A business current account offers ease of banking and improves your credit score. We list the important reasons why a current account holds your company in good stead.
A business current account is a necessity for companies that wish to have a robust financial outlook with regular growth prospects. While a new company owner may be tempted not to open the online current account right away, here is why it matters
* It separates business revenues from personal money.
This is an important point for consideration by sole proprietors, who may have only a savings account to their name at the time of starting the business. However, a dedicated current account for business helps segregate the business revenues from personal finances. Separating the two helps you keep track of how much revenue the business brought in during the financial year, as well as file monthly GST returns and annual ITR correctly. Basically, it dispels any confusion you might have about how much money the company earned in a year.
* It imparts professionalism to your company.
A dedicated business current account gives an aura of professionalism to your company. Clients will not issue cheques or other payments to a personal savings account it helps taxation and auditing processes for everyone concerned when transactions are made between company accounts. Even if your company is a small one, it is better for its daily operations to have its own current account it tells clients that you are a serious business entity with a healthy financial outlook.
* It improves your credit score.
It might seem surprising that opening a business current account may improve your company's credit worthiness but it does. When you open and maintain a company current account, without any defaults on payments or borrowings, a credit score is created and it keeps rising over time. Good credit history is important when your company wishes to take working capital or SME loans in the future.
* It makes daily transactions easier.
The current account is designed to offer ease of transactions, whether it is transferring payments to vendors or monitoring an investment. Leading banks in India offer a host of value-added services, like free withdrawals, unlimited transfers at no extra cost, debit card with the company account, etc. Besides, you can use the net banking facility to effect payments or check company finances at any time you wish.
* It gives access to the bank's business banking services that your company needs.
Leading banks have designed not just different kinds of current business accounts to suit the needs of different companies, but they also offer online current account opening, overdraft facility, prepaid cards for employees, low or nil charges on transactions, easy options to buy insurance or start investments, etc.