Steps to Open Business Account Online Just in 5 Minutes – 2024

Effective money management is crucial in business. It’s important to have a detailed grasp of your company’s financial situation in addition to focusing on earnings and losses. A specialised company account is useful in this situation. Any organisation, no matter how big or little, is built on its business accounts. It makes tax filing and financial management simpler by keeping personal and corporate money apart and giving you a clear view of your company’s financial situation.

The significance of a business account, its advantages, and how it may support the expansion and prosperity of your company will all be covered in this article. This post will offer helpful tips to get you started with your business account, regardless of how experienced you are as an entrepreneur. Now, let’s get started.

What is a Business Account?

A Business Account refers to a bank account exclusively used for business transactions. A bank or a financial institution manages it and allows business owners to keep their funds separate from the money flow of their business. This business bank account is useful for all kinds of businesses, from individual contractors to small and medium businesses and even large enterprises.

Types of Business Account

Business accounts are available in various forms, each tailored to meet a business’s specific requirements. Some of the types are:

• Business Checking Account: This is the main account used for everyday business activities. It is used for transactions, settling bills, and managing expenses.
• Business Savings Account: Similar to a personal savings account, this account is used for keeping emergency funds and earning income interest. These best business savings accounts aids in creating a financial safety net for the business.
• Money Market Account: This is a savings option that offers a higher interest rate and flexibility. It suits businesses seeking higher returns while maintaining access to their funds.
• Certificate of Deposit (CD) Account: This higher interest option secures your funds for a specified period in an FDIC-insured account. It is beneficial for businesses with surplus capital.
• Merchant Account: This account is required if you wish to accept payments via card or e-commerce.
• Cash Management Account (CMA): A CMA is a managed account that combines the features of checking, savings, and investment accounts. It suits businesses seeking a comprehensive and strategic approach to managing their available cash. 

Working of Business Account

In terms of operation, a business account handles the financial transactions associated with a company’s activities. It aids in receiving payments, paying bills, and managing cash flow and offers a method to monitor transactions. Additionally, business accounts offer special benefits designed only for companies, which can enhance earnings. Keeping personal and business spending apart is critical for both tax purposes and establishing credit for your company.

Characteristics & Features of Business Account

A Business Account has various characteristics along with several features. Some of them are: 

1. Characteristics of Business Account

• Designed for Business Needs:Business accounts are designed to fulfil specific requirements of companies, such merchant services, payroll processing, and invoicing.
• Higher Transaction Volume:Comparing these accounts to personal accounts, more transactions are usually permitted.
• Fees and Charges: For their specialised services, business accounts frequently include fees and charges, which might change depending on the bank and the kind of account.

2. Features of Business Account

• Online Banking : Most business accounts offer robust online banking services, allowing businesses to manage their finances anytime.
• Merchant Services : These accounts often provide merchant services, such as credit card processing, to facilitate customer payments.
• Payroll Services: Business accounts may offer payroll services, making it easier for businesses to pay their employees.

Importance of Business Account

A business account plays a crucial role in a company’s financial management. Some of the reasons why it is important are:

• Separation of Personal and Business Finances:In order to comply with tax and regulatory requirements, it helps to keep personal and corporate money separate.
• Professionalism:A company’s professionalism while interacting with clients or customers might be improved with a business account.
• Financial Management:Expense monitoring and comprehensive statements are only two of the services and tools it offers to support good money management.

What are the Documents Required for Opening a Business Account?

To open business account you need several documents. The documents required can vary depending on the bank’s internal regulations and the type of business (e.g., sole proprietorship, partnership, private/public limited company). Some required documents for opening the best online business bank account are:

• Proof of Identity: This could be a Passport, PAN card, Voter’s Identity Card, Driving License, or any other identity document the bank accepts.
• Proof of Address: Documents such as telephone bills, bank account statements, electricity bills, Rental cards, or a rental agreement showing the customer’s address.
• Documents of Business Formation: These include articles of incorporation, business licenses, and doing business as (DBA) certificate.
• Employer Identification Number (EIN)
• Ownership Agreements: If applicable.
• Business License: Specific to your industry or business type.
• Certificate of Assumed Name: If applicable.
• Entity’s current landline/ mobile number and e-mail ID.
• Partnership deed and Partnership Letter: If it’s a partnership firm.

Account opening Cheque from existing Current Account.

What is the Eligibility Criteria for Opening a Business Account?

If you’re considering opening a business account, there are several key criteria you need to meet. These can vary, but typically include:

• Business Type: Sole trader, LLP, or a registered company.
• EIN or SSN: Required unless you’re a sole proprietor.
• Business License: May be required.
• Partnership Agreements: If applicable.
• Monthly Credit Card Revenue: Some banks may ask for this. 

Steps For Opening of Business Account

The first step towards every commercial organization’s appropriate financial management is creating a business account. Follow these steps to open a business account:

1. Online

• Step 1:Choose the Account Type
  • Recognise the sort of account that your organisation needs.
• Step 2: Select a Bank
  • Depending on what your business requires, pick a bank.
• Step 3: Go to the Bank’s Website
  • To create a business checking account online, go to the bank’s website and locate helpful information.
• Step 4: Pick the Business Bank Account
  • To create a business bank account, choose the exact account type.
• Step 5: Get Your Business Documents Ready
  • Get your company documentation together. Based on the needs of the bank, this may entail identification and address verification as well as additional paperwork.
• Step 6: Deposit Money into the Account
  • A minimum deposit may be required to start the account, so be sure you have enough money.
• Step 7: Open Your Business Bank Account
  • Follow the bank’s online instructions to open your account.
• Step 8: Start Using Your New Bank Account
  • Once your account is open, you can use it for your business transactions.

2. Offline

• Step 1: Visit the Bank
  • Make an appointment and choose a bank branch that is convenient for you.
• Step 2: Consult with an Employee of the Bank
  • They will break down the numerous corporate accounts and take you through the processes.
• Step 3: Give the Required Documentation
  • Bring your company licence, EIN, and other required documentation to the bank.
• Step 4: Complete the Application
  • Fill out the application that was provided to you by the bank agent.
• Step 5: Deposit Initial Funds
  • Deposit the opening balance as stipulated by the bank after establishing your account.

How to use a Business Account?

An effective tool for handling the money and transactions involved in running your business is a business account. Use these procedures to operate a company account efficiently:

1. Online

• Step 1: Sign Up
  • Register for an online banking account with your bank. You’ll need your business account number and other details.
• Step 2: Login: 
  • Use your username and password to log in to your online banking portal.
• Step 3: Dashboard: 
  • Navigate through the dashboard to understand the various features available.
• Step 4: Transactions
  • You can make transactions like fund transfers, bill payments, and payroll management.
• Step 5: Reports
  • Generate financial reports to track income, expenses, and other business transactions.
• Step 6: Security
  • Always log out after your session and keep your login credentials secure.

2. Offline

• Step 1: Visit Your Bank 
  • Go to your bank, where your business account is held.
• Step 2: Service Desk
  • Approach the service desk for assistance with your transactions.
• Step 3: Transactions: 
  • You can deposit or withdraw money, request chequebooks, and conduct other transactions.
• Step 4: Bank Statements
  • Request for bank statements to track your business transactions.
• Step 5: Meet Your Relationship Manager
  • For any complex queries or services, meet your assigned relationship manager.

What is the Minimum Balance Required to Open a Business Account?

• The amount of money needed to start a business account can change based on the bank and the type of account. Some banks might ask for a certain amount of money to be deposited when opening a new business account. This deposit and the ongoing balance required can differ between bank and account types.
• For example, Standard Chartered India has a Smart Business Account that doesn’t require a minimum balance if you have credit transactions of ₹15 lakhs monthly. Meanwhile, Axis Bank has a digital current account that requires a monthly average balance of ₹7,500 for Semi-Urban and Rural areas and ₹15,000 for Metro and Urban areas.

What is the Transaction Limit in a Business Account?

In India, the transaction limits for a business account can vary based on the type of transaction and the bank’s policies. Some general guidelines are:

• Cash Withdrawal Limit: You can take out between ₹10,000 and ₹100,000 from your Account daily. The amount you can spend online with your debit card is also limited.
• Cash Deposit Limits: There’s no limit on how much money you can put into your Account. But if you put in more than ₹50,000, you must give your PAN card details. The bank will tell the Income Tax Department if you take out or put in more than ₹10 lakhs in a year.
• UPI Transaction Limits: You can send up to ₹1 lakh per day using UPI. But if you’re paying a bill or a merchant, you can send up to ₹5 lakhs. Different banks have different limits for how much you can send in a day, between ₹25,000 and ₹1 lakh.
• Business Expenditure Limits: If a business spends more than ₹10,000 in cash on one person daily, it won’t count as an expense. For transport businesses, this limit is ₹35,000. 

What is the Maintenance Cost of Using a Business Account?

The type of business, the bank, and the account’s particular features can all affect how much it costs to keep a business account. However, there are a few standard costs that companies need to be aware of. They are as follows:

• Regular Maintenance Costs: These are recurring costs to keep the account operational. Many banks charge a periodic (monthly or yearly) fee that covers basic banking services like deposits, withdrawals, and transfers.
• Transaction Fees: These are charges for specific transactions such as wire transfers, debit or credit card payments, or issuing cashier’s checks. The cost can increase for businesses with high transaction volumes.
• Extra Service Costs: Businesses requiring specialized banking services like merchant or payroll may incur additional fees. It’s important to understand these costs.
• Penalties: Banks may charge a fee if certain requirements are unmet, such as maintaining a minimum balance or conducting a certain number of monthly transactions.

Advantages & Disadvantages of Business Account

A business account offers several advantages that can contribute to a company’s success, but it also has disadvantages. They are:

1. Advantages of Business Account

• Ease of Record Keeping: Business accounts make tracking income and expenses more manageable, simplifying record keeping.
• Access to Business Loans: Having a business account can make it easier to access business loans and other forms of credit.
• Enhanced Credibility: A business account may help a firm gain more trust from partners, suppliers, and consumers.
• Additional Services: Additional services like business advising are frequently included with business accounts, which is advantageous for expansion and growth.

2. Disadvantages of Business Account

• Costs: Business accounts often come with fees for various services, which can add to a company’s expenses.
• Complexity: The extra features and services associated with corporate accounts might make management more complicated than those of personal accounts.
• Limited Personal Use: Personal transactions are often forbidden or limited in business accounts as they are intended to be used for commercial purposes. 

How to Choose the Best Business Account

Selecting the best business account is essential to successful money management. The correct account may facilitate transactions, help you keep tabs on your earnings and outlays, and even offer certain benefits. Some crucial considerations to make while choosing a business account are:

• Fees and Charges: Seek an account that has few or no monthly fees, and be mindful of any costs associated with transactions. A free business account may be provided by certain banks, although there may be requirements like a minimum balance.
• Transaction Limits: The monthly transaction limit for certain accounts is set at a certain amount. You should choose an account that can handle a high volume of transactions if your company processes a lot of them.
• Online and Mobile Banking: In today’s digital age, having access to your account anytime, anywhere, is essential. Check if the bank offers a robust online and mobile banking platform.
• Customer Service: Good customer service can be invaluable for a business. Look for a bank with a reputation for excellent customer service, especially if you anticipate needing help regularly.
• Additional Services: Some business accounts come with additional services like payroll management, invoicing, or merchant services. If these are services your business needs, it might be worth finding an account that includes them. 

Final Word

Setting up a business account brings a lot of advantages, from making financial transactions easier to boosting professionalism. Whether you’re a freelancer, own a small business, or run a large corporation, the benefits of having a separate new business bank account are clear. 

By keeping personal and business finances apart, you achieve better understanding and organization and set the stage for lasting financial success. Welcome the ease and safety a business account offers, and confidently elevate your business to new levels.

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Disclaimer

This article is solely for educational purposes. Stable Money doesn't take any responsibility for the information or claims made in the blog.