What is a Banking Resolution?
Obviously, not everyone can manage your business’s finances, but how does the bank know who’s authorized? Rather than just opening a bank account, business owners will need to specify who can act on behalf of their company. A banking resolution does exactly that. Let’s review some of the ins and outs of banking resolutions, what’s included in them, and how to make updates.
What is a Banking Resolution?
A banking resolution is an official document adopted by a company’s members (for an LLC) or Board of Directors (for a corporation) that authorizes specific individuals to act on behalf of the business in banking matters. This includes opening and closing accounts, signing checks, handling wire transfers, and conducting other financial transactions. During the first meeting for a business, it’s common to include a corporate resolution addressing who will be included in this document.
A banking resolution is formal proof to banks and financial institutions that the people named in the document have the authority to make financial decisions for the company. Without a banking resolution, banks may refuse to allow certain transactions.
What’s Included in a Banking Resolution?
A banking resolution needs to be precise to give the bank all the necessary information. While there is no one-size-fits-all template, key details on the document typically include:
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The name of the business
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The name of the bank
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A list of authorized individuals
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The scope of their authority
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The date that the resolution is approved
Do I Need a Banking Resolution?
A banking resolution is technically not legally required, but if your business has a bank account, you will likely need one. Banks typically require this document to verify who is authorized to conduct financial transactions on behalf of the company. Without it, your bank may require additional documentation for approvals.
Some smaller businesses or single-owner LLCs might operate without a banking resolution, but having one helps prevent confusion or delays with financial institutions.
How to Get a Banking Resolution
Luckily, obtaining a banking resolution is a pretty straightforward process. During a meeting with the members of an LLC or a corporation’s Board of Directors, those present can form a resolution that states which individuals are authorized to act on behalf of the company in banking matters. Once the resolution is approved, the banking resolution is signed by the corporate secretary and stamped with the corporation's corporate seal. A certified copy can then be provided to the bank when opening or updating accounts.
Updating Your Banking Resolution
A banking resolution isn’t a one-and-done document. Over time, it may need updates as team members change and responsibilities shift. To update the resolution, the members of an LLC or the Board of Directors of a corporation should hold a formal meeting and approve the changes. Once an updated version is complete, it should then be documented in the company’s official records, and a new certified copy should be provided to the bank.
Banking Resolution Templates
When opening a business bank account, lots of banks will require a banking resolution, so it’s best to be proactive. To stay proactive, you can form your own banking resolution document by downloading and printing out one of our free templates:
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LLC banking resolution template (.doc format)
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Corporation banking resolution template (.doc format)
Although most businesses will have their banking resolutions prepared before going to the bank, some banks will require you to fill out their own custom banking resolution template. Banks will vary in this respect, so try to get all the details you can when searching for a new bank. If you apply for a loan, the bank will keep the banking resolutions on file along with the Certificate of Incorporation/Formation, the bylaws/Operating Agreement, and other company formation documents.
For any additional questions, please contact Harvard Business Services, Inc. at 1-800-345-2677.
Banking Resolution FAQs
What is the purpose of a bank resolution?
A banking resolution formally documents who within a company has the authority to manage its banking activities. This document provides banks and financial institutions with the necessary proof of authority, thereby preventing fraud when someone attempts to open or close accounts, sign checks, initiate wire transfers, or perform other critical financial activities
Where do I get a banking resolution?
You can create a banking resolution internally. There’s no single required format, and companies are generally free to draft the document in whatever structure makes sense for them. Your team can obtain one by drafting it from scratch or by using one of the free templates on our website, listed above. Just remember to include the authorized names and the scope of their authority.
How do banking resolutions differ for different entity types?
For LLCs, the resolution is typically approved by the members or managers, while for corporations, the Board of Directors formally adopts the resolution. Partnerships may require approval from all partners unless the partnership agreement states otherwise. While the content is similar across entity types, the approving body and signature requirements vary based on the company’s governance structure.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.
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