Ecommerce essentials – a Current Account; Here’s how you can create one

A current account is the preferred bank account when doing business. Even ecommerce related business! It is a deposit account just like your savings account. However there is no limit on the number of times or amount you can withdraw from or deposit into this account. Also there is no restriction on the amount withdrawn from this account, provided you have the required balance in your account.

These basic benefits of a current account make it the most liquid account banks offer. They are used to facilitate heavy transactions like bulk purchases and salary payments. Unlike a fixed deposit or savings account you do not earn any interest from this kind of account.

Be Cautious

NOTE: In some cases banks may charge a small fee for current account facilities. Before opening a current account research a couple of banks to know how much they charge per transaction and how many free transactions you are entitled to per month.

Requirements for a Current Account

To open a current account one needs to complete at least 14 years of age. The account can be opened by a public limited company, private limited company, sole proprietorship, partnership firm, association, club or trust. The initial deposit for this kind of an account ranges from Rs. 5000 to Rs. 25000. It will depend on the bank you open your account at.

What do you need to set up the account?

Step – 1 Application form

Collect the current account application form from the bank you prefer and fill out the details requested.

Step – 2 Submit proofs

A] Photographs

Submit passport size photographs of all the account holders. For example, all the proprietors in your business, active partners, office-bearers, directors or trusties.

B] Proof of identity

For proof of identity you must submit copies of either, your PAN card, voter’s id, driving license of passport.

C] Proof of address

Submit your latest electricity or telephone bill.

D] Business documents

In case of a Proprietorship

• Latest passport-size photographs of all authorized signatories

• PAN or GIR No.

• Letter of proprietorship signed by the proprietor in his or her individual capacity

• Certificate from the State Government or a Statutory body or trade license or sales tax certificate or shop and establishment certificate

In case of a Hindu Undivided Family (HUF)

• In case a Hindu United Family (HUF) business you must submit a letter signed by the Karta and all the Co-Parceners

• Along with their names and residential address

• PAN or GIR No.

• Latest passport-size photographs of all authorized signatories

• Letter of proprietorship signed by the proprietor in his or her individual capacity with rubber stamp from the HUF

In case of a Partnership

• Letter from all partners approving the person selected to open and run the account

• Partnership deed and registration certificate

• Shop and establishment certificate

In case of a Public or Private Limited Company

• Memorandum and Articles of Association

• Names of all the directors and their respective residential addresses

• Certificate of incorporation and commencement of business

• PAN or GIR No.

• Copy of board resolution authorizing a representative to open the account and run it

In case of a Trust

• Registration certificate copy

• Names of all the trustees and their residential addresses

• Trust deed copy

• Photographs of the persons operating the account and association or club

• Copy of resolution by trustees authorizing a representative to open the account and run it

• Copy of board resolution authorizing a representative to open the account and run it

• The association or club’s by-laws

Step – 3 Additional step

This is an additional measure that you can take when opening a current account. Submit an introduction to the bank. You can obtain it from an existing account holder in the same bank. This person’s account should be at least six months old with its KYC compiled.

Maintaining a current account is essential when it comes to doing business. It contains highly liquid funds and is perfect for receiving large payment amounts. In addition to this you can avail of specialized banking features like overdraft facilities and easy banking. The account also allows you to separate your personal transactions and savings from your sole proprietorship business finances.