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As of 2022, India is the third largest startup ecosystem in the world.
Many startup founders initially feel that they can manage their finances without having a current account. However, sooner or later, they realise that they require a startup current account for streamlined withdrawals, deposits and other business transactions.
Here’s a tell-all piece on current accounts, and why they are an absolute must for Indian startups.
What are the benefits of a current account for your Startup?
Here are five major reasons why you need a startup current account:
1. Transact securely and track your money movement easily
Businesses need to carry out transactions of substantial value. Businesses carry out a large volume of transactions every day, many of which involve substantial sums of money. Therefore, it is crucial that the transactions are carried out securely, and are well-documented. . A current account allows you to transact securely while enabling you to track money movement effectively.
2. Transact in foreign currency
Instead of having a separate account for foreign exchange, several financial institutions provide forex facilities with their current accounts, which are customised for startups. As a startup founder, you can also opt for the services of an expert to guide you through the regulations around foreign investment and trade.
3. Make payments in bulk, and collect your dues with ease
With a current account, you can make bulk payments for your startup. Also, several financial institutions provide electronic collection services which enable you to collect payments digitally through RTGS and NEFT. This, in turn, helps you increase effectiveness and efficiency of revenue collection.
4. Make informed business decisions
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 transactions in real time. Having a Current Account also helps in improving their creditworthiness.
A current account gives you a clear view of your transactions, expenses and incomes, thereby helping you make informed decisions about your business.
5. Transact without worrying about limits
Such flexibility proves to be very helpful in ensuring that a big-value business transaction is carried out without any hitch.
A current account gives you the flexibility to deposit and withdraw money as many times as you need, with no cap on transaction amounts. This helps ensure smooth money movement and timely payments to all your stakeholders.
How to select the right startup current account
Here’s what you should consider while choosing a startup current account:
Monthly Average Balance requirement
A majority of banks require account holders to maintain a monthly average balance in their current accounts. Maintaining a monthly average balance enables you to be eligible for multiple business banking benefits, for e.g: free cash deposits, DD benefits and so much more.Make sure you check this requirement before applying, especially if you are an entrepreneur just starting your venture.
As a current account holder, you would be eligible to opt for the overdraft facility, if your bank is convinced of your creditworthiness. This facility can come in handy if your business faces a financial crunch. With the overdraft facility, you can withdraw even when the account balance is zero.
Generally, banks allow individuals to carry out unlimited transactions via their current account. However, banks charge a fee for international transactions, or when the number of outward transactions (also called payouts) in a period exceeds a predetermined free-transaction limit.. Make sure you check the schedule of transaction fees prior to applying for a current account. Ideally, you should opt for a bank that offers a current account with a high free transaction limit and low transaction fees.
Robust online banking infrastructure
You should apply for a current account with a financial institution gives you a user-friendly mobile and internet banking portal.This way, your need for going to bank branches for simple tasks will be reduced greatly, leaving you time to focus on running your business.
Documents for opening a current account
Banks usually demand several documents for KYC while opening your current account. Document requirements may differ slightly from bank to bank. Ensure that you have all the documents – general and specific to the bank you want to open your account with – handy for account opening.
Here is a list of general documents that you will need, regardless of your type of business and the bank you want to open your account with:
- Address proof: any one out of Aadhar card, voter ID card, rent agreement, electricity bill, telephone bill, water bill, passport, driving license
- Identity proof: any one out of PAN card, passport, voter ID card, driving license, aadhaar card
- Business registration proof or incorporation certificate
- PAN of the entity
- Latest passport size photo
- Account opening cheque from an existing bank account
- You must submit KYC documents for all the authorised signatories of your business.Please note that, based on your type of business (sole proprietorship, partnership, company and the like), you will need additional documents for account opening. You can find a comprehensive list of current account opening documents for different kinds of businesses here.
- Once you’ve submitted your documents, representatives from the financial institution will take you through the next steps of the account opening process.
The RazorpayX-Powered Startup Current Account: built by disruptors, for disruptors
Running a startup can be hard – but money movement doesn’t have to be. We, at RazorpayX, have built a current account that is for startups like yours, so you can focus on growing your businesses without ever having to worry about your money.
With a RazorpayX-powered Current Account, you can:
- Pay your vendors accurately and on time with intelligent Vendor Payments, armed with OCR-based invoice scanning and payments that you can schedule in advance
- Automate payroll and statutory compliances end-to-end and execute them in 10 minutes with RazorpayX Payroll
- Enjoy the most seamless payouts experience in India with RazorpayX Payouts
- Add beneficiaries just the way you add contacts on your phone, and start transacting immediately without waiting out a cooling period
- Make informed decisions with smart, real-time insights and reporting from your RazorpayX dashboard
- Bank on the go with the RazorpayX mobile app, and make, approve or reject payouts on your Apple Watch
…and a whole lot more, like 250 free payouts every month!