I. SOLE PROPRIETORSHIP TRANSACTIONS WITH A BANK A sole proprietor or sole owner of an unincorporated business may desire to open an account with the bank. The most common questions asked in regard to this account activity are:
A. Must the Bank Require a Tax Identification Number or Will a Social Security Number be Sufficient?
A sole proprietorship is not a separate “entity” from the individual owner and therefore a Social Security number (SSN) must be given. A sole proprietorship account is always documented and reported, for IRS purposes, in the individual name of the sole proprietor (not in the name of the business) regardless of whether the sole proprietor uses an SSN or Employer Identification Number (EIN).
B. Should There be any Special Documentation on the Signature Card?
It has been suggested that the words “sole owner” be noted on the signature card of a sole proprietorship. Some banks require the filing of an affidavit of sole ownership or a trade name affidavit if the account is opened under a name different from the owner. Also, it is urged that the owner’s name be included in the account name. For example, John Smith DBA (doing business as) Smitty’s Video Store. C. If the Sole Owner Wants to Authorize Others to Access the Account, What is the Procedure? The owner may allow for others to write checks or to otherwise withdraw funds from the account by either a written authorization signed by the owner or by opening a new account and closing the old one. Non-owner names may always be deleted by the bank with instructions by the account owner.