Opening a current account is one of those essential tasks that you must not miss out on when beginning a business. Maintaining such an account helps you separate your business banking transactions from your personal transactions. In addition, such an account helps your company track all the business-linked expenditures, which simplifies the taxation process.
6 reasons why you must open a current account:
- Provision of overdraft facility
As the name suggests, an overdraft is the option that banks provide on a current account to withdraw a higher amount than the amount parked in the current bank account. This facility helps you to meet different expenses, pay your staffs’ salaries on time, etc., at times when there is a delay in receiving the payment from clients/customers.
- Separates business transactions from personal transactions
To get all the tax benefits, it is vital for you to separate your business transactions from your personal transactions. It can help you with bookkeeping, which further allows you to maintain a systematic record of all your business income and expenses.
- Allows unlimited transactions
A current account allows you to make more transactions with higher upper limits, which eliminates the need to worry about cash flow. Unlimited bank transactions can easily be conducted at any frequency based on your requirement. As an outcome, a current savings account offers higher cash fluidity, which savings bank accounts often fail to provide.
- Reflects professionalism
No matter whether you are making or receiving payments through a cheque, online banking, or RTGS/NEFT, it reflects professionalism to transact in the name of your company. This leaves an ethical impression and displays the legitimacy of your company.
- High credibility
Many companies may ask for a credibility letter from your bank before allocating work to your company. Holding a long-term good relationship with the bank in the form of a current bank account may help you avail the recommendation for credibility at any time.
- Additional benefits
Before you click on the ‘current account opening’ option, make sure to know about all the additional benefits linked with it. While a current bank account has different variants to match your business preference, it is a zero-interest bearing account. No interest on the current account balance is offered due to the provision of higher benefits in the form of higher withdrawals/deposit limits and allowance of a certain number of free pay orders, demand drafts, and RTGS/NEFT transactions. The provision of the overdraft facility on the current account is one of its biggest benefits.
The importance of a current account is multifaceted. It offers assurance about constant cash flow efficiency and removes the requirement to worry about the transaction limits. The overdraft facility is a crucial benefit of these kind of bank accounts that helps your company with numerous business-related expenditures at times when your business is still waiting to receive the payment from clients.