Should you open a business account? Business accounts make it easier to manage your finances, but not all of them are the right choice for you.
Having a bank account makes everyday activities much easier and provides various benefits. Despite this, many companies do not have one, as they consider them unreliable, unnecessary or too expensive to maintain. That is why we share with you the information you need to break myths, resolve doubts, and learn the benefits of opening a business account.
In Mexico, the vast majority of micro-, small-, and medium-sized entrepreneurs consider it important to separate personal finances from their businesses. For this reason, many specialists suggest opening separate bank accounts and not using personal loans for the company. However, in practice, entrepreneurs usually use their personal credit cards to finance their business or share the same bank account with their company.
For these reasons, a major challenge for SMEs is professionalization, as many entrepreneurs view their business income as family income or assets. In other words, they use their business as “petty cash” to finance their personal expenses. This makes company management much more complicated and can lead to very costly mistakes.
So, it’s in your best interest to open a business account for you and your business.
But first, what is a business account?
Bank accounts are financial products that help manage money. An account is, more precisely, a contract between a client and a bank or entity through which the account holder deposits an amount of money and the entity undertakes to safeguard it, with the assurance that all income and expenses will be recorded.
A business account, therefore, comprises a whole portfolio of services designed specifically to manage a business’s money and process its financial transactions.
Types of business accounts
Financial institutions in Mexico offer companies and businesses various products that can mostly be classified into the following types of accounts:
Business Current Account
They allow you to manage your money easily, simply and safely, as you can access the cash whenever you need it. Current accounts are also known as deposit accounts and are the most common type of bank account, as they allow you to manage money through transfers, payments, and enquiries. They do not offer any type of profitability, as they are not oriented towards savings but are created to manage the money stored in them. It is common for them to be subject to some commissions.
Business Account with Checking Book
Checking accounts offer easy, everyday access to the money you deposit into them, and they also have a chequebook to manage your money. They usually don’t require minimum balances, but you do have to keep enough money in the account to cover your purchases. If you run out of money, you have to deposit more to keep using the account.
Business Savings Account
This type of account is suitable if the primary goal is to find a safe place for the money that a business earns. Savings accounts allow you to generate a small return on the money you keep in them. As the name suggests, these accounts are intended for saving money, so there may be a limit on the number of withdrawals or transfers you can make in a month, and there is usually a minimum daily balance requirement.
Business Payroll Account
It is a bank account into which an employer deposits the salary and other benefits corresponding to the salary of an employee. It is common for this type of account to be exempt from commissions.
Business accounts in dollars
It is a deposit account in which, instead of making transfers in local currency, they are made in dollars. Once the money is deposited, it can be accessed at any time, with the option of using it in dollars or exchanging it for pesos. Plastic cards associated with dollar accounts are widely accepted worldwide.
Why should you open a business account?
Believe it or not, one of the first things you should do after setting up your business is to open a business account. A business bank account will help you keep your personal and business money separate and better handle expenses, making it easier to track your business finances and save time.
In addition to simplifying your company’s accounting, opening a business account gives you more benefits:
- A safe place to keep your money
- Possibility of obtaining a business loan or line of credit
- Make payments and transfers, including paying taxes
- Make payroll payments
- Possibility of having a checkbook
- Have a debit and/or credit card
Opening a business account helps you stay compliant and protected. It also offers benefits to your customers and employees.
To top it off, most business bank accounts offer benefits that standard personal accounts don’t.
Protection: Business accounts offer security to your business, your customers, and you personally.
Professionalism: Customers will be able to pay with credit and debit cards or write checks to the company instead of to you. Plus, you can authorize employees to handle everyday banking tasks on behalf of the business.
Prevention: Business bank accounts usually offer the option of a business line of credit, which can be used in case of emergency or if the business needs new equipment.
Purchasing Power: Business accounts help you manage and invest in your business and build your credit history. Business credit is similar to personal credit. Creditors use your credit history to determine how well you manage your money.
It’s easier to keep accurate accounting records: Using the same account for your personal and business expenses is not a good idea, as mixing finances can complicate accounting. It’s better to have one business account and use it exclusively for business transactions.
Filing taxes made easy: Filing taxes can be a complex process. If you use the same account for your personal and business expenses, it becomes even more complicated. A mistake in transactions and deductions can mean losses. Using a business account can help simplify tax compliance.
How to open a business account?
Some people open their business account at the same bank they use for their personal accounts. While this may sound very convenient, we recommend comparing the rates, fees and benefits offered by various institutions, as well as the requirements each one asks for in order to open an account.
Some factors to consider when opening an account for your business are:
Requirements for a business account
Opening a business account is often more difficult than opening a personal account. Before choosing an account for your business, research what documents you will need, who you will need to sign, and how many visits you will need to make to the branch.
Commissions and fees for a business account
Accounts may have different fees associated with them, such as a monthly maintenance fee, charges for not maintaining the minimum balance, or fees for making wire transfers. Read the fine print! It’s important to be aware of fees and understand how to manage them to avoid unwanted costs.
Monthly transaction limits
Business bank accounts may charge you fees based on the number of transactions in the account, the number of checks you write, and the number of checks or cash deposited per month. It’s best to find an account that meets your business needs without having to pay fees.
Digital services
There may be different features and services to compare, such as the ability to use an online banking system, use a mobile app, or connect the account to your business’s accounting software.
When conducting your research, you should ask enough questions to find out if the financial institution offers the services you need. Be sure to consider key factors related to day-to-day account management:
- Opening Offers
- Interest rates on savings and checking
- Interest rates on lines of credit
- Transaction fees
- Cancellation fees
Minimum monthly fees, which are charged if the company does not cover the minimum monthly balance or the minimum required number of transactions made.
You should know what the minimum balance required is and how much you will have to pay if you have a lower balance; how many free transactions you would have per month and what the fee is for exceeding the limit; how many cash deposits you are allowed per month and all issues related to your company’s requirements.
Each financial institution has different requirements for opening a business account, but in general, you can expect them to ask for the following:
- An initial deposit
- A document that verifies your identity and that of the business
- RFC or tax status certificate
- Your business license
Associations and corporations may be required to provide incorporation documents.
The advantages of having a 100% digital business card
By now, you’ve probably realized that opening a business account with traditional banks is a rather complicated process. Fortunately, there’s now a new option.
Oyster is the first 100% digital business financial platform in Mexico, which eliminates the challenges of traditional banking for small and medium-sized businesses.
In our country, opening a business account can take weeks and several visits to the branch. But as an entrepreneur, you need to take advantage of the time to dedicate yourself to what you know how to do.
Signing up with Oyster has no opening fee or minimum balance and seeks to empower you to grow your business. With it, at any time and every day of the week you can make transfers to suppliers, request payments from clients and gain access to Oyster Mastercard cards, accepted worldwide.
With Oyster, you will have a CLABE number for your business, as well as a financial app that will make it easy for you to monitor every transaction you make. If your company is incorporated with the SAT, you can register for free with Oyster. You only need some basic documents and an Internet connection.
Thanks to cutting-edge technology and human talent, the entire registration process is done within the application and in just 20 minutes. Afterwards, in a matter of a few days, you will be able to use your card and see how this new financial experience will help you boost your business.
Don’t be afraid to change. Having a digital financial platform should benefit your business and facilitate your activities. If the services of current banks do not satisfy you, dare to change to another financial solution.
