Running a business or getting your venture off the ground is both challenging and rewarding, requiring dedication, strategic planning, a keen understanding of your market, and good financial management.   While many startup owners often use their personal bank accounts for business dealings, this setup could result in future challenges and limit the potential for growth.  Opening a dedicated bank account for your business is not complicated and it makes good business sense. 

 

What is a business account? 

A business/corporate account, similar to a personal account, can be either a checking or savings account.  A business bank account operates by providing a separate account for business finances, allowing for the separation of personal and business transactions. It enables businesses to receive payments, make purchases, pay employees, and manage cash flow effectively. Business accounts may offer features like online banking, overdraft protection, and business credit cards to support financial operations.

 

Why have a separate bank account for your business?

For entrepreneurs and business owners, managing finances effectively is crucial for success. One fundamental step in achieving this is to maintain a separate bank account for your business.  This separation simplifies accounting, making it easier to track income, expenses, and profits specific to your business.

Aside from clear financial separation, here are other reasons why you should keep your personal and business finances separate:

• Boost credibility
  A dedicated business bank account enhances your business's credibility and professionalism. Clients and suppliers are more likely to trust and engage with a business that has a formal banking setup. 
• Simplified tax filing
  Having a separate bank account streamlines the process of preparing and filing taxes. It allows for accurate tracking of business-related transactions, reducing the risk of errors and ensuring compliance with tax regulations.
• Improved financial management
  A business bank account provides better control over your business finances. It enables you to monitor cash flow, manage expenses, and plan for future investments more effectively.
• Access to business banking services
  Many banks offer specialized products and services for business accounts, such as business loans, credit lines, and merchant services. These can be invaluable resources for growing your business.  Chinabank, for example, can help you with your funding requirements with term loans, revolving credit, and trade services.  It also offers corporate online banking and cash management solutions to help you manage your cash flow more effectively. 

 

Is it good to have your personal and business accounts at the same bank?

While the saying goes “don’t put your eggs in one basket”, having both your personal and business accounts in one bank has its benefits:

• Convenience
  Easily manage all your accounts in a bank that you know and already knows you.  Transferring funds and monitoring transactions will be easier and more cost efficient.
• Relationship pricing
  By having multiple accounts in a bank, you may benefit from waived fees, preferential interest rates, and more flexible services, thereby maximizing the value of your banking relationship.
• Enhanced partnership
  Maintaining your personal and business accounts at the same bank can strengthen the partnership, potentially providing increased support and leverage as your business grows.  If you need a term loan or revolving credit, you'll have an established banking relationship to get approved. 

 

What type of account to open for a business?

Choosing the right type of bank account for your business depends on your financial needs and goals.  While both savings and checking accounts offer easy access to your funds through online and mobile banking, transaction security, and PDIC insurance, each one serves different purposes and offers unique benefits.

A savings account is primarily for building a financial cushion. It is designed to help you set aside funds for future needs and emergencies.  A checking account, on the other hand, is designed for frequent transactions and daily business operations. The added flexibility of a check makes it convenient to pay suppliers, employees, and other business expenses.

For many small businesses, the optimal solution is to have both a savings and a checking account for greater financial flexibility and more efficient cash management.

 

What are the requirements for opening a business account?

You can open a business account in much the same way as you open a personal account.  The difference is the documents you need to prepare and submit.  The documents required may vary from bank to bank, but in general, you need:

1. For Business Name / Sole Proprietorship Accounts

• Certificate of Registration of Business Name with DTI
• Application for Registration with DTI
• Special Power of Authority (SPA) if the signatory is other than the owner of the business
• Certificate of Tax Exemption / Preferential Tax Treatment (if exempt from withholding tax)

2. For Partnership Accounts

• SEC Certificate of Registration
• Articles of Co-Partnership
• Partnership Resolution or Agreement duly notarized, designating the depository bank and authorized signatories
• Certificate of Tax Exemption / Preferential Tax Treatment (if exempt from withholding tax)

3. For Domestic Corporate Accounts

• SEC Certificate of Filing Articles of Incorporation
• SEC Certificate of Filing Articles of By-Laws
• Articles of Incorporation and By-Laws
• Board Resolution duly certified by the Corporate Secretary, designating the depository bank and authorized signatories
• Certificate of Tax Exemption / Preferential Tax Treatment (if exempt from withholding tax)

5. For Foreign Corporate Accounts
The following documents authenticated by the Philippine Consul:

• Articles of Incorporation
• By-Laws
• Board Resolution duly certified by the Corporate Secretary, designating depository bank and authorized signatories
• SEC License to do business/to operate in the Philippines

 

Open your business bank account today!

Business banking empowers Filipino entrepreneurs with tailored services, better fund management, and credit opportunities.  Chinabank's business accounts provide an ideal combination of security, convenience, and growth potential for local businesses. These accounts offer competitive interest rates that help your savings grow steadily while ensuring easy access to funds for daily needs through online and mobile banking, PDIC insurance for added protection, and reasonable minimum balance requirements to avoid fees. 

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