If you are an entrepreneur, it is essential that you open a business bank account to carry out business transactions smoothly and keep your finances organised. A business bank account, also known as a current account, can make your business look more professional and allow you to keep a track of your business cashflow in a much better way. However, with so many banks offering different features, it can often be confusing for new entrepreneurs to choose the right business current account for their business. To help you make a well-informed decision, we have enlisted a few common mistakes that you must avoid while opening a business bank account. Read on to learn more about the same.
Choosing the wrong bank
Opening a business bank account with a less-established financial institution can put your business finances at risk and cost you dearly in the long run. Therefore, it is advisable to opt for a traditional and well-known bank to open a business bank account. You can check the credibility of the bank by going through its existing customer reviews online.
Incorrect or incomplete information at account setup
While filling the account opening form, ensure to provide accurate personal as well as business details. Incorrect or incomplete information may prove to be a roadblock in your business account setup. Also, keep all the required documents handy before you begin with your account setup. This will help avoid any inconvenience and you will be able to open your business bank account smoothly.
Not planning cheque-signing access
Entrepreneurs often forget to plan for business cheque-signing access. If you’ve got a business partner, ensure to provide him/her with cheque-signing access. If you forget to do so, your partner won’t be able to deposit cheques. Therefore, while opening a business current account, make sure that the right people have the authority to sign cheques.
Not understanding the fee structure
Business bank accounts usually offer fee waivers to account-holders who are able to maintain the account balance above a specified minimum amount each month. On the other hand, banks may levy some penalty charges if the account balance falls below the minimum monthly balance. Therefore, before opening a business bank account for your company, make a note of the minimum monthly balance and determine whether you will be able to maintain it on a monthly basis. Also, do not forget to read the fine print as it will help avoid any inconvenience later.
Mixing personal and business expenses
You must never use your business bank account for your personal expenses as it can make it difficult for you to evaluate the position of your business. Additionally, it can also cause accounting and tax reporting challenges. To avoid this, it’s best to maintain separate accounts for your business and personal needs.
Now that you are well aware of some common mistakes made while opening a business bank account, ensure to avoid these to open your bank account in a smooth and hassle-free way. Avoiding these mistakes will also save your valuable time and effort required in correcting them.