What is a business current account? We have savings bank account and its related product which we use for personal purpose. So, how does a current account differs with a savings bank account? How to open a business Current Account? In this article, we have got covered for you. Read on!
Current account is meant for business transactions. It is not an interest bearing account. So, you would not get any interest on your deposit. Transaction amount and number is unlimited. That’s the beauty of a current account.
Whereas Savings Bank Account generate returns through interest.
Here are some of the requirements of having a Current Account
Having a business current account, you have to maintain a specific balance in the account.
Banks term this as MAB (Monthly average balance) or QAB (Quarterly average balance). For current account commonly its MAB and its different for every variants of current account. Also, varies between banks.
MAB is normally classified and linked with the area of your business establishment. For a normal current account the required monthly average balance need to be maintained is as follows
Rural: MAB is ₹ 2500
Semi- urban: MAB is ₹ 5000
Urban: MAB is ₹ 10000
The above mentioned figures are not same for all banks. It keeps on changing from as per bank.
If you want to find it out click below the links
Axis Bank Ltd. etc.
This MAB can be as low as ₹ 2500 in rural areas and it can go upto ₹ 10 lakhs for high end current account products.
Classification of current accounts
Current accounts are classified as per type and business model of the applicant. Mentioned below are some of the applicants with their business models.
- Hindu Undivided Family and other non personal firms.
Most of the applicants fall under the above list of classification and as per their requirement bank normally provide specific current account to the applicant.
Types of current accounts
In our country, banks has given various names for a current account products, the underlying facilities are more or less the same. Popular banks such as ICICI bank, HDFC bank and State Bank of India offer various business account which can be referred below.
ICICI Banks has the following current accounts
- Variants of smart business accounts
- Classic 2.0
- RCA standard and M20.
HDFC Bank Ltd. has the following current accounts
- Max advantage
- Smartups for startups
- Shaksham current account etc., to know more click here
State Bank of India has the following current accounts
- Power POS
- Power Jyoti to know more click here
Documents required to open Current Account.
Documents required for opening current account in the banks are as follows
- For proprietorship concern: Registration certificate, License/certificate issued by municipal authority, Sales and tax returns, GST registration certificate and in addition of proprietor’s valid KYC documents.
- For partnership concern: Main documents required are partnership deeds, power of attorney granted to partners, registration certificates, certificate/license issued by municipal authority, GST registration and in addition to KYC documents of all the partners.
- Societies concern: Main documents required are registration certificate if registered under society act, resolutions of board members in addition to KYC of the account operators identified in board resolutions.
- Company (Private limited, public limited companies) concern: Here documents such as article of association and memorandum of associations are mandatory plus certificate to commence the business.
- Trust accounts: Main documents are trust deeds, Power of attorney and KYC documents of trustee and beneficiary.
- Hindu undivided family (HUF) : Main documents required are Joint Hindu family letter (COS 38), declaration by karta, KYC of Karta and identification documents of all the co-parcerners.
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Who can open current account?
Current account can be opened by an individual who has a firm or business establishment where financial transactions are frequent. Remember, current account is not for personal use.
Where can you open current account?
The facility is available in all the nationalized bank such as State Bank of India, Punjab and Sind Bank, Bank of Baroda, Vijaya Bank. Private banks such as ICICI Bank, HDFC Bank ltd, Axis Bank and State Cooperative banks has a current account facility as well.
You can open your current account offline and online.
Benefits of current accounts
You can send money anywhere in the world on real time basis. In India, you can do transaction between same bank or different banks.
You can do any amount of transaction at any time if you use online banking. However, bank branch business hours is time bound.
Here are some of the benefits of Business Current Account
- It allows you to maintain proper record of your business transaction.
- It secure your money with deposit insurance.
- It enables you to pay to anyone as you please.
- Proper accounting of business entries can be easily archived.
- Add on benifits such as Internet Banking, ATM, Mobile Banking, Tele Banking with latest technology can be availed with free registration.
- It allows you to avail business loans.
- If POS machine is installed at your business unit, handling of hard cash and the risk of handling it will be nil.
- With POS machine, your business sales would likely increase.
- With current account variants other than normal curren account, you may get freebees and offers from time to time.
- High end account gets lots of discounted rates on services like the charges of chequebook, ATM, deposit limit, withdrawal limit, cash handling charge etc.
What facilities is given?
A number of facilities are given to the account owners, such as, cheque book, NEFT and RTGS transaction, SMS facility, Internet banking, Mobile banking, variants of ATM card, Insta card for cash deposit at bank or at CDM (Cash deposit machine).
Special features of current accounts is its unlimited transactions. You can do various non-home transactions too.
For business purpose, current account is a must
So, you heard me right. When you have a business establishment where you require doing lots of transactions with many vendors. Its advisable to have a current account. You can maintain multiple current account in different banks.
Having current account will keep track of your expenses and income in a much better way. There will always be a proof of transaction too. Plus, it is easier to check current account transaction than to verify transaction through account book or a ledger.
Though, as a successful business man one should keep good quality ledger and accounting system.
If your business has a dealing of frequent pays of small amounts daily, opt for POS (Point of sale) machine. It will save lots of time and energy. As business is all about time management POS would definitely help.
To open or maintain current account of your firm, please visit the bank of your choice and follow your bank instruction. Always ask to clear any doubts.