Online business is experiencing rapid growth – there are billions of Google searches daily for online services, e-commerce and basically almost everything else, making it a very competitive marketplace.
This has led to many entrepreneurs setting up new websites and for that they need to register a company, open a company bank account, and sometimes they also need additional services such as payment processors, debit cards, using nominee directors or shareholders for the company, virtual offices etc.
GBO will assist you to incorporate your company and open a company bank account. We work with top banks in the EU helping us achieve the best service, rates and operational plans for our international clients.
Documents needed to open a Business Bank Account in 2021
Personal Identification – You will need the personal details of those involved in the business. Generally, this includes owners, shareholders, partners, authorized signers, beneficial owners and directors. Each of these people will need to supply proof of identity, usually in the form of a passport with notarised or apostille.
Letter of Referral – If you are the owner of an existing business then bring a letter of referral or bank statement from the financial institution where you have an existing business bank account. You should have held the exiting account for at least the last 3 months.
Proof of Address – A utility bill bearing your company name and address and dated within the last 3 months should be sufficient. A municipal rates bill for the business premises dated within the last 12 months is also acceptable.
Account Signatures’ Right – If you are one of several owners you will need to show a resolution from your co-owners or board granting you the right to handle the finances of the company/open an account/control the account. If several individuals will be operating the business account then you will need to show proof of their identity. Any individual who is to have access to the account and be an authorized signatory must show proof of identity.
Certificate of Incorporation – If your company is a Limited Liability Partnership or Limited Company you will need to provide a Certificate of Incorporation verifying that your company is licensed and registered.
Certificate of Incumbency – This document lists the names of all individuals (directors, shareholders, officers etc.) involved in the company and states their role in the company, corporate office and obligation (incumbency) to the company.
Memorandum of Association – If your company is a Limited Liability Company you will need to show the bank a Memorandum of Association (MOA) which you would have received during the registration when establishing your company. The memorandum defines the relationship between the shareholders and the company setting out the Articles of Association that state how the company is to be run and owned.
Articles of Association – You will need to show the bank the documents used to register and form your company. The bank will require the Articles of Incorporation that were filed in the jurisdiction where your company was registered. This document states the purpose of your company and the role of its members.
Possible additional requirements when opening a Corporate Bank Account in 2021
Business plan – Some banks may ask to see your business plan that sets out the company’s purpose and strategy.
List of customers – Occasionally the bank will ask to see a list of your company’s clients.
List of main suppliers – You may be asked to provide a list of suppliers or an invoice from a supplier dated within the last 3 months.
Employer Identification Number – In the USA, depending on where and how your company was registered the bank may ask for proof of your Employer Identification Number (EIN) or Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN). This is a number issued by the IRS to businesses established in the US, for the purpose of identification. If your company is registered outside the US then you may be asked for a tax number from your jurisdiction.
DBA Certificate – If your business will be operating under a name other than its legal registered name then you may need a “Fictitious Business Name Certificate” also known as a “Doing Business As Certificate” or DBA.
Expected cash-flow – When opening a corporate account the bank may ask for a projection of anticipated transactions. This should give the bank a better idea of the expected monthly cash flow and credit you may need.
Business Certification – If your business deals in a field that requires specific licensing like healthcare or the food industry you will need to show the appropriate business licenses.
Take into account that the bank has the right to ask for any documents it wishes. If you choose not to supply the required documents the bank is likely to reject your application for a business account. It is best to approach the bank with as much information about your business as they may require. A corporate bank account at a respected financial institution is essential for running a successful business.
Questions and answers regarding opening a Business Checking Account in 2021
What factors should be taken into consideration when setting up a business account?
Before you visit your bank to open a corporate account and before you even start gathering the documents you will need to open the account you should consider some very general but vital points that will affect your choice of bank:
Where are your most important clients located? This is an important but often overlooked point. Some large companies will not do business with you unless your company has a bank account in a certain jurisdiction. Often big customers want you to hold a business account in the same jurisdiction where they are located. Check this out before you approach a bank to open a new business account.
Will your new business bank account meet your needs?
You might consider opening more than one business account – separate accounts for separate financial roles – taxes, income, payroll etc. Depending on the size of your business this may make your life easier and the business finances easier to control and monitor. Save yourself problems in the future by consulting with an accountant or other professional financial expert before rushing to open a new business bank account.
How to choose the right bank for your new business bank account?
The present bank that you use for your personal account may be great but for your business needs, there could be a better bank that relates to your business and offers better business banking services. Look out for a bank that provides expert advice. A business bank account should be with a financial institution that can provide a line of credit, a balance transfer, credit/debit cards and cash management. Look for a bank that best fits the industry you are in and don’t rule out your options without carefully considering what each bank can offer you. Business banking fees are another important aspect when comparing banks.
Depending on the type of business you own it may be possible to open your business bank account online without even going into the bank physically. However, if your business provides telemarketing, money services or is an online gaming business, a visit to the bank in person will be necessary.
How to prepare for opening your startup business bank account in 2021?
Contact the bank and find out what documents you will need in order to open a business account. Gather together all the applicable documents you may need before opening your account. Remember that different types of bank accounts require different paperwork. Among the standard documents and details you will need in order to open your business account are full details of shareholders, directors and beneficial owners; a business plan; references; company registration documents etc.
Comparing the advantages and disadvantages of the best Business Bank Account
- Separating your personal and business funds. You may be tempted to use your own personal funds to pay bills or salaries in order to support the viability of your business. By clouding the difference between your personal and business funds, you risk destabilizing your business’ financial security. Firstly, accountants frown upon any transfers of funds from one’s personal account to one’s business account and vice versa – this could mean the business cannot run itself solely based on its income. Enforcing a strong separation between your private and business account, therefore, affirms financial stability.
- Maintaining professional appearance. Being able to provide your business’ bank account details to customers helps strengthen the credibility of the business.
- Centralizing your funds. When running a business, one has to regard all different facets of the newly developing operation. It is a laborious task which, therefore, necessitates the simplification of some of the business’ more complex aspects. Ascertaining that your business finances are managed efficiently is a substantial way to save you both precious time and money; having a singular bank account assists you in achieving precisely that. Apart from their better accessibility features—which help increase the efficiency of your business finances management – by using one account to manage all actions relating to the business, there is merely one monthly statement one has to review and file.
- Come tax day, and as long as your business bank account is separated from your personal account, it will be considerably easier to report your income; you will find it simpler to differentiate the business’ income from any income that was passively procured from saving interests. Furthermore, with all the information concerning the business’ incomes and savings centralized in one place, either board members or shareholders can be effortlessly informed.
- Fees and limitations. The main disadvantage for having a business bank account concerns the bank’s fees. First, banks are entitled to penalize you for failing to maintain a monthly average balance. While these charges vary from bank to bank, they are nonetheless enforced by them all. Second, banks also limit bank accounts withdrawals and transactions. While there are exceptions to this rule, some banks indeed determine a withdrawal limit fee while also setting an allowed number of transactions for each type of account. Exceeding either the account’s withdrawal limit or its limit of allowed transactions will result in charges.
- Opening a business bank account. There is far more paperwork involved in opening a business savings account than the paperwork involved in opening any other savings account.
- Credit History. When opening a business bank account, one has to undergo credit history inspection. Poor credit history results makes opening a business savings account a more difficult and lengthy process.
- Business banking interest rates. Business savings account’s interest rates are far lower than the interest rates for other savings account.