Current Account for Business- A current account is developed primarily for companies who conduct transactions in greater amounts daily. This is usually a no-interest portfolio. Numerous small companies continue to conduct deposits from personal bank accounts. Depending on the size and nature of your company, you can choose between a savings account and a current account.
Why Do I Need a Current Account?
When you open a current account, it enables you to properly manage the business's finances. You will determine if the company is profitable or not. Separating the reports often assists businesses with organising their payroll documents, avoiding overspending, and efficiently filing taxes.
Establishing the business's credit begins with the establishment of a current account. This enables you to comfortably apply for potential business loans. Enhance your creditworthiness by establishing a current account as evidence of business. Select a reputable bank and maintain a letter stating that you have a current account with them.
Why should a home-run business have a current account over a savings account?
- There is no limit on the number of transactions.
- There are no restrictions on deposits or transfers from the home branch.
- Numerous services are available, including checks, demand drafts, Internet banking, and mobile banking.
- Overdraft security is one of the most advantageous aspects of current accounts. Overdraft plays a critical position in market management. Therefore, when selecting a current account, verify the bank's intention to offer an agreed-upon overdraft.
- Additionally, the current account offers extravagant features such as multi-location fund transfers, free pay orders, free inward remittance, and free demand draft services. Several well-known banks now provide dedicated customer care and customised options for current accounts.
Types of Current Accounts- Current accounts are classified into the following categories based on the transactions that entities choose to conduct:
- Standard Current Accounts-> Provides a zero-interest account with a credit limit requirement.
- Packaged current accounts-> Provide many benefits to account-holders. Services such as travel protection, emergency assistance, and roadside assistance are included.
- Premium current accounts-> Entails a slew of personalised features. Individuals with a large level of financial dealings would benefit greatly from this service.
- Foreign currency accounts-> It is well-suited for someone who engages in regular foreign transactions.
How to Open a Bank Account for Business?
The method of opening a new current bank account for business consists of the following five stages:
Choosing A Bank: The first step is to choose a bank. Choosing a bank that has superior client support and transaction capabilities. However, you can assess a bank's netbanking functionality, loan and overdraft capabilities, and so on.
Choose a Current Account: Banks provide a variety of current bank accounts that are tailored to the specific requirements of different businesses. Choose the account form that is most appropriate for your firm. To be certain, call the bank's customer service team to dispel any questions.
Visit the nearest branch: After determining the sort of current account you want to open and shortlisting 2-3 banks, visit the closest branch to obtain an account opening form and inquire about the bank's account opening process.
When you approach a bank to open a current account, the bank would ask for the basic documents:
- Pan Card
- Photo ID Proof
- Passport Size Photo
- Contact details
- Address Proof
- ID & Address Proof of business owner
- Nominee details
- Business details
- Blank cheque from an existing bank account
Final Process: Finally, once all the documentation is completed, the bank may seek a referral from the person who introduced you to the bank, but only if you were not already a client. Following that, the bank will process your application and, once accepted, you will acquire your Current Account Kit online or offline at the address you provided.
How to Open Current Account for Sole Proprietorship in India-
- Two certificates attesting to the owner's name and address — given by a government authority/department as a registration/licence document.
- Job card released by NREGA and properly signed by a state government official.
- The sole proprietor's most recent passport-size colour photograph.
- PAN Card
- In the event of granting a Power of Attorney for operations, photographs and contact information should be attached.
How to Open Current Account for Partnership Firms-
- Partnership deed registration certificate with the company.
- List of beneficiary shareholders who control more than 15% of the company.
- Evidence of the partners' addresses and identities.
- A legal declaration that identifies the partners that have been granted power of attorney.
- Trade Licence
How to pick the best business current account?
Choose a bank that offers a low minimum balance requirement. If your bank sets a high minimum balance on your account, it can become a problem for your working capital.
Your bank account also assists you with managing your normal cash flow, so be aware of your account's withdrawal cap. While the majority of current accounts do not have a cap on the number of withdrawals, there could be a cost if the limit is exceeded.
Free Business Current Account- Many banks offer zero balance current accounts, along with great features:
- No provision for a minimum balance.
- There are no secret fees associated with purchases (NEFT/IMPS/RTGS).
- Passbook updates in real-time.
- Services for integrated bill paying.
- Payments and money transactions are managed effortlessly from the netbanking panel.
- One-size-fits-all payment method.
Documents Required- The process to open a free business current account:
- The applicant provides us with their mobile number, which is checked via OTP, as well as their company information via a form.
- The complete Know Your Customer (KYC) is required by all registered signatories and beneficial owners of the company.
- After authentication of records, the account is activated.
The factors we need to consider before choosing the best current account-
- The bank must be conveniently available and connected to meet business needs. Along with a good venue, the bank must have adequate facilities such as well-maintained ATM networks, online banking, and mobile banking.
- Using an overdraft, which is one of the benefits of a current account. It has a significant impact on the overall business. Therefore, when selecting a current account, verify the bank's intention to offer an agreed-upon overdraft.
- At the start of any company or entrepreneur's career, the amount of money needed for input is greater. To avoid incurring additional costs during the startup phase of your company, choose an account with a low to no monthly balance criteria.
When considering starting a new business, one of the critical requirements is to open a current bank account. Various public and private banks in India provide a variety of current accounts, making it very difficult to choose the right current bank account for small businesses.
1) How to Start an Online Grocery Store with Low Investment
2) How to run a successful clothing business in a village?
3) How do ice cream shops stay in business during winter?
4) OkCredit: Simple, Paperless & Secure solution for businesses
Q. Is the current account mandatory for an online business?
Ans. Yes, you have to maintain a current account in the name of your business.
Q. Is the current account mandatory for a sole proprietorship?
Ans. A sole proprietorship is reserved only for smaller businesses. Yes, all businesses must have current accounts.
Q. Is GST required for current accounts?
Ans. GST is not mandatory to open a Current Account.
Q. What is the minimum balance in the current account?
Ans. A normal current account needs a minimum balance of Rs. 10,000. Depends on the bank you choose.
Q. Can I convert my savings account to my current account?
Ans. It is not practical to move a savings account to a current account since the two accounts are fundamentally different and have unique characteristics and benefits.