Business Current Account: When Starting a business or a startup company, having a current bank account is very important for conducting your transactions. A current bank account is a business account where the owner, has no limit on the number of transactions that can be made daily, including withdraws as many times as possible to run the daily operations of your business.
It is really funny that many business and startup company owners still use their personal bank accounts to accept and spend money for their business transactions. The truth is that it is very wrong to use your personal bank account for a cooperate business transaction. This could cause some headaches in the future of your business.
Reasons You Must Open a Businesses Current Account
Separate Business From Personal life
Having a good business current bank account should be one of the first things to consider for your business as you create a Business Plan. In the 21st century, when you run a business with personal bank accounts you might end up finding it hard to keep track of all your transactions as well as calculate your income and expenses properly.
Having a business account to manage your company will keep business transactions separate from your transactions as a business owner. This is very important to manage your business’s cash flows, tax planning as well as tax filing.
Business looks professional
It is not a false saying that when you have your business’s or company’s official name on all transactions, it makes your business look professional and dependable. You don’t want your customers to think that your business is just a bedroom event going on.
In many ways, a business bank account shows the kind of seriousness that a personal bank account does not. It shows credibility and trust in all financial transactions you have.
In the business world, using a personal bank account for receiving payment during transactions might sometimes raise red flags with some customers or suppliers. This is not the case with a business bank account, because your bank puts your business’s name on checks and all payment methods,
Unlimited Transactions
A business current account comes with privileges that sometimes allow you to spend more money than what is there in your bank account up to a maximum limit. Don’t forget that every day your business has to deal with many transactions. The business current account makes this easy by having no limit to the number of transactions you can carry out. Your company also has the opportunity to choose from different payment methods at all times and from anywhere. Some of these payment methods are:
- USSD codes
- credit or debit cards
- banking apps
- Internet banking
- cheque books
- and other money transfer modes
Bulk or Large payments
In addition to the unlimited number of withdrawals and transactions that can be made using your current account, you also get the benefit of conducting bulk and large payments that a normal personal account would not have permitted.
Foreign Transactions
If you run a company that is into importation or exportation, opening a business bank account is the first step in building the relationship between your business and your international business partners. Not having a business current account, makes foreign payments difficult to carry out and this will not help boost your exports or import business.
Opening a business current account sets the foundation for building your business’s reputation. If you were expecting a payment from, let’s say a business partner in China, you don’t want to contact that customer in China, and the next thing you find yourself doing is sending your personal banking details with a name such as Godwin Fafemi Uche.
This is not helpful at all, and should you not receive the payment later and you plan to complain to the Chinese embassy, I’m not sure they will see you as being a serious business owner.
If this is how you plan to operate as a business owner, then you are not ready for expansion. Using your personal bank account is not effective and efficient, it does not make it easier for your company to scale internationally. With a current bank account, you also don’t have to worry about foreign exchange transactions.
FREQUENTLY ASKED QUESTIONS
What is a business current account?
A Business Current Account is an account belonging to businesses or companies rather than individuals or any type of savings account, which provides the facility to hold deposits, receive, and make payments with an unlimited number of withdrawals and transactions that can be made using the current account.
Is a business account the same as a current account?
Business Current Accounts operate similarly manner personal bank accounts. However, business account holders can often access services that are unavailable to personal account holders, including carrying out transactions in foreign currencies. carrying out credit checks on other businesses and suppliers.
Can a business have a current account?
Yes. As a limited company is a separate legal entity, it needs to have its business bank account. A business current account is a great tool for keeping the finances of a company separate from personal life and for managing regular transactions such as paying employees and taxes. You must pick the right bank and understand all the fees before you sign up. If you run a limited company, you must separate your personal and business finances using a business bank account.
Can I use my business account for personal use?
It is not advisable to use your business’s current bank account to carry out family or personal expenses, this can expose you to potential legal and financial trouble if things go south. If your business fails or is sued, your assets are protected from professional liabilities if your business is a corporation or a Limited Liability Company.
Is it legal to have more than 1 current account?
Yes. While there’s no limit to how many Savings Accounts you can have, there are a few things to consider before signing up for more than one. Can I have more than one current account? There are no official rules on how many current accounts you can have and with different bonuses and features on offer there might be times when it makes sense to open a new account alongside your existing one. Practically it might be more difficult though.
Is the current account taxable?
In most countries, a Business Current Account is a zero-interest account, for this reason, there are no taxes on Business Current Accounts. In most cases when you keep money in a regular savings account you will generally owe federal or state income taxes on the interest that is earned in the course of your money overtime. Businesses pay taxes at rates the year interest is earned, whether or not funds are withdrawn from the accounts. Banks do not have to deduct tax before paying you the cash reward, so you receive these rewards gross and the gross amount is taxable. Current accounts typically have two types of rates, one for the interest paid if you’re on credit, and one for the amount charged if you are overdrawn.
