Your club just collected its first round of dues. $1,200 from 30 members, all Venmo’d to the treasurer’s personal account. It seemed fine at the time. Now the treasurer’s spouse is asking why there’s a mysterious $1,200 deposit in their joint checking account. The IRS might have the same question.
This is how most community organizations start their financial lives: someone volunteers to be treasurer, money goes into their personal account, and everyone pretends that’s normal. It works for about three months. Then it gets messy. Expenses get mixed with personal spending. Nobody can tell what the organization actually has. And when the treasurer rotates off the board, untangling the money becomes a project nobody wants.
The fix is obvious. Your club needs its own bank account. The process is straightforward, but it involves a few steps that nobody tells you about until you’re standing in a bank branch with the wrong documents. Here’s the complete walkthrough.
Why You Need a Separate Account (Even for a Small Club)
Some organizers push back on this. “We only handle a few thousand dollars a year. Why bother?”
Three reasons. First, legal protection. When organizational money flows through personal accounts, there’s no legal separation between the organization’s finances and the individual’s. If someone sues the club or the IRS questions a transaction, the treasurer’s personal assets could be exposed.
Second, financial transparency. Members pay dues and expect that money to go toward the organization’s mission. A separate account with its own statements gives your board and members a clear picture. That transparency is the foundation of trust, and we’ve written about why financial transparency matters so much for community organizations.
Third, practical sanity. Tax time, budget reviews, expense tracking – everything is harder when organizational transactions are mixed with someone’s grocery runs and Netflix subscriptions.
If your organization collects any money at all – dues, event fees, donations – it should have its own bank account.
Step 1: Get an EIN from the IRS
Before any bank will open an account for your organization, you need an Employer Identification Number. An EIN is essentially a Social Security number for your organization. Banks require it. The IRS requires it. You need it even if you have no employees.
The good news: getting an EIN is free and fast.
Apply online at IRS.gov. Go to the IRS EIN Assistant. The application takes about 15 minutes, and you get your EIN immediately at the end. Not in two weeks. Not in the mail. Right there on your screen when you finish.
You’ll need the legal name of the organization, the type of entity (most clubs choose “other nonprofit/tax-exempt organization”), the responsible party’s name and Social Security number (usually the president or treasurer), and your organization’s address and formation date.
A few things to know: the online application is only available Monday through Friday, 7 a.m. to 10 p.m. Eastern Time. The session times out after 15 minutes of inactivity and you can’t save progress, so have your information ready before you start.
If you can’t apply online (international responsible parties, entities that don’t fit the online categories), you can fax or mail Form SS-4 to the IRS. Fax applications typically get a response within four business days. Mail takes four to five weeks.
Print your confirmation. The moment you get your EIN, save the confirmation page as a PDF. You’ll need this number for the bank, for your state registration, for tax filings, and for approximately everything your organization does from now on. Losing it means calling the IRS, and nobody wants to call the IRS.
Step 2: Gather Your Documents
Banks vary in what they require, but most want to see the same core documents. Gather all of these before you walk into a branch or start an online application. Coming back because you forgot something is a rite of passage nobody needs.
EIN confirmation letter or printout. The CP 575 letter from the IRS, or the online confirmation page. No EIN, no account.
Articles of incorporation or certificate of formation. If your organization is incorporated with the state, bring the official filing. Unincorporated associations may not have this, which is fine, but some banks require it.
Bylaws. If you don’t have bylaws yet, some banks will still open the account, but many won’t. Bylaws demonstrate that your organization has authorized decision-makers. If you haven’t written yours yet, our guide to writing bylaws for community organizations covers what you need.
Board resolution or meeting minutes authorizing the account. This is the one people forget. Most banks want written proof that your board authorized the account and designated specific signatories. At a board meeting, pass a motion like “The board authorizes the opening of a checking account at [Bank Name] with [Treasurer Name] and [President Name] as authorized signatories.” Record it in the minutes and bring a copy to the bank. This is one more reason to run productive board meetings that document decisions clearly.
Photo IDs for all signatories. Driver’s licenses or passports. All signatories usually need to be present at account opening, or visit the branch separately.
IRS determination letter (if you have tax-exempt status). If your organization has 501(c)(3), 501(c)(4), or 501(c)(7) recognition, bring the determination letter. It may qualify you for fee waivers and nonprofit account types. You can still open an account without tax-exempt status – you just won’t get the nonprofit perks. For more on whether you need it, see our primer on tax basics for small nonprofits.
Document checklist to print and take with you:
- EIN confirmation (CP 575 letter or online printout)
- Articles of incorporation or certificate of formation
- Bylaws
- Board resolution or meeting minutes authorizing the account
- Photo IDs for all signatories
- IRS determination letter (if applicable)
- Organization’s physical address and mailing address
- Initial deposit (check or cash, amount varies by bank)
Step 3: Choose the Right Type of Account
Not every checking account is created equal. Banks typically offer three options for organizations like yours.
Business checking. The most common option for clubs and associations. Business checking accounts are designed for entities that aren’t individuals. They come with features like multiple signatories, check-writing, and online banking. Monthly fees range from $0 to $25 depending on the bank and balance requirements.
Nonprofit checking. Some banks offer specialized accounts for organizations with 501(c)(3) or other tax-exempt status. These often come with lower or waived monthly fees, reduced transaction charges, and sometimes fee-free payment processing. If your organization has formal tax-exempt recognition, always ask about nonprofit-specific accounts.
Basic savings account. In addition to your checking account, consider opening a savings account for your reserve fund. Keeping reserves separate from operating funds prevents accidental spending and makes it easier to track your financial cushion. If you’re working on creating a budget, a separate savings account for reserves keeps the numbers clean.
For most small clubs and associations, a basic business checking account is all you need to start. You can always add a savings account later as your reserves grow.
Step 4: Pick the Right Bank
Many organizations make a choice here they regret later. The biggest factor isn’t interest rates or flashy apps. It’s whether the bank actually wants to work with small organizations.
Credit unions. Often the best option for community groups. They’re member-owned cooperatives themselves, so they tend to understand volunteer organizations. Many offer free or low-cost business checking with no minimum balance. One caveat: federal credit unions require your organization to qualify for membership before they’ll open an account, so call ahead. If there’s a community credit union in your area, start there.
Community banks. Local banks often cater to small organizations more willingly than big nationals. You’re more likely to get a real person who knows your account and can help when something goes wrong.
Large national banks. Chase, Bank of America, and Wells Fargo all offer business and nonprofit accounts. The upside: broad ATM networks, polished online banking, and integration with most payment processors. The downside: you’re a number, and getting help means navigating phone trees. It’s worth asking specifically about their nonprofit or community organization accounts before committing.
Online-only banks. Mercury, Relay, and similar banks offer zero monthly fees and excellent dashboards. The catch: if your organization deals in cash (event ticket sales, fundraiser proceeds), depositing it’s difficult without physical branches.
Questions to ask any bank before opening an account:
- Is there a monthly fee? Can it be waived for nonprofits or with a minimum balance?
- What’s the minimum opening deposit?
- How many free transactions per month? (Some business accounts charge per transaction after a threshold.)
- Can we have multiple signatories? Is there a fee for adding them?
- What online banking features are included?
- Can we connect payment processors like Stripe or PayPal?
- What happens when we need to change signatories (which you will, eventually)?
Step 5: Set Up Signatories the Right Way
This is the decision that trips up more organizations than any other. Not because it’s complicated, but because people make one critical mistake: putting only one person on the account.
Always have at least two signatories. Typically the treasurer and the president. If your treasurer gets sick, moves away, or steps down abruptly, someone else needs to access the organization’s money. A single-signatory account can freeze your organization’s finances for weeks or months during a transition.
Better yet, consider three signatories: treasurer, president, and one other board officer. This gives you redundancy without giving too many people access.
Signatory best practices:
- Keep a written record of who is authorized on the account. Include this in your board minutes.
- Update signatories promptly when officers change. The outgoing treasurer should help add the incoming one before fully transitioning out. This is part of a good leadership transition process.
- Never give debit card access to more than one or two people. Debit cards create uncontrolled spending.
- Some organizations require two signatures on checks above a threshold amount. Most banks don’t enforce this – it’s an internal policy you’ll need to enforce yourselves.
Step 6: Set Up Online Banking
Once the account is open, set up online banking immediately. Enable email or text alerts for deposits, withdrawals, and low balances so the treasurer knows when money moves. Go paperless with monthly statements delivered by email and backed up to a shared Google Drive or Dropbox. If the bank offers read-only access, set it up for the president or a second officer – it gives your board visibility into finances without the ability to move money.
Step 7: Connect Your Payment Processor
If your organization collects dues online, you’ll need to connect a payment processor to your new bank account. Stripe, PayPal, and Square are the most common options for small organizations.
The process is straightforward: create a business account with your chosen processor, enter your organization’s EIN and bank account details, and verify the account (usually by confirming two small test deposits).
A few important considerations:
Processing fees are real expenses. Stripe and Square charge 2.9% + $0.30 per online transaction. PayPal runs higher at 3.49% + $0.49. Over 80 members paying $75 through Stripe, you’re losing nearly $200 in fees. Budget for this.
Keep your processor account under the organization, not a person. Use the organization’s EIN, bank account, and an organizational email address. When the treasurer changes, you should only need to update login credentials, not rebuild the entire account.
Match processor deposits to your bank statements. Processors batch deposits, lumping several days of payments into one. Good membership management tools handle this reconciliation automatically.
Common Mistakes to Avoid
Using a personal account “temporarily.” There’s nothing more permanent than a temporary fix. Once money starts flowing through a personal account, extracting it creates tax complications for the account holder. Open the organizational account first, even if it delays your first dues cycle by two weeks.
Forgetting to update signatories. Officers change. Bank signatories don’t update automatically. We’ve seen organizations where the only person authorized on the account left the board two years ago. Update signatories at every leadership transition.
Not documenting expenditures. Every expense should have a purpose documented somewhere – a receipt, a board approval in the minutes, a note in your records. When someone asks where $340 went in March, “I don’t remember” isn’t an answer that builds member confidence.
Opening the account without a board resolution. Without formal board authorization, you’ve got one person who unilaterally controls the organization’s money. That’s a governance problem waiting to happen.
Single signatory. One person controlling all access to the organization’s money is the single most common financial governance failure in small clubs. It’s also the easiest to prevent. Add a second signatory before you leave the bank.
After the Account Is Open: First-Month Checklist
- Deposit initial funds. If the organization has money in someone’s personal account, transfer it immediately and document the transfer.
- Order checks. Some expenses still require them. A small batch with the organization’s name and address is enough.
- Set up tracking. Whether it’s a spreadsheet or membership software, record every transaction from the beginning. Don’t tell yourself you’ll “catch up later.”
- Share account details with the board. The board should know where the account is, who the signatories are, and how to access statements.
- Start collecting dues into the new account. Update your dues collection process to route payments to the organizational account.
- File the account information securely. Add the bank name, account number, routing number, and signatory list to your organization’s records. Store it where the next treasurer can find it.
The Bottom Line
Opening a bank account for your club isn’t exciting. Nobody got into community organizing because they love paperwork. But it’s one of those foundational steps that makes everything else easier – budgeting, collecting dues, handling members who don’t pay, and reporting to your members with confidence.
The whole process – EIN, documents, bank visit – takes a few hours spread over a week or two. That’s a small investment for an organization that plans to be around for years.
Get the EIN today. Gather your documents this week. Open the account next week. Your future treasurer will thank you.
Once your bank account is open, the next step is making dues collection seamless. Somiti connects to your account, automates payment tracking, and gives your board real-time financial visibility – so your volunteer treasurer can stop chasing payments and start focusing on the community.