How to get a current bank account for my business? This is the Query we get almost everyday, so thought lets put some light on it. First of all its not mandatory to have a current account if you are doing business, its just that if your business handles lot of cash or handles lot of transactions per day or month then your bank will insists that you have a current account which is also very useful for doing business smoothly.
Before going ahead get to know How to Set up Sole Proprietorship Firm and business licences required
What is a Bank Current Account?
Also called as Transactional account is a deposit account held at any bank or financial institute and as name indicates is mainly used for heavy transactions. If you know, our savings account have a limit on withdrawal even if you have balance in your account there is a maximum amount of money you can withdraw in a day, for different banks it is different. But Current accounts are provided for the sole intention to give you freedom to do as many transactions, deposits, withdrawal in a day as you would like to. Its is also of great use if you have employees and you want to transfer salaries every month.
Current accounts are meant neither for the purpose of earning interest nor for the purpose of savings, but for convenience of the business or personal client; hence they tend not to bear interest. Instead, a customer can deposit or withdraw any amount of money any number of times, subject to availability of funds.
Choose the right Bank for taking Current account
Current bank accounts offer everything you normally find in a personal accounts like – cash & cheque handling, direct debits and standing orders, NEFT, Mobile banking, debit/credit cards and overdrafts etc. But unlike personal savings account, you will be charged for the transactions you makes on your current account, so its always better to do a analysis of what you require and what are banks providing and match those two to get the best of the benefits. Its like choosing mobile plans! for example – If you do more transactions then choose a bank giving more number of transactions free of charge. Found these links showing different features provided by two different banks HDFC and Bank of Baroda.
Procedure for applying for a Current account in a Bank
Step 1 – Every bank has their own forms to be filled, download them from the bank’s website or take it from the bank directly and like any other bank account opening requirements, you will require Stamp size photos, Standard ID Proof, Address Proof, PAN Card (Mandatory for Current Account) and like any other bank account, somebody has to introduce you to the bank ( their signature). If you already have an account in the same bank, things will be little simple for you.
Step 2 – Some banks ask for Entity Proof, which mean your ‘business proof ‘, now for a sole proprietor business is not separate from themselves, but there are some business licences which you can show to the bank. Some of the licences which will work is listed below. (Note- Having a business license depends on what kind of business and at what stage you are. )
- TAN Certificate or allotment letter – if you are giving salary to anybody then you should have TAN number and You can get TAN online for 62 within 5 Days.
- Sales tax / Service Tax registration certificate – If your turnover is crossing 10 lakhs in any given year then you should get your service tax registration done.
- PAN Card is same that of individual proprietor’s PAN card, as for proprietorship firms no Pan card is alloted , if you dont have one, then you can apply for a PAN card in your name and you can apply for PAN with 94 online and get it in 7 days.
- VAT / CST registration – If you are selling and buying goods with a state the VAT you have to get and if you are buy & selling in other states the CST.
- Shops and Establishment Certificate – If you operate business from a shop then with the help of local inspector you can get a establishment certificate
- Importer/Exporter code – This licence you should have if you are importing and exporting goods
- Proffessional tax/EPF – If you have many employees this applies
- Certified Charted Accountant’s Certificate
- OR Any other document issued by local/ state/central government subject to the bank’s Satisfaction.
Step 3 – Initial deposit varies from 5000 to 25000 depending on the banks.
That’s it you are done and you should get your current account hopefully and If you are in a very early stage of business and have not applied for any business licenses and don’t require them, then be assured that you may not require Current account also.