When it comes to the management of a company, there are a variety of factors that need to be considered. These factors include, but are not limited to, running the business day-to-day, and paying employees’ salaries every month. It also includes taking debt into account along with expenses when growing and expanding the business.
A current account is an absolute necessity for any kind of business. The purpose of this piece of writing is to explain what a current account is and why it is beneficial to companies.
What Exactly is a “Current Account”?
Having a separate bank account for a company makes it much simpler to record financial transactions. It also helps to manage cash flow and figure out tax obligations. A business current account allows the same depositing, withdrawing, and balancing of funds as a personal current account.
Almost all commercial banks in India allow customers to open current accounts. Business owners and entrepreneurs who do a lot of transactions can use these types of accounts to their advantage. Since this number is generally high and the amount spent per transaction can be large, interest is usually not added to the balance.
Benefits of Maintaining a Current Account
Once you know what a current account is for a company, you can start thinking about all the advantages it offers. There are numerous advantages to opening a business current account: –
- With an unlimited transaction limit, account holders no longer have to worry about how much money is coming into or going out of their accounts. Owners of accounts are free to make as many or as few withdrawals as they like. This ensures a great degree of operational flexibility for businesses.
- Maintaining financial privacy by keeping a separate bank account for business transactions is very helpful. It allows owners to keep their finances from interfering with their professional initiatives. It is much simpler to track incoming cash, which improves budgeting and planning. When it comes time to pay taxes and think about deductions, having clear and understandable financial records is a huge help.
- The business’s financial data is presented in a clear manner, making it possible to draw wise conclusions. The statement will specify the location and parties involved in the transactions. An overview of a client’s banking relationships is included in the immediate financial reports. Most banks make it available to their customers. Real-time transaction data is also provided, which is useful for making better business decisions.
- All company transactions may be handled quickly and on schedule with the help of a current account. When these transactions are completed, it is easy to maintain friendly relationships with both vendors and buyers.
- Improves credibility. Having a separate checking account for your business is a good way to establish your company’s credibility in the eyes of customers. A company that doesn’t use its current account looks unprofessional and raises doubts about its trustworthiness.
- Other perks of current accounts are like those found in traditional savings accounts. Almost all banks offer free demand drafts, NEFT and RTGS transactions, and Pay Orders to business clients. All of this is in addition to the limitless withdrawals and deposits.
Current Account Structures
Banks offer different types of current accounts to meet the different needs of their customers. When you open a current account, you must have a clear idea of the kind of transactions you intend to do. Here are some of the typical current account types that banks provide:
Standard Current Accounts
A specified monthly average balance and minimum balance requirements apply to this non-interest-bearing deposit account. Chequebooks, debit cards, an overdraft facility, etc. are all available. Other advantages may include free RTGS and NEFT transactions, online banking, SMS banking, and so on.
Current Accounts Packaged
The bundled accounts provide account holders with a wide range of benefits. Other services like roadside assistance, medical care, and travel insurance are also included.
Single-Column Cash Register
Simple cash accounts or single-column cash book accounts let you make daily transactions. But they don’t have features like an overdraft facility. It is suitable for companies without active bank accounts. It is a book that keeps track of daily transactions.
Current Accounts With a Premium
It provides exclusive discounts and benefits to account holders. The account includes a lot of customization choices. This account is suitable for people who deal with a lot of critical financial matters.
Accounting for Foreign Currencies
This account is an ideal option for individuals or enterprises that often transact in foreign currencies.
Many factors contribute to a current account’s significance for a company. Traders may rest easy knowing that their transactions will be processed accurately. Also, there is no cap on the volume of business they can conduct in a particular time frame. In case readers are wondering whether a current account is necessary to operate a business in India, the answer is no. Thus, it is recommended that business owners make use of it for the sake of smooth business operations.
A current account can be opened for them at any of India’s commercial banks. Before opening a checking account, business owners should look at what different banks have to offer. They should never let themselves get caught off guard in the future by failing to read the fine print. Business owners need to keep their personal and business finances separate. They should have separate bank accounts to make this possible. Contact Piramal if you have any doubts or need help understanding the benefits of opening a current account for your business. Piramal will guide you well and make your mind clear.