How To Open A Business Bank Account (Requirements And Guides)
How To Open A Business Bank Account (Requirements And Guides). This article aims at answering the following questions: What is a business bank account? What are the documents needed to open a business bank account? What are the steps to open a business ban account?
Business Bank Account
Business bank accounts let you handle your company money professionally and separate them from your personal affairs. It takes more work than establishing a personal account to create a corporate bank account. Documents must be collected, identities must be established and permits in order. Learn why and what you need to do to establish a business bank account.
For every prospective company owner, finding out which bank you want their business entity to select, what processes you need to go through, and which corporate bank account criteria must be met. Although various banks have somewhat varied processes, the fundamental need remains the same.
Furthermore, establishing your industry’s business bank account is what consummates Nigerian corporate incorporation. Here is thus a tutorial for foreigners on how to establish a company/company account in Nigeria, along with the list of everything you need to accomplish.
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Benefits of a business bank account
1. Limited protection of liability
Business banking helps to minimize your individual accountability by separating corporate money from your personal finances. “You always need to segregate your personal and company money, no matter what kind of business you run,” stated Chas Rampenthal, General Advisor of LegalZoom. “From effectively segregating your money, the first and most essential stage is different bank .
2. Professionalism
A company bank account enables the company to check, which is more respectable than requesting customers to verify your name. Your clients may also pay by credit card and staff can carry out financial activities on behalf of the company. You still want your company to seem respectable. If you maintain your company funds by establishing a bank account, this helps to improve your professionalism.
3. Credit options
Numerous banks include an opportunity to utilize a loan line in a crisis. Many also offer investment credit cards you may use to start establishing your credit history.
4. Purchase protection for customers
Several banks provide commercial accounts as an alternative for commercial banking. Merchant services are a commercial benefit, since they safeguard your clients’ purchases and their private details.
Types of business bank accounts
Here are the four kinds of business bank accounts:
1. Checking account
A checking company account is the ideal option to manage your company’s wages, expenditures and other fundamental financial duties.
2. Merchant account
Whether you intend to take purchase by credit and debit card, check with your bank to see if you may open up a trader’s account. Most banks also provide trading services, depending on who you are banking with. Most banks recommend that all of their customers [shop] before you pay for a specific account and at least adjust their pricing yearly.
3. Credit Card account
You may utilize an emergency business credit card or various things for your company. The main advantage of a credit card to startup entrepreneurs or, if you have poor credit, it may help you develop or enhance your credit score. Things to consider when choosing a bank for your business account.
Read also: Top 10 best banks for savings account in Nigeria
Things to consider when choosing a business bank account
1. Sign-up bonuses
Banks may provide incentives to establish a business account with them. These incentives may be a good opportunity to make a little more, but bear in mind that these bonuses are taxed.
2. Maintenance needs of account
Business bank accounts often have criteria that you need to fulfill; if you don’t, you may impose charges. For example, banks are often required to keep a particular balance – but the amount required varies from bank to bank – it may be a daily minimum or a monthly minimum. If you have several accounts, the institution may add a minimum aggregate sum to all of your transactions, or it may look at each individual account.
3. Fees
Each bank has distinct price structure and characteristics. In general, business accounts have greater charges and minimal balances than personal accounts.
Steps To Open A Business Bank Account
1. Choose a bank
The most important step in creating a bank account is to choose which bank you wish to work with. All bank offers different sorts of rewards to its bank customers; you must investigate which benefits you require for your business and then choose the appropriate bank.
2. See what accounts are you looking for
According to Inc. you may require various income, payroll and tax accounts of company banks. This depends on your company’s intricacy. Please ask for suggestions from your accountant. Companies which are just starting off will generally require simply the four accounts indicated above.
3. Register Your Business Name
Set up the name of your firm before you talk to your possible new bank – that is, without your own name being used. This is a logical step towards establishing your company. Every bank requires you to provide your business or company certificate of registration. This is an evidence that your business is officially registered under the law.
4. Separate business from personal accounts
One may begin as a modest one-person firm, so why deal with an account? However, you must conceive of your company as a distinctive element from yourselves from day one if you are serious. After all, the requirements, habit and legal position of companies and people varies.
A company separation from personal accounts would enable you to track your business receipts and expenses better. Also, since your personal and your business tax status may be different, maintaining items such as interest and costs separates them is much cleaner.
5. Get Your Paperwork
Make sure you know their needs and what form of documentation they will have to pay on your account before traveling to the bank, as various accounts have different demands. Often, a tax Identification number is necessary for you. You will also request your business permit or a registration paperwork for your company name.
6. Fill the Application
The request to create your bank account may be readily found on the official website of the organization. Obtain the same information by completing all the facts you want and provide the same paperwork to the bank in step 2.
7. Manage access
Who seems to have access to the money is a critical choice you will confront. Consequently, there should be limited access and rigorous protection of account numbers and passwords. However, you could also find it important to allow anyone to handle your funds in contrast to yourself so that business financial management will not stop whenever you are not there.
Whoever has access should be a trustworthy employee and nobody who has financial access will ever suffer from a background and check of credit. It might also beneficial to utilize a smaller account to reduce your exposure to internal fraud.
Read also: Top 10 Functions Of Commercial Banks
What are the documents needed?
The following are the documents needed to open a business account:
- Decision of the Board of Management/Owners confirming the establishment of the account and the signatories of the account.
- Certified memoranda and association business seal.
- Full opening form completed by the authorized signatories of the firm.
- Certified genuine copy of documents of incorporation (Form CO7).
- Proof of signatures and directors’ residential address
- The signatories’ passport picture
- Verification of the Bank Number of managers or owners
- Legitimate document of identity of the directors or owners, such as international passports, driver’s licences, etc.
- Tax Identification number for a commercial utility, such as the Nigerian Power Holding Company (PHCN), water bill, the Lagos Waste Management Authority (LAWMA), etc. Tax Identification number (TIN).
- Registration of Special Check Unit Against Money Laundering (SCUML).
- Special conditions for foreign nationals, such as business license, residency permission etc.
- Two fully completed corporate account holders benchmark forms.
Minimum Opening Balance For A Business Bank Account
The Nigerian Business Bank account has a minimum starting amount that varies based on the bank. The money to start a current account is usually between N 100,000 and N 500,000. Although, this varies across banks in Nigeria.
Conclusion
The opening of a Nigerian corporate account is highly helpful for Nigerian enterprises, in particular e-commerce. Moreover, having a business account in Nigeria enables the company to receive payments online using Naira. For more insights about this article, kindly use the comment box below.
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