How to open a current account for a Private Limited Company?
To enable the smooth and easy functioning, a current account for a Private Limited Company needs to be opened. A current account is very helpful in daily business transactions, also it is required for business purposes like receiving payment or paying vendors, and conducting any financial transactions on behalf of the company. A current account is unlike any other personal account; it is specifically for business transactions. This guide takes you through the steps of opening a current account for a Private Limited Company in India-with documentation and procedures mentioned here.
Documents Required to Open a Current Account for a Private Limited Company
Check that you have all the required documents before visiting the bank to open a current account. Though this may vary slightly between banks, the following documents are generally required:
- Certificate of Incorporation
The Certificate of Incorporation is a document issued by the Ministry of Corporate Affairs (MCA) by which your company is established to be legally registered in existence as a Private Limited Company.
- Memorandum of Association (MoA) and Articles of Association (AoA)
The MoA and AoA reflect the objectives, rules, and regulations of the company. The MoA deals with the extent, area, and range of operations of the company, whereas the AoA sets out its internal regulations and management.
- Board Resolution
A resolution from the Board is an official document that is adopted by the Board of Directors of a company that permits the opening of the current account and appointment of the authorized signatories.
- List of Directors
The latest list of directors, with their Director Identification Numbers (DIN), is needed to verify that the people hold themselves responsible for the business operation.
- Permanent Account Number (PAN) of the Company
The PAN would require identification of the company for tax purposes.
- Identity and Address Proof of Authorized Signatories
The authorized signatories need to verify their identity and address. Some of the proofs accepted are an Aadhaar card, a passport, a voter ID, or a driving license and utility bills, and a statement from the bank.
- Photographs
Passport-size photographs of all the authorized signatories will form part of the necessary documents.
- Proof of Registered Office Address
It may include bills for utilities, agreements of lease, or receipts for property tax. The proof will have to be either in the name of the company or in the name of the business owner.
- Shareholding Pattern
The shareholding pattern describes the ownership framework of the company and records the particulars of individuals/entities holding more than 10% shares in the company.
- Account Opening Cheque
The documentation generally requires a cheque drawn on an existing current account or personal account of the authorized signatory. This is needed to verify the veracity of the applicant and the banking details.
Step-by-Step Process to Open a Current Account
- Choose a Bank
There are several banks one can compare in terms of many services, such as online/mobile banking, ATM access, the services offered particularly for businesses like payment gateway, bank loans, etc., charges on accounts, and minimum balance requirements.
- Visit the Bank Branch
While many banks provide online account openings, visiting a branch to drop off documents and find assistance from the business banking relationship manager is a helpful move.
- Submit Documents
Submit the necessary documents to the bank. The bank will verify the documents, including KYC checks for all authorized signatories.
- Complete KYC Process
The bank raises KYC (Know Your Customer) across facility-authorized signatories, namely identity, address, and sometimes biometric verification. Some banks might insist upon a video KYC process for this.
- Activate the Account
Your current account will be activated by the bank as soon as the verification process has been completed. There is the expectation of a checkbook, debit/credit card, as well as online/mobile banking for you.
- Maintain Minimum Balance
Most banks will provide an account with such a minimum balance so that they won’t charge maintenance. Make sure you’re aware of the specific minimum balance requirement for your bank.
Tips for a Smooth Account Opening Process
- Ensure Document Accuracy:Â Do an extra inspection on every document, especially to check the correctness and completeness. Any variance in documentation can result in delaying that document.
- Maintain Minimum Balance: Familiarize yourself with the bank’s minimum balance requirement, and be sure to maintain it or be prepared to be charged a penalty.
- Online Banking: By utilizing these online banking services, you can manage your business transactions easily and quickly.
- Regular Updates: You must inform the bank of any changes in your business particulars or authorized signatories.
Get Started with TaxDuniaÂ
Opening a current account with a Private Limited Company in India is a great beginning for every business. It builds the required mechanism for the conduct of day-to-day financial transactions and keeps the company on the legal side. You can collect the required documents and procedures for opening a current account in your company’s name and efficiently manage your business bank accounts. Reach out to TaxDunia for business advice
