Your personal account might seem to you as good enough to take care of the business transactions too. However, it’s important to separate personal finances from your business to keep accurate, easily accessible track of your business’ financial status, as well as to reap the various benefits that banks offer for business account holders.
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Opening a business bank account is quite an easy and straightforward process. The tough part is to select the right bank and account type that best matches your needs and avails the maximum perks. Whether you are a sole proprietor or a corporation, there will be times when you will need to trace every cent coming into or going out of your business, especially for accounting, tax filing, etc. Here’s how to open a business bank account to ensure your calculations for bookkeeping, reporting, and forecasting are accurate, and as fast as skimming over your bank statement.
How to Open a Business Bank Account
The process to Open a Business Bank Account
If you are wondering how to open a business bank account and whether it’s too complicated, then wonder no more. The process is simple: deciding the right bank for your business, gathering necessary documents, selecting the most favorable account type with fee minimization, and benefits maximization. Finally, completing the formalities and making your first deposit.
1. Deciding the right bank for your business account
You may prefer opening a business bank account in the same bank you use for your personal account. Some banks will offer favorable terms for holding both personal and business accounts, so you should definitely look into the available offering from your current bank. There are, however, a variety of options along with multi-currency borderless accounts for businesses.
So depending on the features you really need, explore and weigh your options. Take consideration of over the counter services, opening hours of the branch, etc. Try to find banks that offer services of cash flow reports and insights. Which can spare you the time and hassle of accounting and provide complete transparency into your finances. Conduct your own research, talk to representatives of the different banks and ask lots of questions to evaluate your best choice.
2. Keeping the necessary documents ready
Although you don’t need to assemble a great deal of paperwork. It’s a good idea to keep the commonly required documents ready. So that you don’t need to waste time scrambling for them in different places when the account-opening appointment is fixed. You’ll need a Tax ID, Officially recognized personal ID such as a driver’s license or state ID card and general information including name, address, date of birth and nationality.
You’ll also require formation documents of your business, business license, ownership agreements, and if your business operates under any name other than its legally registered name, then the DBA (Doing Business As) certificate.
3. Selecting the most favorable account type with fee minimization and benefits maximization
The fees, rates, credit facilities and benefits vary between banks. Make sure to get clarification on various charges such as payment processing and other servicing fees, which can vary based on location and other factors. Certain fees might be waived if you meet conditions such as maintaining a minimum account balance.
Make sure to read all the terms and conditions in the policy information documents of the banks, including all those small prints. Tech-savvy business owners may also see if the bank’s account package has electronic check printing which is compatible with the accounting software of the business. As some banks enable you to electronically print checks via particular software.
As you expand your business, changing the type of your business account might be beneficial. Upgraded accounts might charge additional fees. But the benefits may outweigh the costs, so consider the cost-benefit relationship.
4. Completing the formalities and making your first deposit
Sometimes you might be able to open a business bank account online. Followed by an electronic deposit that gets your new account up and running. However, most cases will require you to go to the nearest bank branch in person and make the opening deposit. Once done with this final step of how to open a business bank account, congratulate yourself on this new ownership.
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Reminders and Tips for Everything to Run Smoothly
Before starting to invoice using your new account information, check that your account operations are fully activated by depositing a small amount and transferring out.
Don’t forget to choose the account type only after checking transaction costs if you exceed the limit in your monthly package. The volume of transactions may vary over time. Change the account type to match the cost-benefit ratio if required.
Check that the name on your cheques matches the one you are legally registered under. Not the DBA if it is different from the registered name.
In case you’re using bad credit to open your business account, take the time to speak to several banks to see which accounts best serve your needs. There are small business advisors in many banks who can help you evaluate the various options.
Finally, it is natural to be a little nervous about finding the most suitable business account for your individual needs. Investing some time and effort to do proper research to navigate through the different options, packages and cost structures will pay off in the long run by ensuring your business needs are properly met. You may talk to a financial professional in your area. Whose specialized knowledge of these issues will help make your decision a more concrete and educated one.
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