If you are a business owner, you might have encountered the term ‘business account.’ Many businesses link their personal accounts for their business transactions when they start. This can be convenient in the beginning but is not advisable in the long run.
There are many benefits of having a business account. However, many businesses might be confused in the beginning about what a business account exactly is. It is advisable to know everything about business account opening before you start that journey. To learn about business accounts in simple terms, read through the following article.
- What is a business account?
- A business account is a dedicated account for your business transactions that helps you streamline all your company’s payments and bills.
- A business account is for holding, receiving, and transferring a company’s funds.
- A business account separates your personal spending from your business spending.
- Having a business account is essential for your business, whether it’s on a small scale or a large scale.
- What is the difference between a business and a personal account?
- A personal account is used for personal spending, while a business account is for business spending.
- Both kinds of bank accounts give you a debit card; however, a business account separates your savings and checking accounts.
- If you want to accept credit card payments, a business account becomes necessary. You cannot accept credit card payments from customers on your personal account.
- With a business bank account, many banking tools and services open up for you which might not be available to a personal account holder.
- There are business-specific loans and credit cards that might become available to you only after opening a business account.
- When the tax season is around, a business account will have all your finances consolidated at one place which will make the process easier for you. On the other hand, a personal account will have different obligations and services available for taxes.
- How to open a business account?
- Get your business priorities straight.
Before you get started, streamline your business priorities and the must-have features that you want. How you operate your business should guide you toward the type of business account you want.
- Compare and choose a business account provider.
It is advisable to compare the various services offered by different financial institutions. The interest rates, fees, perks, multicurrency feature, customer service and other such important factors that could influence your decision.
- Carefully collect all documents and apply.
A business account opening is similar to a personal account opening, differing slightly in procedure and scope. You must carefully collect all the documents required for this procedure. You will need to provide all the details of your company, its Unique Entity Number (UEN), the company’s business profile, and approval of the business account opening signed by the directors if asked for.
- Activate your account and add funds.
Once you have proceeded with all your details and documentations, the bank or the institution will review your application and approve it in a given period of time. In Singapore, a bank may take two or more weeks to finalise approval. Once it is approved, add funds to your account and get started.
- What are the types of business accounts?
- Multicurrency Business Account
A multicurrency business account is an account which helps you manage your transactions in different currencies through one single account.
- Business Checking Account
A business checking account is a type of business account that most business owners go for. It comes with its own sets of benefits and is not only helpful for established businesses, but small, medium and even startup businesses.
- Business Merchant Account
A business merchant account is a very important kind of specialized business account for businesses which need different types of payment options.
- Foreign Currency Account
While a multicurrency business account allows you to receive and send money in multiple currencies through one account, a foreign business account is for a specific country or currency.
As a business owner, there are many benefits to having a business account. It allows you to obtain a business loan, helps you file your taxes, and consolidates your financial data for audits and credit creation. A business account is a very important expense management tool for your company and a must for its growth and development.
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