- Corporations, LLCs and partnerships use a business ownership category
- The standard limit is generally $250,000 per insured bank for the business category
- Sole proprietorships are treated differently
- Signers and owners do not multiply coverage
- Separate legal entities may have separate coverage
- Businesses holding large cash balances should plan deliberately
- Primary sources
Corporations, LLCs and partnerships use a business ownership category
FDIC guidance places deposits owned by corporations, partnerships and qualifying unincorporated associations in a separate ownership category. A validly formed business entity can therefore receive coverage separate from the owners’ personal deposits at the same bank.
The standard limit is generally $250,000 per insured bank for the business category
The FDIC states that deposits owned by the same corporation, partnership or unincorporated association at one insured bank are added together and insured up to $250,000 in that ownership category. Opening several accounts for different business purposes does not create separate insurance limits for each account.
Sole proprietorships are treated differently
FDIC guidance says sole-proprietorship and DBA deposits are not insured in the corporation/partnership category. They are generally combined with the owner’s other single-ownership deposits at the same insured bank.
Signers and owners do not multiply coverage
Adding more authorized signers, members, partners or officers does not multiply the insurance limit for one business entity. Coverage follows ownership of the deposits, not the number of people authorized to use the account.
Separate legal entities may have separate coverage
A separately incorporated subsidiary engaged in an independent activity may qualify for coverage separate from its parent and other entities, while divisions that are not separately incorporated generally do not. Entity structure and account titling therefore matter.
Businesses holding large cash balances should plan deliberately
A business routinely holding more than the insured amount should confirm ownership-category treatment, bank insurance status and account titling. It may also consider spreading operational reserves across more than one insured institution when appropriate. For complex structures, use the FDIC’s official tools or obtain professional advice.
Primary sources and reference material
Build banking decisions around operating risk and total cost.
Use the account structure, permissions and liquidity rules that fit how the business actually receives, holds and moves money. Verify changing bank terms before implementation.