Banks in India usually offer different types of accounts to their customers. One of these is a Current Account. This account is typically for those with a very high volume of transactions. For startups in the country, opening this account is generally seen as an essential step in their journey towards operational efficiency and managing their finances.
Let us explore why opening one is compulsory for startups. Here are also the factors to consider when opening a Current Account.
Overview of Current Accounts
A Current Account is a versatile banking tool. It is a Deposit Account suitable for entrepreneurs, businesspersons, and professionals. These people can use this account to seamlessly manage their monthly and daily cash flow. They also need not worry about the limit on the number of transactions. Current Accounts are meant to conduct business and are usually designed to encourage businesses of multiple sizes.
When you open a Current Account, you should know that, nowadays, banks may offer different variants of this account customised to the requirements of multiple sectors and organisations. Sometimes, banks might also allow a Zero-Balance Current Account opening for specific customers.
Reasons why startups need to open a Current Account
The reasons that make it compulsory for startups to open a Current Account and its effects include:
- A dedicated platform
When startups open a Current Account, it offers a dedicated platform to help them manage their daily financial activities. These include conducting business transactions, receiving payments, etc.
- Boosts credibility
When startups open Current Accounts in the name of their business, it increases their credibility. It also instils confidence among investors, customers, and suppliers.
- Legal requirements
According to RBI guidelines, businesses engaged in commercial activities must open a Current Account to carry out their economic transactions. This also includes startups. In addition, the Companies Act, 2013 highlights the importance of maintaining a separate account for business transactions. This necessitates opening a Current Account for startups.
- Ensures regulatory compliance
When startups open this account, it ensures they comply with regulatory and legal obligations, like maintaining financial records and filing taxes.
- Provides specialised banking services
A Current Account usually offers a startup specialised banking services tailored to its business requirements. These typically include Online Banking, Overdraft facilities, and more. This helps streamline their financial operations.
Aspects to be mindful of when opening a Current Account
Before you open a Current Account, check the following factors:
- Minimum balance
- Terms and conditions associated with the account
- Fees and charges
- Overdraft facilities
- Reputation of the bank
- Digital services
- Customer service
- Eligibility criteria
Conclusion
For startups in India, opening a Current Account is a regulatory obligation. The decision to open this account is also vital in their journey towards financial management and operational efficiency. Such an account offers various benefits. However, choosing the right one is vital in your financial journey when opening such an account.
