Opening a dedicated bank account is advisable if you’re building a new business because it makes the business look more professional. A corporate bank account works like your personal account; you can transfer funds, keep money, write checks, pay bills, etc. Yet, there are distinct steps in opening a business account, which we’ll explain in this article.
What Are Business Bank Accounts?
They are accounts you open in the name of your company. You use it only for company-related transactions. It helps you keep company and personal finances separate and have accurate financial records.
What Do You Need To Open Business Bank Accounts?
Your banking institution will request personal information for all owners and directors of the company. This request ensures they are working with legitimate people that aren’t under sanctions or any restrictions due to their previous activities.
The documents you will provide include
- A valid government-issued identification, such as a passport or driving license
- Proof of residence (credit card statement, mortgage agreement, rent or lease agreement, etc.)
- Citizenship status
- Address and contact information (email or phone number)
- Social security number
Company Information and Documents
The financial institution will likely request a Certificate of Incorporation indicating your company is formally registered with the government. Other important documents you might need include
- A memorandum of association signed by all shareholders acknowledging their intention to form a company
- A government license if you operate in a strictly regulated industry such as law and medicine
- Articles of association outlining the rules governing the company
- A tax identification number issued by your domestic tax authority
Some financial institutions require a minimum deposit to open a corporate account. Ensure you check this in advance and confirm you meet the requirements. Some banks give you the option of having a minimum deposit or paying monthly maintenance fees. Others don’t have this requirement at all.
How To Open A Business Bank Account
- Gather the required documents: Collect and organize them in a single folder because you’ll need to submit them online or in person.
- Consider your needs: Which ones do you need? Do you need to accept payments from credit and debit cards? Do you need a loan? Do you need foreign exchange services? Etc.
- Look for a suitable bank: With the services in mind, you can shop for different banking institutions and pick the one you like.
- Apply for the account: You can open business accounts online or in person. The former is the more convenient option, as you can do it anywhere if you’re connected to the internet. You’ll submit the documents online just like you’d do in person and wait for a review and approval.
- Deposit funds and start using it: Once you’ve gotten approval, you can deposit funds into the account and start transacting with it.
Types of Business Bank Accounts
- Checking: This type is designed for recurring transactions such as payroll, vendor payments, bill payments, etc.
- Savings: Where you keep money you don’t need in the short term and earn interest on it.
- Merchant: This type lets you accept payments online from your customers.
Factors To Consider When Choosing A Banking Provider
- Fees: How much do they charge for everyday transactions such as transfers, withdrawals, deposits, etc.? Is there a monthly or yearly fee? Ensure you choose a provider with fees you can afford.
- Customer Service: A good provider should offer good customer service when you need it. You should be able to contact a human support representative to help solve your issues.
- Digital services: A good financial institution should offer a digital banking app that lets you transact from anywhere in the world.
- Interest Rates: How much interest do they offer on your savings account? Most banks offer between 0.1% and 5%.