Current account assists businesses in smooth flow of the banking transactions. Given the fact that businesses require to conduct a huge number of transactions daily, choosing to open business bank account helps sustain the natural business flow. Some of the crucial benefits of a current bank account include overdraft facility, option to make high withdrawals, easy international payments etc. The best bank to open current account depends upon your preference and requirement after in-depth comparison among different current bank accounts.
Why open a business bank account over a savings bank account?
· Zero limit on the number of bank transactions
· Zero limit on withdrawals and deposits from home branch
· Abundant facilities like demand drafts, cheques, internet, and mobile banking are available
· Availability of overdraft facility (permits to make payment over and above the current balance by borrowing funds of a predetermined limit from the bank)
Factors to note before you open a business bank account
A current bank account can be created by a proprietor, individual, a trust, a company or association. Key goal of such accounts is to eliminate restrictions that apply on savings bank accounts and make sure smooth flow of all transactions. Thus, opening a current account enhances business sustainability. However, such perks give way to certain implications. Such implications include:
· Maintenance of high MAB (Minimum Amount Balance). Failure to maintain the MAB levies a high penalty, which may differ according to the bank or the business account type.
· No interest rate is provided on parking funds in such accounts. However, just a handful of exceptional banks may offer interest rates of such accounts. While few banks offer interest on such accounts, the offered rate will be much lower than the savings bank account.
· Unnecessary added services on such accounts may be very costly.
Benefits linked with business account
There are various advantages of operating a business account, few of them are:
· Anytime withdrawal facility for mitigating your business cash needs.
· Easy deposit of cheque or cash at distinct bank branches. This feature makes collection of payment from small customers convenient.
· Availability of overdraft facilities assists to mitigate the working capital requirements of your business.
· Provide internet or mobile banking facilities.
· Enables businesses to make direct payment via demand draft, pay orders or cheques.
Reasons to open a business bank account are several. You can be rest assured of the liquidity, smoothness in transactions and may not worry about the limit pertaining to the frequency of transactions you may conduct in a specific time-period. Also known as, liquid deposit accounts, these accounts offer distinct customized options to help at times of financial needs. Availability of overdraft facility of up to the agreed limit in times of emergencies is one of the biggest benefits of such accounts. Note that while all the regular transactions are performed from a business account, they are tax free in nature due to the generation of zero interest on them.