As of this second, India is the third largest startup ecosystem in the world.
Many startup founders initially feel that they can manage their organisation without having a current account. However, sooner than later, they would realise they require a current account to facilitate streamlined withdrawals, deposits and other business transactions.
This article illustrates everything related to startup current accounts, including why they are a must for Indian startups. Let’s get right into it.
What is a Startup Current Account?
A startup current account is a type of bank account specifically designed for startup businesses and entrepreneurs. It typically includes features such as a low minimum opening balance, no monthly maintenance fees, and access to online banking and other services.
What are the benefits of a Startup Current Account?
Here are 5 major reasons why you need a current account for your startup:
1. Keep track and protect your transactions
Businesses need to carry out transactions of substantial value. Therefore, it is crucial that the procedure is carried out under constant monitoring. With a current account, you can get that security and safety for all digital transactions that you make, along with tracking these payments.
2. Conduct foreign transactions
Instead of having a separate account for foreign exchange, several financial institutions provide facilities with their current accounts, which are customised for startups. Startup founders can also opt for the services of an expert to guide them through the legal regulations concerning foreign investment and trade.
3. Conduct bulk payment transactions with collection services
With a current account, you can make bulk payments for your startup. Also, several financial institutions provide electronic collection services which enable one to make payments digitally through RTGS and NEFT. There is another added aspect to this as well – this collection service helps you to increase the effectiveness and efficiency of revenue collection.
4. Smart insights and ease of transactions
Current accounts are ideal for businesses to manage their transactions by accessing their accounts daily. Businesses can make informed decisions now with faster access to financial reports and other information about real-time transactions. Having a Current Account also helps in improving their creditworthiness. However, the withdrawal limits vary across the different types of current accounts that the startup founders opt for.
5. Make higher transactions without a worry
Current accounts come with a higher transaction limit in comparison to other accounts. This allows you to carry out a larger volume of transactions wherein there are no restrictions on deposit. Such flexibility proves to be very helpful in ensuring that a big-value business transaction is carried out without any hitch.
Features of a Startup Current Account
Let’s have a look at the features of a Startup Current Account.
1. Online Banking: Most startup current accounts offer online banking with easy access to account balances and transactions, as well as the ability to transfer money and pay bills.
2. Mobile Banking: Mobile banking allows customers to manage their accounts on the go, with access to their accounts from their smartphones or other mobile devices.
3. Low Fees: Startups often offer low fees and minimum balance requirements to make their accounts more attractive to customers.
4. Business Insights: Many startup current accounts offer business insights, such as real–time analytics, budgeting tools, and financial reporting.
5. Customer Support: Startups typically provide 24/7 customer support to help customers with any problems or questions they may have.
6. Credit/Debit Card: Many accounts come with a credit or debit card, which can be used to make purchases or withdraw cash from ATMs.
7. Additional Services: Some accounts come with added services such as merchant services and financial advising.
Things to consider for selecting the best startup current account
Startup owners need to consider the following aspects while choosing the best current account for startups:
Minimum balance required
A majority of banks require account holders to maintain a minimum balance in their current accounts. Businesses should check this requirement prior to applying. This aspect proves to be particularly important for entrepreneurs just starting their ventures.
Several banks provide current account holders with an overdraft facility after they are convinced of their credibility. This facility is helpful when a business faces a financial crunch. Through the overdraft facility, you can withdraw even when the account balance is zero.
Considering all these, it is vital that applicants must opt for a banking platform that offers this facility. For instance, Razorpay Capital has made it easier for startups to get financed and grow wherein they are pre-approved based on customer payments with no requirement of long customer history and a high credit score.
Generally, banks allow individuals to carry out unlimited transactions via their current account. But businesses need to note that they charge a fee when a particular transaction goes international or crosses a set limit. Businesses should check the schedule of transaction fees prior to applying for a current account. Ideally, business owners should opt for a bank that has a high free transaction limit and a low transaction fee.
Startup founders should ideally apply for a current account with a financial institution that provides a user-friendly mobile and internet banking portal. With a modern platform like RazorpayX, you’ll have the account ready in just a couple of minutes.
Such portals allow opening a current account online without visiting a branch and then instantly facilitating various core services like bill and salary payments and funds transfer with just a few clicks.
Additionally, these provide a unified dashboard that allows you to manage money from the comfort of your place. For instance, RazorpayX provides benefits of instant beneficiary addition, accounting integrations, built-in Tax, smart dashboard, payroll etc all from a single dashboard.
Documents required for opening a current account
The list of documents required for opening a current account varies across the different types of organisations. But these are the documents that new-age businesses have to submit to the concerned financial institution to become a current account holder:
- Proof of address for future communication such as electricity or a telephone bill
- Certificate of Incorporation and Memorandum of Association – applicable for companies and trusts
- Partnership agreement – necessary for partnership firms
- Residence and identity proof pertaining to all partners
- Proof of identity like Voter ID, PAN Card, Driving Licence and/or Passport
- A cheque from an existing savings account
- Colour photographs, etc.
After submission of these documents, representatives from the financial institution complete all other formalities related to account opening.
Fees and Charges of Startup Current Account
The fees and charges associated with a startup current account in India include
1. Account Opening Charges: Most banks offer startup current accounts without any account opening charges.
2. Annual Maintenance Charges: Most banks do not charge an annual maintenance fee for these current accounts.
3. Cheque Book Charges: Most banks offer free chequebooks with these current accounts.
4. Debit Card Charges: Most banks offer free debit cards with these current accounts.
5. ATM Withdrawal Charges: Most banks do not charge for ATM withdrawals.
6. Balance Inquiry Charges: Most banks do not charge for balance inquiries.
7. Statement Charges: Most banks do not charge for account statements.
8. Cheque Return Charges: Most banks charge a fee for returned cheques.
9. Fund Transfer Charges: Most banks charge a fee for fund transfers.
10. Cash Deposit Charges: Most banks charge a fee for cash deposits.
The importance of a Current Account for a business is multifaceted. Be it paying your employees, and vendors, enabling free inward remittance, or conducting other operational transactions you need a smart current account.
Be it paying your employees, paying your vendors, enabling free inward remittance, conducting other operational transactions or keeping personal assets separate from business assets, a current account is crucial for your startup.
Get RazorpayX Current Account – it’s built for disruptors like you
We know managing a startup can be hard. That’s why we created a current account that is tailor-made for startups like yours. With RazorpayX Current Account, you get:
- Easy credit: Guaranteed collateral free Credit Cards
- Powerful automation: Taxes, Vendor Payments, Payroll and more.
- Smart Dashboard: Manage inflows and outflows seamlessly
- Forex Services and more
- Integrated access: Access via desktop, mobile or your smartwatch.
1. How to update GSTIN in a current account?
You can update Goods and Services Tax Identification/ Registration Number (GSTIN) in your current account by either visiting a bank branch or updating it online via internet banking.
What is Monthly Average Balance?
Monthly Average Balance (MAB) refers to the average of day end balances in an account for every day in a month.