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Can an LLC have a NOW account?

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Question: 
Can an LLC have a NOW account?
Answer: 

No, unless the LLC is a non-profit entity. In spite of the fact that many single-member LLCs are able to use their members' Social Security numbers under Internal Revenue rules, they are not individuals and don't qualify under the legal definition of sole proprietorships, regardless of how the IRS treats them.

Congress wrote the law that permits NOW accounts to exist. That law says that NOW accounts can be held by individuals, domestic government units, non-profit organizations and certain others when holding the funds in a fiduciary capacity for individuals eligible to hold NOW accounts in their own right. Unless Congress changes the law, an LLC is not eligible. You'll find another response to this question here, where you will also find a link to a definitive response from the Federal Reserve Board to the Tennessee Department of Financial Institutions that provides a complete analysis.

First published on BankersOnline.com 5/31/10

First published on 05/31/2010

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