A checking account is a bank account that a legal entity or an individual entrepreneur opens for conducting non-cash banking procedures, such as cashless payments, invoicing other legal entities, purchasing goods from suppliers, and much more.
The purpose of payments distinguishes the checking account for entrepreneurs and legal entities from the bank account of an individual. To identify the client, the bank assigns him/her an individual account number. For a company, a number is an important part of bank details.
A checking account is an exceptional number of digits that allows the bank to identify the customer.
Why you need a checking account
First of all, a current account your business opportunities expand: the list of potential counterparties will increase, and you will get the opportunity to participate in tenders.
Also, the head of the company will be able to use additional banking services:
- connect acquiring – to be able to accept payments from bank cards;
- transfer salaries to employees’ cards without unnecessary spending;
- submit the proceeds to the bank and store it in a non-cash account;
- availability of overdraft, loans of various types;
- pay taxes;
- connect to the “Currency control” service;
- carry out international operations;
- manage your business remotely.
You cannot work with an LLC without a checking account. There is such an opportunity for individual entrepreneurs.
Opening a checking account for an individual entrepreneur in a bank will be relevant for you if:
- The amount of payment under one agreement is very high;
- You want to receive payment by cards. More and more customers pay with cards because it is convenient and fast;
- You pay taxes and contributions to government funds.
What can you use a checking account for?
A checking account can be used to perform the following operations:
- Replenish an account;
- Withdraw cash from the account. Withdrawal fees depend on the specific tariff;
- Transfer money to legal entities and individual entrepreneurs. To do this, you need to create payment orders. Almost all current banks that provide cash settlement services provide an opportunity to make payment documents online, which is much more convenient and faster;
- Mandatory tax payments;
- Transfers to individuals. If you are an entrepreneur who does not have subordinates, then you will be able to transfer the proceeds to a card that will be issued as an individual;
- Be able to receive non-cash payments from individuals and legal entities.
Cons of opening a checking account for LLC and sole proprietor
- Payment for maintaining an account. Each checking account has a fixed amount that a sole proprietor or LLC must pay on a monthly basis. Each bank has a different amount of payment for maintaining a current account. IMPORTANT! If there were no money movements on the account, then the bank does not take money for maintaining the account;
- Arrest of the current account. The tax office has the right to block your current account if you have debts in taxes and contributions. If a sole proprietor or LLC has several checking accounts, then all of them are blocked and then you have to make efforts to open them;
- Bank bankruptcy. If you have opened an account in an unreliable bank, then it can simply go bankrupt and all the money of the organization and the entrepreneur can burn out, so use the services of only well-known banks.
How to open a checking account?
In order to open a checking account, you need to contact the nearest bank branch or apply online.
Let’s consider the first option:
- This item will be relevant for both the first option and the second. At the initial stage, you choose a bank. Things you need to consider: the needs of your firm (you need to make a list of the services you need to run your business), tariff plan (pay your attention to the cost of monthly maintenance, commissions for various operations), customer reviews (study the reviews on the Internet about the bank that interests you), bank’s daily schedule, number and in-store locations of the bank, bonuses, quality of customer support;
- Contact the bank branch and get advice;
- Collect all documents;
- Take them to the bank;
- A couple of days later, visit the bank again and sign the agreement.
- Select a bank;
- Submit an application for opening a checking account. Provide the required data in the application;
- A bank employee will call you back and tell you about the conditions and basic tariffs. They will also tell you what documents you need to collect;
- You collect documents and transfer them. The bank manager will come to your office at a convenient time for you;
- The bank will check the documents. If everything is ok, a contract is concluded.
Checking account service fee
- Cost of monthly account maintenance. Individual banks reduce their cost if the client pays for the service in advance;
- Commission for transfers. A certain number of payments are included in the service package, while the rest are paid separately;
- Cash out and replenishment. The commission is taken as a percentage of your amount.