What Is an Account Holder?

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Money is the lifeblood of any company, and it's hard to be successful without keeping good control of how your revenues flow. Part of that process is generating enough revenue to be profitable and maintaining tight control of your costs. At an even more basic level, it means controlling who has access to the company's bank accounts and under what conditions.

TL;DR (Too Long; Didn't Read)

An account holder is the person who accepts legal responsibility for handling the account.

Account Holder in a Sole Proprietorship

Keep Them Separated

Giving Someone Else Access

Account Holders in Partnerships

Account Access in Other Business Structures

Larger, incorporated companies set up bank accounts in a similar way, with the significant controller and anyone owning a 25 percent share or greater providing the bank with additional personal information.

In these cases, the company might also furnish the bank with an operating agreement explaining who is responsible for the company's management and a document called a banking resolution explaining which people have authority to set up accounts and services with the bank and under what conditions. The bigger the company, the more likely it is that the daily banking and check writing is done by relatively low-level managers or accounting staff as opposed to the owners or senior management.

Establishing Controls

It's important to have controls over the use of your bank accounts and especially over checks and payment authority. This can be as simple as keeping the company's physical checks under lock and key and restricting the keys to a few trusted people. In larger companies this isn't practical, but you might opt to set up your accounting software so that only specific people can print checks. Another common control is to require a second authorized signature on checks above a given dollar amount, which reduces the risk of fraud or embezzlement.

References

About the Author

Fred Decker learned business fundamentals at second hand as an insurance and mutual funds broker, and at firsthand as a retail store manager and the chef/proprietor of his own restaurants. He has written hundreds of business-related articles for sites including Zacks.com, Chron.com, Vitamix.com, Bizfluent and GoBankingRates and many others. He was educated at Memorial University of Newfoundland and the Northern Alberta Institute of Technology.

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