Running a Business? Here’s Why You Should Have a Current Account!
Choosing to open a business bank account is one of the crucial tasks you should not omit while beginning a business. Having a separate startup business account or current account assists you track all your expenses accurately and simplifies your taxation process. Apart from this, such accounts provide other benefits too.
Read on to know why it is important to open a business bank account for your business.
What is a current account?
Businessmen, entrepreneurs, and others with high end regular transactions should consider opening a current account. Remember, as frequency of transactions and amount per transaction is usually high in such accounts, zero interest is offered upon the current account balance. However, a current account assists with huge sum withdrawals, deposits, and contra transactions. By approaching any commercial bank, you can open a business bank account.
Here are top 7 benefits of owning and operating a current account:
- Provides overdraft facility
As the name suggests, overdraft facility allows you to withdraw over and above your current account balance. This feature available in current account helps you mitigate different business expenses, pay salaries to your employees on time and meet other necessities at times when the actual payments to be received by you are delayed.
- Allows unlimited transactions
Such accounts provide a high upper limit on transactions, which eliminates the need to worry over systematic cashflow. You can perform unlimited transactions of any frequency as per your requirement. As an outcome, the current account offers a high level of cash fluidity, which is impossible to get in case of savings bank account.
- Separates business transactions from personal transactions
To get tax benefits, it is crucial for you to separate your business transactions from your personal transactions. Doing so also helps with proper bookkeeping as it maintains a clean record of all your business income and expenses.
- Makes operations very easy
Delayed transactions can lead to unwanted hiccups. With a current account, you can keep all your business operations running just like a well-oiled machinery. All your daily transactions are performed proficiently and effortlessly. Benefits of online banking are also provided on such accounts. Usually, the speed of transactions is high, which assists you to maintain an excellent rapport and build trust with your customers and vendors.
- Endows high creditworthiness
Before assigning you any work, many organizations may demand for a creditworthiness letter. This is a letter issued by your bank. Thus, if you hold a current account and maintain a good relationship with the bank, you may avail the creditworthiness letter from them anytime.
- Converts to business legitimacy
As mentioned above keeping personal and business accounts separate is important for proper bookkeeping. However, there is more to this. Being the owner of a business, you might sign cheques or make transfers to your partners, vendors, and others. It might appear unprofessional if such payments are conducted from your personal savings account. Choosing to open a business bank account in the company’s name allows your payees to develop confidence about you holding a legitimate company.
- Additional benefits
A current bank account is not only a zero-balance account, but it also comes with additional benefits, which is not available in case of savings bank account. Based upon your business, your bank may offer you free RTGS transactions, demand drafts, pay orders etc., besides providing unlimited deposits and withdrawals on current account.
Importance of current accounts is multifaceted. With it, you can be assured about the cash flow efficiency and need not fret about the limit pertaining to the allowance of the number of transactions in a particular time-period. Provision of overdraft options in such accounts helps meet numerous expenses, pay timely salaries etc. at times when your business is awaited to receive the payment.