THINGS TO CONSIDER BEFORE OPENING A BANK ACCOUNT FOR BUSINESS PURPOSE

Banks play an important role for businesses that plan to invest and expand. Finding and opening a bank account can seem intimidating given the sheer number of options out there. Fortunately, most banks follow a straightforward process similar to the one described below. Getting your account open is just a matter of picking a bank, providing certain details, and funding your account. Once the formalities are done, you can start using your account — and can gradually avail the services that the banks can offer. 

1. Choose a Bank or Financial Institutions,

2. Visit the Bank Branch or Website,

3. Pick the Product You Want,

4. Provide Your Information,

5. Your Financial History,

6. Consent to the Terms,

7. Fund Your Account,

8. Start Using the Account. 

Why open a bank account?

1.  Protection: Business banking offers limited personal liability protection by keeping your business funds separate from your funds. Merchant services also offer purchase protection for your customers and ensure that their personal information is secure. 

2. Professionalism: Customers will be able to pay you with credit cards and make checks out to your business instead of directly to you. Plus, you’ll be able to authorize employees to handle day-to-day banking tasks on behalf of the business.

3. Preparedness: Business banking usually comes with the option for a line of credit for the company. This can be used in the event of an emergency, or if your business needs new equipment or assets.

4. Separate your business & personal finances: Having your business and personal bank accounts separate can help manage your business’s cash flow and makes it much easier to track the financial health of your business.

5. Earn high interest on your savings: If you decide to open a business savings account, you can earn higher interest rates on your daily account balance compared to a checking account. This can help maximize your business’s cash flow over time.

6. Maintain a clean financial record: A business bank account can help provide a neat and tidy financial record at the end of the year because your personal finances won’t be commingled with your business.

What sort of account should you choose?

Choose the account type that’s best for you:

Not all accounts are the same, even when it comes to basic business accounts. It can be very wise to contact the banks in your local area to discuss what exactly you’d get if you opened an account. While all bank accounts are different, they can generally be lumped into 2 general categories for your business: 

Choose a Savings Account if you’re looking for a place to save money over a short time, but still, keep it readily accessible. Choose a Chequing Account to keep money that you plan to use for day-to-day spending or to pay bills over the short term. You’ll earn less interest than with a savings account if you open a checking account.

Factors to consider when choosing a bank to open a business bank account are?

1. Existing banking relationship: Think about starting your search with a bank where you have a prior relationship when setting up a business bank account. If you have a reputation established with a bank, it may be easier to open an account – as finance is a community based on trust, reputation, and name value.

2. Affordable costs: Consider the costs that you would have to bear like fees for monthly servicing, deposits, and ATM use. It would be wise to have a comparison sheet handy so that you can ensure that you can make an informed decision.

3. Convenience: Make sure the location, as well as the number of ATMs and branches, suits your needs.

4. Good online/mobile experience: Confirm your bank offers a good online experience, including online bill pay and mobile deposits.

5. Support for future needs: If you expect to need more than just bank accounts, make sure your bank offers small business loans, lines of credit, and credit cards. A small business credit card allows you to float business expenses and help separate your business and personal expenses even more.

What sort of documents are needed to open a bank account? 

1. Personal or business identification: You must provide your personal identification for verification before you can start the process of opening your account. Furthermore, the bank will ask you for business documents so that they can smoothly execute the process. 

2. Organizational documentation: You may also need to provide the documentation used to organize your business, such as a partnership agreement (if applicable) or articles of incorporation. 

3. Business licenses: If your startup business needs to show a license, you will also need to provide your license documentation (Trade License) when opening a business account. Sole proprietorship accounts will need personal documents like a NID Card or Passport whereas BIN will be needed for the other business types. 

Opening a business bank account is a good decision for all business owners. However, before you open one, you must do your due diligence – you need to identify the right business account type, find the right bank, know what you’re paying, and have your documentation in order. This will set you up for better success. A businessman is known for two things – his words and his transactions. Having a business account can help ensure that your transaction process is simplified, taking a big hassle off your plate.