6 Benefits of Opening a Current Account | Best Advantages of Current A/C
6 Benefits of Opening A Current Account
A current account is a type of account that is normally opened by sole proprietors, business partners or business entities that have huge and regular transactions with the bank, because of its unique features and flexible nature. It is a zero interest account but you can do unlimited deposit, withdraw and contra transactions as there are no limitations about the no. of transactions to be done with a current account. There are many advantages of a current account that you might be depriving yourself of, so here we are with the 6 best advantages or benefits of having a current account or already having one.
It Helps To Distinguish Business Finance from Personal Wealth
Business holders intertwine business and personal funding pretty often. As a business owner it is tempting to blur the lines between the business and personal expenses. After all you are your business. But mixing up the two will cause a major problem for you at the time of paying tax. You may not think this through and use personal assets for startup capital but if your future involves you making profit, the IRS (Indian Revenue Services) are going to want its share. In order to separate current account in which business and revenue expenses are recorded helps you distinguish the financial assets of your business and your personal wealth. By doing so, you are not only able to plan better from the financial aspect but also you can understand the financial position of your business in a much better way.
Clear and Sophisticated Working in Business
Professional office manners are necessary for the long-term success of a business, whether it is a big company or small business. The majority of prospective investors will want to see a sophisticated business preparation and a sense of professionalism before they consider backing your business. Having a current account indicates your sincerity in carrying out the business, as a current account by the name of your business entity will help you achieve that sense of professionalism in your business.
Ability to Prove Credit Worthiness
The valuation performed by the lenders that determine the chance that you may default on your debt obligations by considering the factors such as your credit score and reimbursement record. Having a current account by the name of your business may help in facilitating this process. Credit worthiness can be checked using interbank relations. You may also need to issue guarantee/letter of credit to foreign counter parties if you are into any kind of import/export business and having a current account with a well reputed bank will help by making this process easier and setting up your creditworthiness among the investors.
Benefit of Overdraft Facility
Another important benefit of a current account is the overdraft facility. Overdraft facility is a kind of credit agreement made with a financial institution that permits you, to extract more than you have in your bank account, up to a pre-specified maximum value, without any sum of interest to be paid. This kind of facility is not available in a savings account.
Easy Cash Transfers
A current account offers much more benefits than a personal savings bank account can provide. Value added services at no added charge are offered to current bank account holders and banks prefer to open current account for their customers as a current account does not offer any kind of interest to the account holder, but a lot of extra facilities such as 24 hours phone banking, door step banking, internet banking and mobile alert services, certain number of free pay orders / demand drafts and the facility to transfer funds instantly using NEFT/RTGS etc. Free inward remittances, deposits and withdrawals at any location, multi location transfer, periodical statements and personal account is like an essential part of a business that has several other benefits too and is very important while running a business.
So a current account gives you a general picture about the health of the business organization. It is accessible to the account owner “on demand” and is accessible for recurrent and instantaneous access by the account holder or to others as the account holder may direct. Being a businessman you would not want to deprive yourself o all these benefits offered altogether in a single bank account.
Absolute Control on Overseas Finances
A current Account also offers you some perks in the case of overseas finances as it lets you relocate your earnings to abroad conveniently with absolute security. You can repatriate the funds held in the account along with the interest earned at any point of time and you don’t even have to pay tax on the interest amount. With a host of direct banking channels available at your fingertips, you can stay in complete control of your hard-earned income abroad.