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5 steps to open Corporate bank account

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No matter how large your business is, it is important that you open a corporate bank account to separate your business finances from your own personal savings. Generally, most countries require corporate bank account opening for registered companies so that it is easier for them to deduct business expenses and pay corporate income taxes. For sole proprietors and partnerships, the option to open a corporate bank account is up to the discretion of the business owner. However, it is highly recommended that they open a corporate bank account as it allows them to better segregate business expenses from their own personal expenses, thus allowing them to better plan their business finances. While the specific steps to open a bank account will differ based on the country the bank is located in, the process to open a corporate bank account is generally similar for most countries and can be achieved by following these steps:

1. Select an optimal bank

The first thing you want to consider is the reputability of the bank – whether it is creditworthy and reliable and whether it offers a high level of confidentiality for its clients. It is also important to check the profitability of the bank and the amount of capital the bank has so that you know that the bank will remain resilient even during periods of recession. Another factor to consider is the area of specialisation of the bank. It is important that the bank has experienced personnel who are familiar with the industry or type of business you work in so that the bank is able to cater to your business banking needs.  Other important factors to consider include the type of services offered by the bank, the quality of banking support, the minimum balance required to open a bank account, the cost of services and the interest rate offered. 

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2. Decide on the type of bank account

There are many types of business account a company can choose from. Typically, you would want to open a few separate bank accounts for different business purposes such as collecting revenue and remitting wages to workers. The most common type of bank account is the business checking account. This bank account allows the company to deposit and withdraw money through electronic transfers, checks, and ATM transactions. Another common type of bank account is the business savings account. This business account offers a higher interest rate than a business checking account, but usually has a much lower limit for the number of times cash can be transacted in the account. Generally, companies use a business savings account to store profits that they are not planning to use in the short term. 

Other types of corporate bank account include the money market account and the merchant account. The money market account is an interest-bearing account that usually has an even higher interest rate than a business savings account. However, a money market account tends to have stricter requirements for the number of transactions allowed, as well as a higher minimum balance requirement and monthly fee. A merchant account, on the other hand, allows a company to accept payments by credit and debit cards. Businesses will need a merchant account if they wish to accept electronic payments from clients.

3. Prepare the relevant documents and ensure that requirements are met

The documents required to open a corporate bank account will differ depending on the bank and the country the bank is located in. Typically, most banks will require a Board of Directors Resolution agreeing to the opening of a corporate bank account, a business plan, the Memorandum and Articles of Association, the Certificate of Incorporation, qualifications of directors and notarized passport copies of directors and beneficial owners. It is important that you arrange a call with the bank to find out what are the specific documents you will need to open a corporate bank account.

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Most banks also have a minimum deposit required depending on the type of bank account opened. Generally, all banks have a minimum monthly balance requirement that must be fulfilled if the company does not wish to incur an additional monthly fee. Do make sure that your company is able to meet the minimum capital requirements before you open a corporate bank account.

4. Open corporate bank account

Once you have decided on the type of bank account you wish to open and prepared the relevant documents, you can proceed to open a corporate bank account with the bank of your choice.  While most reputable banks allow clients to open a corporate bank account remotely, there are some banks that will require a face-to-face meeting before a bank account can be opened. Ultimately, whether you will need to travel to the country to open a bank account will also depend on the laws and regulations of the country as some countries may require the directors and shareholders to meet with the bank officer to sign the required documents. Once you have submitted the documents to the bank, the bank will take some time to approve your application. The time taken can range from one week to a few months, depending on the bank, the type of account you open and the country the bank is located in.

5. Deposit initial capital

Now that your corporate bank account has been opened, you are ready to deposit the required capital into your bank account and start your business. Typically, small businesses will only have one corporate bank account as it is easier to manage. Larger companies may have multiple bank accounts to segregate different transactions such as revenue collection, remittance of wages, long-term investment and payment to suppliers.

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Conclusion

A corporate bank account is integral for every business because it helps to segregate the different revenue and expenses generated by your business. A corporate bank account also offers more services and greater personal liability protection compared to a personal bank account. Before you open a corporate bank account in a country, it is important that you contact bank personnel to find out more about the requirements and types of bank account offered. 

Disclaimer: For more interesting articles visit Business Times.

Bellie Brown
Bellie Brownhttps://businesstimes.org
Hi my lovely readers, I am Bellie brown editor and writer of Businesstimes.org. I write blogs on various niches such as business, technology, lifestyle., health, entertainment, etc as well as manage the daily reports of the website. I am very addicted to my work which makes me keen on reading and writing on the very latest and trending topics. One can check my more writings by visiting Cleartips.net

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