We do not believe that an LLC can open a “NOW account,” but under changes made by the Dodd-Frank Act, you can allow any type of business (LLCs/limited liability companies, partnerships, and corporations) to open ordinary deposit accounts that earn interest. While there may be no major differences between NOW accounts and checking accounts, one technical different is that NOW account customers use negotiable orders of withdrawal, while checking account customers use checks.

• NOW accounts: The Federal Deposit Insurance Act authorizes NOW accounts only when “the entire beneficial interest is held by one or more individuals or by an organization which is operated primarily for religious, philanthropic, charitable, educational, political, or other similar purposes and which is not operated for profit.” 12 USC 1832(a). This has been interpreted to allow sole proprietorships to hold NOW accounts, but it would not extend to LLCs or other business entities. (The Federal Reserve has confirmed this in an interpretive letter. Federal Reserve Board Letter dated August 23, 2006.)

• Interest-bearing deposit accounts: However, note that Dodd-Frank removed the prohibition on paying interest on ordinary demand deposit accounts held by businesses, and that provision has been in effect since July 21, 2011. Dodd-Frank Act, Section 627, which repealed Section 18(g) of the FDIC Act (formerly 12 USC 1828(g); you may view the former version, as it stood before the Dodd-Frank change, here).