A Current Account is a Zero-balance account used by business entities to carry out their day to day business transactions. However, generally small business owners, sole proprietors, freelancers and shop keepers do not avail the current account facility and carry out business transactions from their savings account.
Here’s a list of 6 reasons why a business owner must have a current account:
1. Overdraft Facility
Overdraft as the name suggests is a facility that banks offer to their current account holders to withdraw more money than what is actually lying in the current account. Overdraft or OD helps entrepreneurs to meet various expenses, pay salaries on time even when their actual payments are delayed.
2. Separating Business Transactions
To avail all tax benefits, it’s important for a business man to separate his business transactions from personal savings account. For the ease of book keeping too, a current account statement can help you organize your income and expenditure account.
3. Professionalism
Whether you are receiving or making a payment via cheque, NEFT/RTGS or online banking, it reflects utmost professionalism to transact in your Business’ name. It leaves a good impression and showcases that you are a long term player.
4. Ease of Business
Most of the companies demand a Credit Worthiness letter from your bank before assigning you work as a small business or freelancer. Thereby, if you have a current account and good relationship with your bank then you can get recommendation for your Credit Worthiness anytime.
5. Extra Benefits
A current account is not just a Zero-balance account, it also comes with extra benefits as compared to a saving account. You can get a certain number of free Demand Drafts, Pay Orders and NEFT/RTGS transactions, apart from unlimited number of deposits and withdrawls from your current account.
6. Real Profit/Loss
Apart from the above advantages, a current account shows you the real picture of your business – whether it’s going in a profit or loss, whether you are able to meet your business expenses out of your business income or not and if you are able to make money, how much growth are you seeing quarter on quarter.
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