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With a thriving start-up ecosystem in India, embarking on a business venture can be an exhilarating yet challenging endeavour. And to effectively manage your start-up’s finances, you must prioritise having a dedicated business bank account. Fortunately, the Indian banking sector has recognised start-ups’ unique financial management needs. Hence, banks now offer specialised business banking services to cater to the requirements of start-ups.
What is a business account?
A business bank account, or a current account, is specifically designed for businesses. It allows start-ups and established businesses to manage their day-to-day financial transactions, such as depositing and withdrawing money, making payments to suppliers, receiving payments from customers, and maintaining records of all financial activities.
A business bank account is crucial for start-ups as it helps them keep their personal and business finances separate, which is important for accurate financial reporting and tax compliance.
Benefits of a current account for start-ups
- Professionalism: Having a business bank account adds a layer of professionalism to your start-up’s financial transactions. It helps build trust with customers, suppliers, and investors, as they see that you are operating with a dedicated bank account solely for your business.
- Easy financial management: A business bank account makes managing your start-up’s finances easier. You can keep track of your income, expenses, and cash flow, which is crucial for budgeting, financial planning, and decision-making.
- Payment processing: With a business bank account, you can accept payments from customers through various modes like cheques, online transfers, and credit/debit card payments, which makes it convenient for your customers to transact with your start-up.
- Credit facilities: Many banks offer credit facilities, such as business loans, overdrafts, and credit cards, to businesses with a current account. These credit facilities can be useful for managing working capital, expanding your business, and meeting unexpected financial needs.
How to open a current account for start-ups?
To open a current bank account for your start-up in India, follow these steps:
- Choose a bank: Research and select a bank that offers business banking services suitable for your start-up’s needs. Consider the account’s fees, transaction limits, online banking facilities, and branch accessibility.
- Gather required documents: Prepare the necessary documents to open a business bank account. These usually include:
- Proof of business existence: Documents that prove the legal existence of your start-up, such as a Certificate of Incorporation, Partnership Deed, or Memorandum of Association (MOA) and Articles of Association (AOA).
- PAN: Permanent Account Number (PAN) of the start-up and its authorized signatories.
- Address proof: Address proof of the start-up’s registered office, such as an electricity bill, water bill, or property tax receipt.
- Identity proof: Identity proof of the start-up’s authorised signatories, such as an Aadhaar card, passport, or voter ID card.
- Other documents: Bank-specific documents, such as account opening form, board resolution authorising the account opening, and specimen signatures of authorised signatories.
- Complete the KYC procedure: After collecting the necessary Know Your Customer (KYC) documents for opening the account, the bank will process the formalities to open the start-up business account. Once the business account is opened, your start-up can begin to take advantage of the various facilities offered by the bank.
To wrap up
Opening a current account for start-ups is essential in India to manage their finances efficiently. By following these simple steps and providing the required documents, start-ups can easily open a business account and take control of their finances.
