Do you need a business bank account to open a business?
Having access to tools and services that help your business grow is always a good idea.
When you first start a business, perhaps as a side hustle, it may seem easier to run all your income and expenses through your personal account. You might think you are saving on costs, but instead you could be limiting the growth of your business. For a start, a business bank account in the name of your company communicates serious intentions to prospective clients. It sends a powerful message that your business is more than a hobby.
A dedicated business bank account is a more professional way to manage your company; it makes your accounting easier and offers a range of benefits to strengthen and develop your business – whether you’re a sole proprietor or your business is a close corporation or limited company.
A business bank account is also essential when you’re in a business partnership. You’ll want to keep your personal finances separate from the partnership finances. If you do that, the partners have access to the business accounts to make the necessary transactions, but nobody has access to anyone else’s personal accounts.
A business bank account comes with convenience and credibility
Your business bank account is one of the most important enablers of your business, because it means you can account for all transactions: tracking the cash balance, money owed to the business, money the business owes to creditors, and payroll paid to employees. This is important throughout your business year, but especially at tax time, when you are adding up your tax-deductible business expenses.
Your business bank account also gives you access to a relationship banker dedicated to supporting you and helping your business aspirations along. The way you manage your personal accounts contributes to your personal relationship and credit history with the bank; similarly, your business account is a route to building a profile for your business as a reliable client with a good credit score. In the long run a responsibly managed business account will help you cement the relationship you have with the bank and make you eligible for more products and services that can help your business thrive, such as funding.
Requirements for opening a business account
Nedbank makes it easy to open a business bank account, which is the core of the banking relationship. You will need the original, green-barcoded IDs or smart IDs of all company directors. If you have a registered company, you will need the company’s registration details (CK2) to get a business account in the company name. If you stay unregistered as a sole proprietor, the account will be in your name, as you are personally responsible for the business.
You can choose between the following Nedbank business accounts: Startup Bundle, Business Pay-as-you-use, or any of the Business Bundles. Though functionalities of these accounts differ in line with their monthly fees, all of them enable you to link to a cheque or credit card, receive notifications and join the Greenback programme. See your business account options.
Managing your business bank account
If there is more than one director in a company, you can assign one person in the company to manage your business finances. If required, though, each director can own authorised bank cards for the business account. It’s essential that everyone with a company card uses the business account responsibly, and makes only business-related transactions on their cards. Avoid overdrawing your business account, or exceeding your overdraft, and maintain enough cash flow to cover any business expenses on the account.
Make sure to use your business bank account regularly once you’ve opened one. If an account is not used for a long time, it could become dormant. Used well, a business bank account can help you establish a financial track record that makes you eligible for credit when you need to expand.
