Importance of Current Accounts for Entrepreneurs

A current account is an active bank account that remains operational all day long. This makes it ideal for businesses, especially since there is not upper limit on the amount that can be transferred into or out of the account per day. These accounts support frequent transactions, which is why they are generally used by firms, institutions, government bodies and even societies. To better understand how current accounts work, here’s a look at some of their salient features:

1. Non-Interest Bearing – Since these accounts are generally used to hold large amounts of money, banks do not offer interest to the account holder. The amount that is held in the bank will not earn interest.

2. Overdraft Facility – Banks provide credit, or allow account holders to hold an overdraft for limited periods of time.

3. Statement of Accounts – The bank will provide you with a statement of accounts at regular intervals. You can use this to keep a track of where the funds are going.

4. Ledger Folio Charges – To maintain current accounts, banks will often levy a charge known as a ledger folio charge. It’s important to note that certain institutes to not charge any maintenance fees.

Given the above features, it’s evident that currents accounts have been designed to cater to the needs of entrepreneurs who have a heavy cash inflow and outflow. If you aren’t too sure about why you need to open a current account for start-ups, here’s a look at all the benefits you can enjoy with one of these accounts:

Unlimited Transactions – Most personal savings accounts have a limit on the amount of money you can withdraw or deposit per day. On the other hand, these accounts allow you to make as many transactions as necessary through the course of the day. This means that you can receive as many payments as required. These accounts also allow holders to issue financial instruments likes cheques, demand drafts, and pay orders directly to the creditors.

Cheque Collection – While you’re busy managing your fledgling business, you may not have time to visit the bank during working hours to deposit cheques. This is precisely why most current accounts allow a cheque collection facility. An authorised individual from the bank, generally your account manager, will come and collect cheques from you and deposit them as required.

Easy to Separate Personal & Business Accounts – For tax purposes, it’s vital that you separate your personal and business expenses. By maintaining a separate account just for your business, you’ll easily be able to organise your company income and expenditure.

Professional – When you’re receiving payments from clients, or issuing payments to your vendors, it looks good if you make all the transactions in the name of your company. It also shows that you’re committed to your business and plan on sticking around for a long time.

As an entrepreneur, it’s important that you get all your finances in order. You can easily open a current account online and start enjoying their benefits as quickly as possible.