One of the first things you need to do when starting a business is open a business bank account. Your company’s bank account will contain information about all of your financial transactions, including profits, accounts payable, payroll, and more. Whether or not you need one depends depend on the type of business you have. But it’s always a good idea to have one. It won’t be difficult for a small firm to open a business bank account. The goal of business banking is to help organisations and businesses make the best financial decisions possible. In other words, they support firms in making wise financial decisions based on their present balances and creditworthiness and better utilising their assets. This post will provide a step-by-step guide on how to open a business bank account.
But before we know about the process let us understand the different kinds of business bank accounts:
Different types of business bank accounts
1. Checking account
An excellent option for handling payroll, bills, and other routine financial activities that keep your firm afloat is a business checking account. It can be opened in the company’s name, allowing cash to be sent and received under the company’s name. Bank accounts for businesses function similarly to bank accounts for individuals.
2. Savings account
Your earnings will probably need to be kept in a business savings account. Saving money for potential company usage can be done through a bank savings account. When you need money, you can quickly and conveniently withdraw it from your savings account.
3. Merchant account
Commercial bank accounts known as merchant accounts assist firms in handling internet transactions. Businesses are able to take card payments as well as other types of electronic payments thanks to it. Online businesses that process payments online must have a merchant account relationship.
4. Credit card account
A business credit card is a special type of card made for business owners that has special privileges made for companies. A company credit card might be used for unexpected expenses or other small business needs. The main advantage of a credit card for new business owners or those with poor credit is that it can assist establish or raise your company’s credit score.
Now that the types are out of the way, let’s understand what do you need to open a business bank account.
1. Employer information
To open a business bank account in India, you will need to provide the PAN number for your business, as well as Declaration Form 60 and 61 in compliance with the Income Tax Act.
2. Personal identification
For an account to be opened in the name of a business, the proprietor must present personal identification. Depending on where you live and where you work, you’ll need a different kind of identity, but it must be valid government-issued identification. All partners must present official identification and evidence of residence. You will also require address evidence for your company if you have an office.
3. Registration documentation
This documentation serves as proof that your company has been registered with the appropriate authorities. It can be an LLC registration paperwork, a tax certificate, or evidence of the acquisition of office space. You will require copies of your business registration, formation certificate, GST certificate, and any state government certifications. You must also present a sales tax/service tax certificate, a certificate of practise, an IEC (Importer Exporter Code) issued by DGFT, and an FDA/FSSAI certificate, if applicable to your industry.
4. Ownership and partnership agreements
The greatest business bank accounts provide your company room to develop and thrive. Partnerships are an element of this. Your bank will require this legal documentation if you own a business that is jointly owned with another entity or if another entity owns a majority of your stock. You’ll need to present a partnership deed, a power of attorney, and a stamped document naming each controlling partner/beneficiary in order to do this.
5. Licensing information
After creating an account, you must obtain the specific licences you need. However, some licences need to be obtained before your business may be registered. When opening a business bank account, you must provide these permits. Yet, it depends on the sector of the economy you operate in and the nation where your corporate headquarters are.
6. Brand and company certifications
If your company’s registered name and brand name are different, certain banks and municipal legislation require a “doing business as” certificate. Your bank will want this, particularly if your business has numerous sub-brands.
7. Credit score information
If your business has a credit score, it will be included in your application. The owner of the account’s (the business owner’s) credit score may be required if you are opening a bank account for the very first time when beginning a business.
Takeaway
With the help of the information above, we hope you can clearly see what is required to open a business bank account. You should never wait to open a business bank account. You can open an account as soon as your company is registered and all essential licences have been acquired.
Read More:
- A list of Top 10 Banks In India
- How to Get a Business Credit Card in 5 Simple Steps
- How to Get Short Term Business Loans Online
Business Talk is a digital business magazine that caters to CEOs, Entrepreneurs, VC, and Corporates. While working with entrepreneurs and business executives, we focus not only on their achievements. Our mission is to shed light on business entities, including their innovations, technological benchmarks, USPs, and milestones/accolades.
