Since many consumers now use mobile phone apps as ewallets, entrepreneurs who want to keep payment methods simple ask if having a bank account is still relevant? The answer of course is yes, maintaining a bank deposit account is still relevant and in certain cases a business requirement.
What Kind of Business Requires a Bank Deposit Account
A business organization registered as a Limited Liability Company (LLC) or as a corporation is required to maintain a bank account. A business bank account serves as a means of maintaining control over the funds derived from business operations and over payments of business expenditures and obligations.
Any shift or transfer of large amounts of funds to another account, for reasons not related to the ordinary course of business, will require a board resolution certified by the Corporate Treasurer. Business deposit accounts usually require two authorized signatories as internal control measures.
Banks will approve the opening of a business deposit account subject. Approval of account opening is subject to the submission of specific documents, such as business licenses, permits, trade name certificate, and certificate of registration with the Securities and Exchange Commission (SEC).
In addition, banks require copies of Articles of Incorporation and By-Laws approved by the SEC. The designated depository bank and the authorized signatories will have to be named in a board resolution that will also be furnished as part of the requirements.
Why Solo Entrepreneurs or Single Proprietors Need to Have a Bank Account?
Unlike LLCs and corporations, entrepreneurs registered as solo or single proprietors, are not required to maintain a bank deposit account. Although it’s also a best practice to separate business funds from personal funds by using a bank deposit account to physically segregate personal funds and expenditures.
Moreover, single proprietors need only to submit proof of municipal licenses, permit and business trade name certificate. An entrepreneur will find it easier to organize and manage finances because banks provide a breakdown of transactions related to the movement of funds held in a bank account. Actually it simplifies the bookkeeping process, especially for taxation purposes.
A business bank account whether for LLCs, corporations or single proprietors, may be in the form of a savings account, which in some cases are linked to a checking account. Nowadays, businesses no longer have to issue checks as payments since instant payments by way of interbank fund transfers are now possible. This modern banking system enabled many businesses to eliminate the need to issue checks in completing a business transaction.
Nonetheless, some business organizations still prefer to issue checks as a way to maintain a paper trail in addition to digital trails. Besides, it also makes their business organization look more professional, especially when applying for a loan or credit line.
Actually, only a few people personally visit a bank since nearly all transactions can be carried out and completed by way of a bank’s mobile apps.That being the case, most bank customers don’t even know at what time their bank opens in case they need to visit. No worries though, because a website can provide that information as well as the address and landline number of your bank.