm\"\n                aria-label=\"Yes\"\n                value=\"yes\"\n        >\n            <span class=\"was-this-helpful__button-text 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