Guide to opening a public account in India www.deekpay.com

What is an Indian company account?

IndiaA company account is a bank account designed for businesses. Businesses can use company accounts to manage their financial assets. Typically, business people use company accounts for the following purposes:

Savings: Company accounts keep business funds safe for future use. Some companies use these accounts as a type of company savings for future purchases. Banking: Companies can use company accounts to manage day-to-day banking operations, such as completing vendor payments or purchasing new merchandise. This can help them complete operations efficiently. Investing: Companies can use a company account to automatically invest dividends or additional income. This can help companies increase their earnings over time.

Difference between a company account and a business account

Often, corporate accounts are considered the same as commercial bank accounts. While they both fulfil business needs, they differ in some key aspects, as shown below:

CategoryCompany AccountBusiness AccountCompany SizeFor Medium and Large CompaniesFor Small BusinessesCompany StructureMust Have Board of DirectorsIndividual BusinessesCan Apply for Benefits and ServicesLower Transaction Fees and Higher Profit RatesVaries by Bank

Advantages of a corporate account

There are a number of potential advantages to opening a company account, depending on the goals and size of the business.

1. Enhancing credibility

Having separate bank accounts for personal and business purposes is very helpful because it makes a business look more professional. When customers see that a business has a corporate account, they are reassured of its legitimacy. Additionally, having this account helps business owners get better deals from suppliers and vendors.

2. Higher investment opportunities

A company account enables a business to deposit and increase excess funds by reinvesting them. Companies can also use this bank account to manage portfolios and sell and buy bonds, shares, new companies and other assets.

3. Providing liability protection

There are a variety of ways to store your business's money. However, while users may get more or less the same features, they will not get the liability protection that a corporate account provides. Another important benefit of a company account is that it separates the company's assets and funds from the business owner. As a result, the funds are the responsibility of the entire company rather than a single individual.

4. Achieving better financial management

Other important advantages of a company account include budget and expense management. In addition, it gives businesses a clearer picture of their financial situation as owners can view detailed reports and bank statements about their company.

5. Easier financial transactions

Thanks to company accounts equipped with Internet and mobile banking services, business owners can carry out basic business transactions smoothly and efficiently from anywhere. Multi-location fund transfers as well as deposits and withdrawals from any location are additional advantages of the corporate account.

How to open a company account in India?

It is important to note that the eligibility criteria and documents required to open a company account vary depending on the business structure. Listed below are some of the key points related to opening a company account in India:

Businesses whose owners wish to open a company account must have a board of directors. Individuals are not eligible to open company accounts in India. A company must obtain approval from the board of directors to open a company account. The standard procedure involves holding a meeting and deciding by voting. The directors also discuss in detail the main purposes, access options and features of the account. For small businesses without a board of directors, the owner does not need anyone's approval or vote to open a new corporate account. Typically, companies appoint a dedicated person (usually the treasurer of the board of directors) to open and operate their corporate bank account.

Recommended Reading:How can a foreign company open a bank account in India?

Documents required to open a public account in India

Below are the documents required to open a company account:

Fill in the application form Articles of Incorporation Memorandum of Association Board Resolutions Certificate of Incorporation Proof of address

Disadvantages of corporate accounts

Considering the large number of business transactions involved in corporate bank accounts, the cost of maintaining these accounts may be higher than regular accounts. In addition, the record-keeping process is confusing and time-consuming.

Important tips for managing company accounts

Here are important tips for managing any company account:

1. Defining an investment strategy

Business owners should develop an appropriate investment strategy for their corporate accounts based on their financial goals. While financial institutions may offer many investment options, the following two are common:

i. Portfolio rebalancing

The bank appoints a financial advisor to manage the company's investment portfolio. This person will make decisions based on market trends, company income and goals.

ii. Reinvestment of dividends

This is a great way for companies to earn extra income. Business owners can choose the types of investments they prefer, such as shares or property purchases they are interested in, but the process can also be automated.

2. Sharing access with the right people

When creating a company account, it is important to carefully determine which person should have direct access to it and when. This is especially important if the account is used for business transactions and savings. For example, the owner will need to grant the relevant manager or leader permission to use the account to purchase new equipment or pay employees.

3. Explore given interest options

Some financial institutions offer higher interest rates on deposits in certain accounts, which helps businesses earn more while saving money. According to experts, directors should explore the interest options of different banks, discuss with each other and choose one.

4. Consideration of the different functions offered

It is advisable to explore the features of current accounts at different banks to make a more informed decision. For example, while some banks offer corporate accounts with mobile banking features, others may have specified transaction or balance limits. Therefore, it is important for business owners to check if their goals match the features of the account.

5. Checking local regulations

Tax rules for current accounts may vary depending on the type of business and location. Often, companies will consult with legal experts who are well versed in tax rules to ensure that the business is fully compliant.

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