A current account is a kind of deposit account, ideal for those people who need to carry out a large number of transactions with the financial institutions regularly. This financial account is created by the authorized banks, at the request of the applicant, if the applicant meets the current account eligibility. This account becomes available for immediate access immediately after it is created. Current account deals with the liquid deposits and to help your business it offers a range of options. Also, the banks offer a cheque facility for the current account holders, and you can pay the creditors via cheque. Usually, there is are current account interests and the minimum balance required to maintain a current account is a bit higher than the normal savings account. The most important benefit of having a current account is that you can avail the facility of overdraft up to a predefined limit.
Here are some advantages of having a current account to facilitate all the business requirements:-
- Business finance and Personal Finance is Segregated:-Unlike a company, a sole proprietor or a freelancer is not legally a different entity from his or her business. But the bank accounts need to be separate to make the better planning of the business and to get a better view of the progress of the business. If there is only one account, then the person may not determine whether the company is running on a loss or not. To record every transaction of the business separately, it is better to have a current account for the business purpose.
- Professionalism in business:It is very vital to maintain out-and-out professionalism when you are dealing with business acquaintances. In this way, you can enhance both your image as a businessman and the growth of your business. You can achieve this easily with a current account as all the cheques issued by you for the payment will bear your name. It also somehow reflects your seriousness and passion for the business.
- Credit Worthiness:-To import or export or to prove your eligibility to the creditors or lenders, you must show your credit worthiness. If you have a current account, the bank will issue a letter on behalf of you which will guarantee your credit worthiness and the other parties can check that further via inter-bank connections.
- Overdraft:you can avail this facility easily if you have a current account. If there is any short-term need for money to compensate the shortfall of funds then you can just overdraw the balance temporarily. This is not available with a savings account.
- Smooth banking transactions: Bank offers facilities like phone banking at any time, internet banking, doorstep banking, multi-location transfer and mobile alert services to all the current account holders. More to that, the account holders can enjoy benefits like free pay orders and demand drafts to transfer the funds instantly as per requirement.
Because of all these, business entities open current accounts to carry out the huge banking transactions. As some people find it to be elaborate and cumbersome, the current account is not preferred by the freelancers or sole proprietors.