In order to maintain a proper financial record of your business, you need a separate bank account to manage its funds. The corporate bank account can be utilized for tracking the money which is to be paid to the creditors, managing cash balance, creating profit and loss statements based on the funds owed to the business and the payrolls which are yet to be paid to the employees. All these activities can be hard to keep a track of which makes it absolutely necessary that all businesses must have their separate bank account and preferably also an accounts department to help you through this tedious process. Moreover, proper financial documentation also helps with filing for taxes and applying for loans in the long run too.
The banks treat business accounts differently than personal accounts and offer various benefits for opening a business or a corporate account in their branch because of the high volume of money transactions over the course of time. This is a mutually beneficial deal, which is why banks typically nominate an employee from within to manage a business account throughout. However, this doesn’t mean that without him you won’t be able to operate the account but having a nominated person from the bank can often help you bypass a number of tedious procedures.
The first and foremost step is identifying which bank account you want to open your business account in; this question is often answered based on the rates of interest and profit being offered by the bank. It is advised that you should consult a financial advisor or contact an agency such as ourselves for proper and vetted information.
Business Account and Its Importance
As mentioned beforehand, having a dedicated account can help you tremendously whether it’s making payments or receiving them. Over the course of time, you will develop a good credit history which is often important when looking for new investment opportunities or applying for loans at good rates. However, let’s look at all the reasons why it is important to have a dedicated business account.
Once your business scales, it becomes a very difficult task to manage your expenses and keeping track of them. If you have a financial team then giving them limited access to this account could be a wise decision as everything will have an official record, which can be tracked from home with just the bank’s mobile application. This is a great model as it enables you to remain on top of your finances without getting into the details too much regarding the expenses or the expenditure.
Similar to tracking the expenses, the cash flow will enable you to understand the ins and outs of the money which is being maintained in the business account. This can also help you in making better business decisions as you will have a clear outlook as to how much the net income, expense, and profit; this record can be obtained monthly, quarterly, bi-yearly, or annually. This gives a lot of power to the business owners in taking full control of their cash without having to understand the depths of the financial field.
Calculating the Tax
Ask any business owner who has not maintained a good financial record, they will all tell you the filing the taxes can become ten times harder. If you have a good financial team then through this business account, they can easily calculate the tax liabilities and maintain transparency when it comes to tax-related matters.
The banks normally look at the financial background of the organizations once they apply for loans and if you have an account that is perfectly maintained and you have filed the taxes as well then it becomes that much easier to successfully apply for a loan application and actually getting it. The banks have strict rules and regulations but they can be met if everything is maintained with transparency.
Irrespective of where you do business, having a bank account that accepts global payments can be a very useful thing. You will be promoted right then and there when you have received a payment successfully without having to leave the comfort of your home or your office. This is one additional value a corporate or a business account provides which has been highly underrated.
In order to create a good brand image, it is always a good idea to have a corporate account as clients and customers are always much more inclined to make payments to the official name of the organization rather than an owners’ account, which they might be unaware of. It helps to reinforce the professional approach and can further your brand value as well.
Accurate Book Keeping
In case you opt for your personal account to be linked with your business then after some time, you will have trouble distinguishing between personal and business payments. This can cause confusion and ultimately lead you to either make a mistake or waste time looking over the bank statements for payment confirmations. This is why it is a good idea to keep your personal and business accounts separate; it will help you with everything.
Benefits of Opening a Business or a Corporate Account
Depending on your business, its model, and your payment structure, you will first have to identify which type of business account you are looking to open; it can either be a savings account, checking account, merchant service account, or credit card account. Normally, the higher your business transactions are, the more benefits and incentives you will be qualified for from the parent bank.
Here are some of the features and benefits of opening a business or a corporate account in the United Arab Emirates (UAE).
- Your personal and business-related funds will be kept completely separate, allowing you protection on personal liability.
- Customers can directly deposit the money to your bank account which you can monitor online.
- You can nominate an employee who will be legally allowed to handle the financial matters on your behalf, which can be tracked at any time you want.
- The credit-card accounts can ultimately help you in making big start-up purchases thanks to a good credit score history.
- Organizations, based on their line of credit, can purchase new equipment instantly despite not paying the money upfront themselves.
- UAE offers the most competitive interest rates or profit rates in the region. This might differ slightly for Islamic Banking.
- Through the Business or Corporate account, you can make international remittances.
- In addition to UAE Dirham, you can open your account in whichever global currency you desire.
Banks For Business Accounts in UAE
There are a number of UAE banks that offer the facility of opening a Business Account. However, in our opinion, the following list of the banks are the best in the business and should be primarily considered.
|Bank Name||Minimum Deposit|
|Dubai Islamic Bank||50,000 AED|
|Abu Dhabi Islamic Bank||5,000 AED|
|Mashreq Bank||50,000 AED|
|RAK Bank||25,000 AED|
|Commercial Bank of Dubai||15,000 AED|
Almost all the banks mentioned above offer competitive interest rates, the option to select multiple currencies, a checkbook facility, free debit card, e-statements, online banking, and much more. However, if you are looking to have some additional questions answered then feel free to contact us and we will answer all your queries and give you the best decision for your business progression.
Documents Requirement for Business Bank Account
The banking sector in UAE is extremely reliable and one of the reasons for that is because they always complete their due diligence and screen all the applications for opening a business bank account. Although it can be a long process but granted what is at stake, it is completely understandable why the process can take time. Here are some of the requirements you will have to fulfill if you are to open a corporate bank account in Dubai.
|Identity and Address Proof||
|Documents Related to Business||
It is worth mentioning that these are just the basic documents that will be required whereas the banks reserve the right to ask for additional documents and information such as updated CVs of all the shareholders and the nominated director(s). Furthermore, the bank might also ask for bank statements from one or more partners. In order to complete the registration process, all of the required documents must be submitted to the bank for verification purposes.
Now that we have discussed the documents required for the business bank account opening, let us look into what the bank expects from you once the account has been opened as there are some prerequisites and rules that they expect to be fulfilled.
- The bank will require the business to maintain a minimum amount of money within the account on a monthly basis.
- Some banks often require businesses to have both savings and checking accounts. Following this, the business account will be opened.
FAQs about Business Bank Account
|Q. How many corporate entities exist in the United Arab Emirates?
A. There are a total of five different pathways through which corporate establishment can be applied for namely:
|Q. Can a foreign company open a business account in the UAE?
A. Yes! UAE offers great services to foreign company owners and investors, which is one of the reasons why the business has attracted such attraction in the last couple of years.
|Q. Does a limited company require a business bank account?
A. Yes, if you own a limited company then you must have your personal assets separate from your business activities. It is important because your business is considered as a separate legal entity.
|Q. What are the different bank account types?
A. There are a number of different bank account types but the most prominent and used ones are as following:
Riz & Mona Role
Riz & Mona consultancy provides you the best services and helps you through all the procedures. The company was set up with the intention to make all the business owners aware of all the challenges that are normally faced by every entrepreneur in the UAE. Our company has qualified professionals who will guide you from the base steps such as company establishment to applying for different licenses to help you get your business off the ground. Contact us for more information and we will be happy to guide you on Bank Account Opening!