What is a Current Account and How to open it in a Bank?
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Current Account is an account in which there is no limit on the no. of transactions that can be done in a day and are therefore also referred to as Transactional Accounts. These type of accounts are held neither for the purpose of Investment nor for the purpose of Savings but only for the convenience of the business as these accounts are the most liquid type of accounts.
Banks don’t pay any interest on the amount lying in these accounts and in some cases also charge a small fee for the services they provide. These types of Bank Accounts are usually opened by businesses as there no. of transactions are on the higher side.
All Indian Banks are allowed to open Current Accounts. You can approach any bank with the requisite documents and on successfully furnishing all details in the application form, the banker will verify all documents and on being satisfied, they will open your Current Account.
Current Account users are also required to maintain minimum quarterly average balance in their accounts. Most banks have minimum quarterly average balance criteria of Rs 5,000/ Rs 10,000.
The following documents are required for opening a Current Account in India
The account holder would also be required to comply with all the KYC Norms. In case you don’t have all the above documents, you can refer this link which provides the list of alternate documents to be submitted in case the above documents are not available.
Almost all banks provide the facility of Debit Card, mobile banking and internet banking for current account users. However, they may charge a small fee for such services.
Karan is CA by Qualification with the rare distinction of being awarded All India Rank 22. He is also the founder of this website and loves to help people with their Tax Queries.
Business Bank Account Checklist: Documents You'll Need
Having a business bank account is a crucial part of running a business. Aside from adding another official element to your business, a business checking account keeps your records organized and separates your business and personal finances.
"It is just good accounting practice to keep your business [finances] separate … and setting up a business checking account is the first step to making this possible," said Kevin Ravenscroft, president and CEO of Timberwood Bank in Tomah, Wisconsin.
If you're opening your first business bank account, here's what you should bring to your account setup appointment. [Ready to open an account? Here's what you need to consider when choosing your bank.]
As with a consumer account, the first thing you need to open your business account is a form of personal identification. As dictated by the Patriot Act, Dodd Frank Act and Consumer Protection Bureau, consumer and business owner/operators must provide certain details and data to corroborate their identities and their business models, said Jim Angleton, president of financial services firm AEGIS Finserv Corp. He said to provide photocopies of driver's licenses for the account holder and signers of the accounts, as well as any professional licenses you might need for your business.
"Business owners should keep in mind that any individuals associated with the company, like authorized signers and beneficial owners who control 10 percent of more of the business, will also need to present personal identification," added Steve Connors, senior vice president, small business corporate products and services at TD Bank.
If you intend to do business under a different name other than your own legal name, or if you are incorporated under one name and want to operate under another name, you'll also need to bring the proper documentation of your Doing Business As (DBA) name.
The next item you'll need is a tax identification number, and, depending on how your business is set up, possibly a name registration.
"If you're a sole proprietor, all you need is an Employment Identification Number (EIN), your Social Security number, as well as a driver's license or passport," said Levi King, CEO of credit solutions and monitoring firm, Nav (formerly Creditera).
King said that while some banks allow sole proprietors to open accounts without an EIN, it's a good idea to create one because it reduces the chance of identity theft. To determine your eligibility for an EIN or for more information about registering for one, visit the IRS website.
To open your account, you'll need to bring the documentation used to form and register your business with the state and other entities, said Connors. These are often called Articles of Incorporation.
"If you form a business as an LLC, limited partnership, corporation or other separate legal entity, to open a bank account you will need the articles of incorporation that you filed with the state, if you are the sole owner," said Tiffany Wright, president of The Resourceful CEO, a financing advisory firm for small to medium-sized businesses.
If you are one of multiple owners, you will also need to bring a resolution from the other owners or board granting you the right to transact financial business for the company and/or open and control the account, Wright said. If you don't have these documents yet, many banks keep sample resolutions on hand for small businesses to use.
To get your business banking relationship off to a good start, experts suggest providing as much information as possible about expected financial transactions. Think about your anticipated cash flow and possible credit needs before your initial meeting.
Angleton suggested including this information in an executive memo outlining your expectations for monthly bank balances including a low, moderate and high dollar amount.
"The more data you supply up front the better," Angleton said, adding that small business owners should understand that the bank will use the requested information to conduct required due diligence in verifying the applicant's identity and activity, in accordance with the Bank Secrecy Act.
When it comes to opening an account, it can be done either in store or online, and there are benefits to both.
"Opening an account in a store provides in-person banking expertise to find the best products to help your business run smoothly and adds another layer of comfort that the account opening is secure," said Connors. "Online openings, meanwhile, can save time for busy entrepreneurs."
It's important to note that opening your business bank account online may limit your banking activities. In addition, members of certain industries must open business bank accounts in person. For more information on opening business bank accounts online, visit the U.S. Small Business Administration website.
Additional reporting by Sarita Harbour. Some source interviews were conducted for a previous version of this article.
Jennifer Post graduated from Rowan University in 2012 with a Bachelor's Degree in Journalism. Having worked in the food industry, print and online journalism, and marketing, she is now a freelance contributor for Business News Daily. When she's not working, you will find her exploring her current town of Cape May, NJ or binge watching Pretty Little Liars for the 700th time.