Opening a business bank account is an important step toward growing your company. The moment the business begins to generate income, it needs somewhere to keep and manage those funds. A business bank account will allow you to manage more of your money in one place.
However, there are things to consider before settling for the perfect bank account for your business and it includes finding the right bank for your specific business needs and preparing the necessary documents for opening that account.
In this article, we’ll take a look at a few things you need to know before opening the bank account, the necessary documents for opening it and how to choose the best one for your specific brand needs.
Table of Contents
What Is A Business Bank Account?
A business bank account is an account that helps a business owner manage business transactions separate from personal finances, and usually comes with special conditions for businesses.
This account allows one to easily keep track of expenses, manage employees’ salary, convey finances to investors, receive payments, and plan the company’s budget.
In choosing the best bank for your account, it is recommended that you go for one that aligns with and favors how the company is already operating or how it will operate predominantly on. For instance, if you will operate primarily online and expect to make most payments electronically, you should look out for a bank that offers low-cost or free electronic transfers for business accounts.
Why Should You Open A Business Bank Account?
In case you’re having doubts about the importance of a business bank account to the business, here’s a few benefits of having a corporate bank account:
- Safeguard personal funds: in the event of a corporate lawsuit or business bankruptcy, your personal funds are not at risk because the business is an independent entity.
- Grant others access to business funds: If you’re operating a corporation or LLC, you need this so the other partners can access the business funds. You don’t want your personal money being accessed by outsiders because it is combined with business funds.
- Avoid tax issues: By properly managing business income and credits(in a business bank account), you can avoid the hassles of having to deal with complicated transactions that might arise as a result of using a personal account for business. This will in turn make it easy to sort taxes as at when due because all the transactions are orderly, seamless and business-related.
- Professionalism: You maintain a professional outlook when your business has a business bank account. Not only that, it also boosts your credibility before customers and customers feel safer paying into a business account than a personal account.
- You can use the account to pay bills, track fees and expenses, make payroll deposits and take advantage of other business banking services offered by the bank that are not available to personal accounts.
How To Open your brand Bank Account
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Consider Your Business Needs:
Before you open your brand bank account, consider your business needs.
- What is the purpose of the account?
- Is it for day-to-day transactions or for larger amounts?
- How much money do you need to open the account?
Are there other accounts at different banks with similar names and balances that could be used as fallbacks if yours ever gets closed down by regulators(or worse)?
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Find A Bank That’s Right For Your Business:
You’ll want to find a bank that has branches in your area. This will make it easier for you to get the business banking services you need and make sure they’re available when you need them.
You’ll also want to look at what kind of services they offer, including check cashing, loans and credit cards.
Also consider their online options (either mobile or desktop) as well as how easy it would be to open an account using one of those methods.
Check how well each bank reputes itself—do they have good reviews? If so, then this could be an option worth considering.
Every bank provides various types of incentives to its business account holders, you need to research on which type of incentives you need for your business and approach the bank that has offered the most convenient ones.
A lot of people prefer the tier one banks such as Zenith Bank Plc, Access Bank Plc, Guaranty Trust Bank Plc among others.
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Prepare Everything You’ll Need To Open A Bank Account:
Once you’ve completed your business plan, it’s time to open a bank account. To get started on this process, go through these steps:
Prepare everything that will be necessary for opening a bank account in your company name. This includes:
- Board Resolution authorizing the opening of the account and approving the account signatories.
- Copy of the company certificate of registration and other incorporation documents.
- Completed corporate account opening form signed by the company’s designated signatories and the directors of the company.
- Residential address of the directors.
- Passports photograph of the signatories.
- Bank Verification Number of signatories/directors.
- Valid identification of the directors such as international passport, driver’s license, etc.
- Tax Identification Number(TIN) for the company.
- Utility bills of business addresses such as the Power Holding Company of Nigeria (PHCN), water bill, Lagos Waste Management Authority (LAWMA), etc.
- Special Control Unit Against Money Laundering (SCUML) registration where applicable.
- Special requirements such as expatriate quota & residence permit for foreign nationals.
- Two duly filled reference forms by any corporate bank account holders.
PS: Directors can double as account signatories.
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Open Your Business Bank Account:
Decide on the type of bank account you want to open.
The common types of business bank accounts are:
- Business checking account
- Business savings account
- Credit card account
- Merchant services account
The most popular however is the business checking account. You can then proceed to fill out the paperwork and provide the necessary documents as stated above. This will help them verify your authenticity and make sure that everything is kosher before they process your request.
- Deposit Funds:
After your application has been processed and approved, you can start using your business bank account. You might like to begin by funding it.
Final Thoughts
As you can see, opening a business bank account doesn’t have to be a complicated process. The key is to get it right from the start by finding the right bank, preparing all of your paperwork ahead of time, and maintaining good credit. If you follow these steps, then opening your own business bank account will be easy and stress-free.