How to Open a Current Account for a Private Limited Company?

A popular type of company that is managed by the Ministry of Corporate Affairs is a Private Limited Company. A Private Limited Company is a kind of privately held firm in which it is illegal for the company's shares to be exchanged on the open market. A Private Limited Company (PLC) must have a minimum of 2 and a maximum of 200 members as per the Companies Act of 2013. In seven working days, a Private Limited Company can be registered.

The next step once the company is registered is to open a current account in a bank in its name. Businesses cannot utilise normal savings accounts. It is essential to open a current account to get around transaction limits. As soon as they launch their businesses, all business owners open a current bank account. Unlike savings accounts, which receive periodic contributions, current bank accounts do not pay interest. We'll examine how to open a current account in this section.

Importance of opening a current account for a Private Limited Company

A PAN number is given to a Private Limited Company (PLC) after incorporation. After getting the PAN number, the PLC must open a bank account in the name of the firm. Even though it is not required, it is preferable to open a current account in the company's name because it has a different legal identity.

Instead of any director or promoter's personal or commercial account, company transactions should be made in the firm's current account. The company's current account will make it easier to distinguish between the business money and the promoters' or directors' personal finances. Even, more than one current account is possible for a Private Limited Company.

The current account of the Private Limited Company is necessary for tax purposes, transactions with its creditors and debtors, payment of salaries and dividends, legal proceedings against the company, settling accounts at the time of liquidation, etc. because the company is recognised as a legal person under numerous acts and laws in India. Due to the current account being under the company name, it increases the trustworthiness and legitimacy of the business' financial operations.

Documents required to open a current account

A private limited business has it easier compared to the challenges a solo proprietor would face. According to Reserve Bank of India KYC guidelines, the following papers are needed to open a current account in the business's name:

• Certificate of incorporation.
• Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account.
• Power of Attorney is granted to its managers, officers or employees to transact business on its behalf (if applicable).
• Copy of PAN allotment letter.
• Copy of the telephone bill.
• Establishment Act Registration.

However, it's possible that your bank will need the presence of the following papers:

• Articles of Association (AOA) and Memorandum of Association (MOA).
• current director list in accordance with the bank's format.
• Verification of each director's and signator's identity.
• Directors' PAN cards.
• According to the bank's format, the company's shareholding structure.

Banks often provide debit cards, mobile banking, and net banking services in addition to current accounts, much like they do with savings accounts. As long as you got all the necessary paperwork and are creditworthy, opening a current account just takes a few days.

Process of opening a current account for a Private Limited Company

A Private Limited Company can open a current account by following these simple steps, which are:

• Visit the bank branch or online presence of the institution where the business's current account needs to be opened. Many banks offer to open a current account for a Registered Private Limited Company online.

• Choose the type of current account after reviewing its characteristics under the "Business Current Account" option on the bank's website, then click the "Apply Now" button and complete the application form. By physically filling out the application form in person at the bank branch, you can acquire the current bank account application form offline.

• Once the application for opening a current bank account has been completed, click the submit button to send it if it is filled out online on the bank website. To open a current bank account, the completed application must be delivered to the bank branch if it is filled offline by getting the application form from the bank branch.

• A customer service representative from the bank will get in touch with the business to finish the remaining processes after the application for opening the current bank account is submitted.

• The business must complete the necessary paperwork to open a current account<

• The bank will open a current bank account in the company name following the KYC verification.

Benefits of opening a current account for a Private Limited Company

• The bank offers the current account holder, i.e. PLC, an overdraft facility that aids in supplying the company's working capital requirements.

• The holder of a current account is not subject to any minimum transaction restrictions.

• The current account aids in the organisation of commercial transactions and the taxes procedure.

• The current account holder will receive assistance with online banking and tools for credit card transactions.

• To satisfy the business's cash requirements, the current account holder will be able to deposit money and withdraw money without any restrictions.

• There are more free checks offered each month.

• A current account makes it simple to transfer money between branches and deposit money there, which makes it simple to collect payments from clients with limited purchasing power.

• Unlike recurring deposits, savings accounts, etc., current accounts do not pay interest, and their fees are frequently expensive.

If you want to open a current account for your Private Limited Company online and having some trouble during the process, then you can get assistance from the experts of Online Legal India. They will guide you thoroughly while you can relax a bit as half of the work will be done by them.