Every business needs a bank account. All businesses, even cash-based ones, will need a bank current account to receive payments from customers and to pay suppliers. Opening a business bank account also helps you keep your personal finances separate from your business so that you have a clear picture of your business’s financial position.
How Do I Open a Business Bank Account?
The process for opening a bank account depends on whether your business is a sole trader/partnership or a limited company.
While it is relatively simple for sole traders operating under their own name to set up a business account, sole traders and partnerships operating under a name that is not their true name/s will need to provide the bank with evidence of the Registration of Business Name. Partnerships should also provide information on the partners and the partnership, including the partnership agreement.
Banks will also seek information on any other beneficial owners of the business. Information required will include proofs of identification and proofs of address for all relevant parties.
A limited company must pass a resolution of the Board of Directors to open a bank account. Each bank will have its own mandate form, which authorises the bank to carry out the instructions of the directors regarding the operation of the account, such as who is permitted to carry out bank transactions on behalf of the company. This form will include the wording of the resolution which the board must adopt.
The mandate form should be completed and signed by each person authorised to carry out transactions, then returned to the bank with specimen signatures from each of the people authorised to make payments on behalf of the company.
The bank will also need to see the company’s Memorandum of Association, Articles of Association and Certificate of Incorporation, as well as evidence of the Registration of Business Name, if the account is being opened in a name other than the company’s registered name. The bank will specify if it needs a copy or original of the relevant documents.
Banks will also seek information on the beneficial owners of the company, i.e. those who own or control 25% or more of the shares or voting rights of the company. Information required will include proofs of identification and proofs of address for all relevant parties.
Opening a Bank Account – Checklist
To open a business bank account you should have the following to hand:
- Details of the beneficial owners of the business – i.e. those who own or control 25% or more of the shares or voting rights of the business
- A completed bank mandate form
- Specimen signatures for all those who will authorize transactions on the company’s bank account
- The Memorandum and Articles of Association (limited company only)
- Certificate of Incorporation (limited company only)
- Certificate of Business Name (if the business is trading under any name other than its true name/s)
- Cash or cheques to lodge to the new account
- Proofs of identification and proofs of address for all relevant parties.