The Business Bank Account Checklist: What it Means, Types and Features

business bank account


What is a Business Bank Account?

As the name suggests, a business bank account is an account exclusively created to handle business banking and finance management needs. It is opened in the name of the business. Running a business involves a huge number of transactions in the realms of income, expenses, employee pay, etc on daily basis. Some businesses try to manage these transactions using personal bank accounts. This method brings along multiple challenges. Mainly because distinguishing business expenses from personal expenses becomes difficult and time-consuming.

Additionally, there is no accurate overview of their spending. This lack of visibility obstructs businesses from taking important financial decisions. An online business bank account definitely helps businesses to solve such issues. Know their types and how they can help.

Types of Business Bank Accounts

The 5 different types of business bank accounts are as follows:

   1. Current Account

This is one of the most versatile business bank accounts. It would not be wrong to call a current account an indispensable business banking account. All businesses deal in multiple numbers of transactions on an everyday basis.

A current account facilitates this without putting any charges on the number of transactions. It does not provide any interest on the savings but makes day-to-day business transactions easy and therefore helps businesses to carry out their operations smoothly.

   2. Business Savings Account 

When it comes to earning interest on operating profits (the remaining revenue after subtracting the cost of goods sold and all business expenses) this account can be an apt choice for businesses. However, a company should only use it for saving profits which it plans not to use in the nearest future. It is because it only allows limited withdrawals with strict terms and conditions.

This clearly means a company would not be able to use or withdraw funds easily in case of an emergency. Moreover, these accounts do not allow direct cash withdrawals from ATMs or cheques as well. Few banks even limit the number of deposits companies can make into this account.

   3. Business Certificate of Deposit (CD) Account

This is another business bank account that business owners use to earn interest on their operating profits. The major attraction of this account is that it offers even more interest as compared to a business savings account. The only catch is that it does not allow any money withdrawals before a certain term. The term can be varied from a few months to years. If the money is withdrawn before the maturity of the term, it results in a hefty penalty.

   4. Money Market Account

A business owner can opt for a money market account if he/she wants a midground between a savings account and a business certificate of deposit (CD) account. Depending on the banks, money market accounts provide a certain number of cheques monthly for withdrawals. They also provide higher annual percentage yield as compared to traditional business savings accounts along with ATM facilities. This account is best suited for businesses that keep higher balances as savings.

   5. Merchant Account

This business bank account is essential for businesses as it deals with credit and debit card transactions and other kinds of electronic payments. When a consumer makes a card payment, the money first gets deposited into a merchant bank account and then automatically gets transferred into another existing business bank account. This account operates on a contractual basis. Terminating the account before the contract incurs a termination penalty for the business.

What are the features of Business Bank Account 

A business bank account holder has access to a range of additional features that are unavailable to regular accounts holders. Here are some of the features:

  • Provides assistance when obtaining a loan.
  • Pay employees and workers in the form of salaries and wages.
  • Facilitates credit transactions with other businesses
  • Easily accessible when it comes to business transactions
  • Provides protection to Limited Liability Companies against business debts
  • Facilitates e-commerce and payment services.

What are the benefits of opening a Business Bank Account?

Open a business bank account for the following benefits:

  • Keeping business and personal finances separate reduces personal liability
  • Expense management becomes more efficient & organized.
  • Benefit from business tax deductions without triggering an audit.
  • They increase trust and business credibility 
  • As investors take into account the transaction history as financial health before providing loans, these accounts also help to sanction loans goals
  • They provide purchase protection

How to open a Business Bank Account?

Opening a business bank account online is simple and these steps are typically involved:

1) Select the preferred bank for opening a business bank account

2) Keep the documents ready before starting the process. The desired documents include:

  • Employer identification number
  • Business owner identity
  • Business details
  • Important agreements and more

3) The business bank account opening process can be carried out using the bank’s online portal or by visiting the physical branch of the bank. The online process differs depending on the preferred bank. In any case, filling out the application form for opening a business bank account is a must.

4) Submit the required documents along with the application form. After the verification process from the bank’s side, the business bank account will be successfully set up.

Important points to consider before opening a Business Bank Account

  • Minimum balance requirement and cash withdrawal rules of the selected account
  • Account maintenance requirements
  • Bonuses provided by the banks eg: new user bonus
  • Contractual terms and conditions (if applicable)

Get a Business Bank Account through OPEN

Business owners can get a business bank account through OPEN. Partnered with RBI-regulated banks, OPEN avails opening a current account through these banks. Current accounts, as mentioned earlier are one of the most desired and versatile online business banking accounts. Account holders with OPEN get a business credit card, receive payments and send bulk payouts easily. They get a lot more benefits such as:  

1) Automated accounting

2) Easy payouts 

3) Effortless expense management 

4) GST filing and tax management 

5) Easy salary payments

6) Alternative lending 

7) Control and view everything under one dashboard

Opting for an online business bank account through OPEN (current account) provides a range of exciting benefits. All of these benefits streamline business’ financial management efficiently. The process is paperless, digital, and simple. To understand more details, click here .

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The Open business account comes with a VISA business card that combines banking, payments, accounting, expense management & taxes, in one place.

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