A current account, also known as Demand Deposit Account, is generally used by businesspeople who have a good number of business transactions with the bank on a regular basis. A business, whether small or big, normally does a number of transactions on a daily or even on an hourly basis. Money is continuously debited and credited and there is generally no savings in the account. A current account has an Overdraft facility that allow businesses to pay their customers and clients even when there is scarcity of funds in their accounts. This is almost like a loan but only for a very short period.
Thus it is imperative for business owners to operate a current account and ensure that their businesses function in a hassle-free manner.
The benefits of a current account are as follows:
• This account helps a businessman to carry out his transactions in an easy and time-bound manner.
• It allows a businessperson to withdraw as much as they want from their account. However, banking cash transaction tax may be levied by the government.
• An important benefit of a current account is that helps to differentiate between business finance and personal finance. Complications may arise when a freelancer or the sole owner of a business parks his/her business money in his/her personal account. This is because a sole owner is not a separate legal entity like a company. If the business transactions are carried out in a single saving account, the proprietor may not be able to gauge the state of his/her business if his/her personal finances are healthy. A separate current helps to differentiate between business finance and personal finance as it records the business income and business expenses.
• Operating a current account helps to elevate your credit standings. Creditors and other lenders often check your credit history before deciding whether to provide credit to you or not. In such cases, a letter of recommendation from your bank where you have a current account may go a long way in facilitating a loan from a creditor.
• Most banks offer services like 2 hours phone banking, door-step banking, internet banking and mobile alert services with current accounts. Sometimes, banks also provide a number of free pay orders or demand drafts and also allow a person to transfer funds instantly using NEFT, RTGS and others. Current account holders do not earn any interest and therefore banks provide a number of value-added services to current account holders.
• The overdraft facility is arguably the most important reason why a businessperson needs a current account. This facility allows a person to overdraw the balance in his account when he/she is short on funds. This is like a short-term loan and the bank may/may not levy interest on this loan.
Thus it is imperative for business owners to operate a current account and ensure that their businesses function in a hassle-free manner.
The benefits of a current account are as follows:
• This account helps a businessman to carry out his transactions in an easy and time-bound manner.
• It allows a businessperson to withdraw as much as they want from their account. However, banking cash transaction tax may be levied by the government.
• An important benefit of a current account is that helps to differentiate between business finance and personal finance. Complications may arise when a freelancer or the sole owner of a business parks his/her business money in his/her personal account. This is because a sole owner is not a separate legal entity like a company. If the business transactions are carried out in a single saving account, the proprietor may not be able to gauge the state of his/her business if his/her personal finances are healthy. A separate current helps to differentiate between business finance and personal finance as it records the business income and business expenses.
• Operating a current account helps to elevate your credit standings. Creditors and other lenders often check your credit history before deciding whether to provide credit to you or not. In such cases, a letter of recommendation from your bank where you have a current account may go a long way in facilitating a loan from a creditor.
• Most banks offer services like 2 hours phone banking, door-step banking, internet banking and mobile alert services with current accounts. Sometimes, banks also provide a number of free pay orders or demand drafts and also allow a person to transfer funds instantly using NEFT, RTGS and others. Current account holders do not earn any interest and therefore banks provide a number of value-added services to current account holders.
• The overdraft facility is arguably the most important reason why a businessperson needs a current account. This facility allows a person to overdraw the balance in his account when he/she is short on funds. This is like a short-term loan and the bank may/may not levy interest on this loan.
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