Your guide to open a corporate bank account in India
When you are a small business, you might lean towards using your personal bank account for business accounting purposes. But this model doesn’t work in every case.
Owning a corporate bank account is equally important to split your business and personal finances and maintain due diligence.
Corporate bank account opening can be quite challenging when you do it for the first time.
What can baffle you the most is the list of required documents and the different types of corporate bank accounts and features available.
Here is how to open a corporate bank account in India.
What is a corporate bank account and why does your business need one?
A corporate bank account is a bank account created for businesses to store their funds, make business transactions, and receive their income.
Any small business that pays tax and does bookkeeping is supposed to open a corporate bank account and process business banking through that.
With corporate banking, you can enjoy exclusive services, products, and offers that are meant for businesses.
When you separate your business resources from your personal account, you save your personal assets too.
Along with that, stress-free tax filing, claiming tax deductions, and having smooth audits is possible only when you have a bank account.
IRS has made it mandatory that every registered business should open a corporate bank account.
Switching to corporate accounts is also considered a professional move as you start financially interacting closely with your vendors.
Another added advantage is you can store your excess income earned in corporate bank accounts and earn more from that.
Some banks offer portfolio management as well using that you can leverage to take care of your business investments.
Corporate vs business bank account: What's the difference?
Before you get to know how to open a corporate bank account in India, you should see how it's different from business bank accounts.
Both may sound similar as they are both linked with the term ‘business’.
One of the main differences between them that you can easily spot is that corporate business accounts are meant for big and medium-sized companies whereas business bank accounts are for small businesses.
So it depends on the money that’s handled, stored, and moved in and out of the account.
How to open a corporate bank account totally differs from how to open a business bank account, and the way they function is also not the same.
Corporate banking is for businesses with complex banking and finance needs.
On the contrary, smaller firms go for business banking where they get basic features that separate their business from personal finance management.
Who can open a corporate bank account in India?
The banks allow only a specific set of people who fit into their requirements to conduct corporate bank account opening.
Before everything, the business owner should have incorporated their business and should have a board of directors.
For each business structure (partnership, sole proprietorship, NGO, etc), the requirements and eligibility characteristics change.
Unregistered businesses and individuals won’t be able to open corporate bank accounts.
But business bank accounts can be opened by sole proprietors and solo or small team business owners without a board of directors.
The owner can solely decide and get a business bank account and doesn’t have to depend on anyone’s vote or approval, unlike corporate bank accounts.
A corporation is a legal entity that can act independently and is entitled to open bank accounts like individuals.
But they should appoint a dedicated person who will act on behalf of the company to do corporate bank account opening.
This dedicated person shouldn’t be the shareholder with the highest amount of shares. It’s usually the treasurer of the board of directors who opens the corporate bank accounts, keeping the corporate resolution as evidence.
But, a business bank account is almost similar to a personal bank account that’s open under the business’s name, because businesses run by single owners aren’t corporate entities.
Process
To open a corporate bank account, the board of directors should provide approvals.
It’s up to the directors to decide and select which corporate bank accounts they should go for, when and how to open corporate bank accounts, needed features, and whether the accounts are for investment or money transactions.
If there are multiple directors, they conduct voting sessions to select one.
Since business bank accounts are for small businesses and are managed without directors, the business owner can decide what suits their business best and go for it.
Related read: How to register a startup in India: A step-by-step guide
Authority in bookkeeping
Directors hold the entire authority over choosing the corporate bank account that the company is going to use.
In the case of business bank accounts, it’s much simpler. Anybody can open business bank accounts, be it a partnership, sole proprietorship, or LLC.
The required documents they will have to produce vary. LLCs will have to produce state registration paperwork to get business accounts and sole proprietorship or partnership businesses should produce the EIN assignment number from the IRS.
Also, they must ensure that the name of the applicant and the name in the submitted documents should be the same.
Limited liability
Business bank accounts don’t offer protection to their owners' personal assets and liabilities.
Because a business account can be, in some cases, considered a personal asset, it can hence be attacked by personal creditors of the business owners.
But a corporate account can never be considered its owners’ personal asset, whether it’s an investment account or savings account.
So, the business finances are safe here and not liable to any attacks when personal finance is at risk.
Credit rating
Corporate bank accounts will never impact your personal credit score in any way.
Corporate account opening is done through the corporation’s EIN.
So, how it performs will affect only the corporation’s credit score and not the personal score of the owner.
On the other hand, a business account is either created using the social security number of the owner or the EIN of the business.
If it’s created with the help of social security number, then any deflections in the account will directly have an impact on the personal credit score of the owner.
Supplementary service offered
Since corporate bank accounts are for a premium range of clients who make transactions in high volumes and amounts, they are offered other supplementary services.
Some axillary services corporate account owners can enjoy are:
• Deposits.
• Remittances, online banking, and phone banking.
• Ability to borrow credit.
• Investment banking and portfolio management.
• Insurance and mutual funds.
• Credit cards and debit cards.
• International transactions and international ATM withdrawals.
• Safe lockers.
• And many more.
Business bank accounts also provide certain additional convenient services for small businesses. They are:
• Access to a business checking account with a low minimum balance.
• Merchant services.
• Online banking services.
• Commercial loans.
• Business credit cards.
• Treasury management.
• Money market accounts to earn more interest.
The corporate banking section of the banks handles corporate bank accounts whereas the commercial banking section takes care of the personal accounts and small business accounts.
More customized services are rendered to the corporate customers as they transact higher amounts and bring more profits.
How to open a corporate bank account?
Once you have selected the bank, visit their branch or go to the corporate banking section of their website and register with your corporation details.
You can also open a corporate bank account from any of the above-mentioned private banks through the MCA’s website at no extra cost.
Now, anyone related to the company or one of the directors should be appointed as the authorized person who will take care of the application process.
The company resolution must be formed in the case of the limited company, LLP, or private limited company.
The company resolution will carry the names of the nominated directors who will be appointed as authorized signatories.
Along with the names, the resolution also carries the location, date, and time of the board meeting and terms that both parties agree to.
The printed company resolution for opening a corporate bank account must be signed by all the directors at a board meeting.
One of the signed resolutions will be submitted to the bank while the other one will be retained by the company.
Documents required for corporate bank account opening
The list of documents that will be required to submit during the time of corporate bank account opening are:
• Memorandum of association (MoA).
• Articles of association (AoA).
• Filled application form.
• Duly-signed board resolution.
• Company’s PAN card.
• Certificate of incorporation that is obtained at the time of company registration.
• Company address proof (If any of the above documents contains your company address, this is not necessary).
• If it’s a public company, the certificate of commencement of business.
Also, with our article discover the top business bank accounts in India offering exceptional features and services to support your entrepreneurial journey. Compare and choose the best.
What are the benefits of corporate accounting for Indian business?
Banks in India are relentlessly working on providing world-class banking services that are on par with fintech products for medium and large-scale companies.
Here are some of the benefits registered companies and corporations can relish when they go for a corporate bank account India.
Increased investment opportunities
The corporate bank account opening opens doors to another way of earning income, which is through investments.
Corporate bank accounts allow you to store the excess money and reinvest it.
When you suddenly see a rise in your revenue, you can use that on trading and investments through corporate bank accounts.
Leveraging this account, you can also purchase and sell stocks, bonds, assets, and acquisitions and manage your investment portfolio.
More security
Your utmost priority is to secure your company funds, your financial data as well as your vendors and stakeholders.
Nothing else would be the safest option than corporate bank accounts to store your funds and make remittances.
The security features of corporate banking are even better than business bank accounts.
Your company funds are in no way called your personal asset unlike funds stored in business bank accounts.
It remains untouched even if your personal assets are at risk or suffering due to a bad personal credit score.
More flexibility
You have entire flexibility to handle and move your business funds as per your needs.
If you make more than you need, you can store them in your corporate bank account and use them later when you are in need of additional funds.
Get started with Volopay
Corporate bank accounts are undeniably the best option to store your earnings and every company should invest time and effort in corporate bank account opening. But your banking needs don’t stop here.
As a business that depends on its vendors and other services, you are also supposed to pay the service providers and suppliers.
Online banking options aren’t really reliable all the time and you will be using multiple ERP systems where you manually input every processed transaction.
Instead of spending time with applications that make you work more, you can replace all these with one payment management software Volopay.
Here is what it can do to simplify your accounts payable:
• It helps you manage vendor invoices and schedule their payments on time.
• Stores all of your vendors' data and processed/processing payments in one place.
• Comes with the ability to create unlimited corporate cards that you can either be provided to employees or be assigned for different projects, campaigns, or departments. Use these cards for online payments and freeze or block them if not in use.
• Integrates with other accounting applications like Zoho books. Hence no more manual transfer of accounting data.
• No hidden FX charges when you make international transactions. Rather have a transparent and nominal transaction cost that’s cheaper than what banks cost you.
• All payment operations are done under one screen. Hence, every detail is stored in a single, transparent window that represents your entire payment history and trends.
While a corporate bank account opening is necessary for you to store your funds and build an investment portfolio, a payment system like Volopay is more than crucial for streamlined money management.
FAQs on corporate bank account
On the surface, they function the same way. But a corporate account has functionalities specific to a business, unlike a traditional bank account. A corporate account can have offerings such as debit cards for employees, more lucrative interest rates, and payroll processing services. The balance requirements and fees are also, overall, better for your business.
Business bank accounts are generally created through the owner's social security number or the EIN of the business. If the account was created using the social security number of the owner, it may impact your personal credit score if there are any deflections.
Opening an account with Volopay is just a matter of few days to a week. All you need to do is submit the required documents for onboarding on the platform and a customer success representative will be assigned to help you complete your onboarding.
Having a business bank account allows you to receive credit card payments. It also shows that you are more professional and tax preparation is also easier.
You will need the following documents to open a business bank account with Volopay - Memorandum of Association (MoA), Articles of Association (AoA), filled application form, duly-signed board resolution, company’s PAN card, certificate of incorporation that is obtained at the time of company registration, company address proof, and the certificate of commencement of business if it’s a public company.