Create a Plan
Getting organized before setting up any kind of business is essential. Before opening a company account, entrepreneurs should create a business plan with measurable objectives and clear goals. This step can be simple or more detailed depending on the type of business and organizational structure. A business plan should include estimated financial goals, including revenues, cash flow and anticipated expenses. It is also necessary to decide on a legal business structure, form a business name, and explore potential sources of funding for the company account.
Choose a Financial Institution
An entrepreneur should consider potential banks and credit unions for a company account. Banks and credit unions may offer a variety of services, including business loan options or lines of credit, cash management, online banking and mobile banking. Many also offer mobile deposit and mobile wallet services for added convenience. When researching a financial institution, entrepreneurs should evaluate the customer service options available, the fees associated with services, and the necessary documentation needed to open the account.
Complete Necessary Documentation
In addition to the business plan, financial institutions may require additional documentation to open a company account. This could include a business license or operating permit, proof of business registration, and a tax identification number. This information may vary depending on the type of business and its structure. Additionally, documents proving ownership of the company and the authority of each signer should be completed. This could include personal identification, such as a driver’s license, passport, or other photo ID for each signer on the account.
Fund the Account
Once the documentation is complete, the business owner must fund the account with an initial deposit, which can vary from bank to bank. The deposit must come from either the business or a personal account. Entrepreneurs must be prepared to make additional deposits in the future, as well. Depending on the financial institution, the initial deposit could be higher if certain products, such as a business loan, are also requested.
Choose Preferred Services
When opening a company account, entrepreneurs should review the different products and services offered by the financial institution and select which ones to take advantage of. For example, many banks now offer mobile wallets, debit cards, and investment accounts. These services can be useful to streamline financial transactions and better organize the company’s financial activities. Additionally, entrepreneurs should examine the different fees associated with services, such as wire transfers or international transactions, to calculate projected expenses.
Understand Security Requirements
On top of selecting preferred services, entrepreneurs must understand the security requirements of their company account. At many financial institutions, this could include setting up dual authentication for online banking, enrolling in text notifications for potential fraud, or monitoring employee access. It is important to maintain an updated log of all users who have authorized access to the company account and be aware of any suspicious activity that might occur.
Know Potential Benefits
When choosing a financial institution and services for a company account, entrepreneurs should survey the potential advantages that come with the account. Many banks and credit unions will provide business loan options, cash management tools and financial advice. These services can be invaluable for entrepreneurs managing a small business or company. Entrepreneurs should also consider the potential savings associated with the account, such as reduced banking fees or waived minimums.
Understand the Responsibilities
Business owners should understand their legal, moral, and fiduciary responsibility when opening a company account. Depending on the type of business, the account may be audited periodically, or require other forms of oversight. The company’s internal policies and procedures should also be updated to reflect any changes to the company’s financial accounts. Additionally, entrepreneurs should consult with a legal expert if they are unsure of their responsibilities when managing a company account.
Negotiate With Financial Institutions
Entrepreneurs should not be afraid to negotiate with a financial institution when opening a company account. Banks are often willing to waive certain fees, reduce minimum balances, or improve the interest rate on a business loan if the business owner asks. Furthermore, banks are often willing to offer additional services, such as employee banking or merchant services, to make the company account more attractive. It is important to maintain a professional relationship with the bank and be clear about the expected terms and conditions.
Develop a Budget
Once a company account is open, entrepreneurs should create a budget to determine how much money the business can spend on products and services. The budget should outline the expected cash flow, including monthly income and expenses. Additionally, the budget should include periodic expenses, such as taxes, fees, and payroll. A budget should be flexible to eliminate the need for unnecessary overdrafts or borrowings and to ensure the company account is properly managed.
Organize Records and Documents
It is important for entrepreneurs to keep good records of their company’s financial activities. This could include maintaining electronic or paper files of bank statements, invoices, and payment receipts. Additionally, business owners should make sure to update any documents related to the company account, such as amending the business plan or filing updated bank statements with the state. By staying organized, entrepreneurs can easily access important documents in the event of an audit or financial institution review.
Calculate Interests
Business owners must also consider how to maximize their savings when managing a company account. For businesses earning interest on the account, it is essential to know how the interest is calculated and if there are any restrictions. Banks and credit unions often offer higher interest rates for accounts with larger balances or those that have agreed to a certain level of deposits. Furthermore, entrepreneurs should review the associated fees when transferring funds in or out of the account.
Analyze Financial Performance
Creating and regularly reviewing financial statements is an important step to understanding the performance of a company account. Financial statements provide an overview of the company’s income, expenses, and projected revenues. Additionally, it is important to review the cash flow and compare the financial performance of the company against set goals. If financial goals have not been met, business owners can adjust their strategy or seek other sources of funding.
Protect the Account
Taking preventative measures to protect a company account is vital to maintaining security. This includes creating strong passwords and restricting access to employees who are authorized to use the account. Entrepreneurs should also consider setting account limits to minimize any potential risk associated with fraudulent activity. Additionally, it is important to update all antivirus, malware and firewall software, to protect the account from unapproved access. Lastly, business owners must remain aware of all relevant data security laws.
