If you just started up your business then as a first step towards it you must open a current account with any banks in India. The benefit of having a current account is, you can have unlimited facility of withdrawal and transfer subject to the balance available in your current account.
Unlike saving A/c you do not have any withdrawal limit for the current account. You can pay your staff salary and other bills without any restriction on it.
Advantages and Disadvantages of Opening a Current Account
- Benefit of overdraft facility
- No restriction on execution of financial transactions i.e. withdrawal and transfer
- Cheque book facility
- Banks don’t offer interest on your current account balance
- No ATM card (except in the case of sole proprietorship business)
How to open a current A/C
Without a bank current account it will not be possible for any business to pay their bills or keep track of their money. With the introduction of section 43B of income tax act, all business expenses more than Rs, 20, 000 a day need to be paid compulsorily by an account payee cheque. If you don’t pay it by account payee cheque then the entire amount paid will be disallowed while calculating income tax. Other benefits of having a bank current account in your business name is, you can pay income tax, service tax and TDS etc online without visiting any branches of your bank. It’s a matter of few minutes to get rid of all these liabilities.
Now the question is how do I get a current account and in which bank I should open a current a/c. Different banks in India offer different current a/c facility. To decide a bank and type of current a/c is purely up to you and based on your requirements. Applying for and opening a current a/c is a matter of choosing bank, picking up the right current a/c based on your business needs.
Here are some steps to help you in finding the right bank and a current a/c for your business;
- Choose a Bank
The first step in opening up a current a/c is to choose the right bank for you. Different criteria can be set for choosing the right Current a/c. You have to talk to the customer care office to understand their product better. Most of the banks have their sales executive who can come to your office to explain their products to you. If you want, you can call such peoples to your office to understand their products better. The most important points for choosing a bank are followings;
- Online facility – Net banking facility, A/c Statements in electronic form, online support etc.
- Cheque book
- Minimum Balance
- Loan Facility
- Location of bank’s branches
- Salary payments support
- Pick the right type of Current A/C
Based on your business requirements you have to choose the right current a/c that matches to it. If you are visiting the bank’s website to collect information then you must check it with the customer care office to know if there are any changes to it or not. Most of the time we find that the website information displayed at bank’s website are changed or not matches with the actual product they offer.
- Visit the Nearest Branch
After deciding the bank and type of current account your chose, you need to visit the nearest branch of that bank to open up your current account. Some banks are also allowing you to open a current a/c online but most of the banks are not in to that list.
Collect the application form and the list of requirements to open a bank current a/c.
- Provide your documents to the bank
Read all the terms and conditions of your current account and then hand over the required documents along with the signed application form to the bank’s concerned person. Your bank may ask you for a reference who can introduce you to the bank. If you have any then provide it to the bank or else you can provide a cheque of other banks in place of any reference.
- Get your Current A/C opened
After doing your paper work your bank may hand over you the current account kit with all the details in it or they may send you your kit at your communication address mentioned in the application form.