Should I open a business account for my business?

business account
Having a bank account makes everyday activities much easier and provides various benefits. Despite this, many companies do not have an account, as they consider that they are not reliable, that they are not necessary or that it is very expensive to maintain them. Therefore, we share with you the information you need to break myths, resolve doubts and show you the benefits of opening a business account.

In Mexico, the vast majority of micro, small and medium entrepreneurs consider it important to separate personal finances from business. For that reason, many specialists suggest opening separate bank accounts and not using personal loans for the company. However, in practice entrepreneurs often use their personal credit card to finance their business or share the same bank account with their company.

For these reasons, a great challenge for SMEs is professionalization, as many entrepreneurs see their business income as a family income or asset. In other words, they use their business as a "petty cash" to finance their personal expenses. This makes running the business much more complicated and can lead to costly mistakes.

So the most convenient thing for you and for your business is to open a business account.

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 holder deposits an amount of money and the entity acquires a commitment to safeguard it, with the assurance that all income and expenses will be recorded.

Therefore, a business account comprises a whole portfolio of services specifically designed to handle the money of a business and process its financial transactions.

Types of business accounts

Financial institutions in Mexico make various products available to companies and businesses that, for the most part, can be classified within the following types of accounts:

Current Business Account

It allows you to handle money in an easy, simple and safe way, since you can have cash when required. Current accounts are also known as deposit accounts, and it is the most common type of account for banks, as they allow money management such as transfers, payments and inquiries. They do not offer any type of profitability, since they are not aimed at saving, but are created to manage the money stored in them. It is common that they are subject to some commissions.

Business account with checkbook

Checking accounts offer easy, day-to-day access to the money that is deposited into them, and they also have a checkbook to manage money. Generally, they do not require minimum balances, but you have to keep enough money in the account to cover purchases. If the money runs out, more must be deposited to continue using them.

Business savings account

This type of account is suitable if the primary objective is to find a place to be sure of the money that a business makes. Savings accounts allow you to generate a small return on the money that is saved in them. As the name suggests, these accounts are intended to save money, so there may be a limit to the number of withdrawals or transfers that can be made in a month, and there is generally a minimum daily balance requirement.

Business Payroll Account

It is a bank account in which an employer deposits the salary and other benefits corresponding to the salary of a worker. It is common for these types of accounts 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 made available at any time, with the option of using it in dollars or changing it into pesos. Plastics 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 creating your business is to open a business account. A business bank account will help you keep personal money and business money separate and better control expenses, thus making it easier to track your business finances and save time.

In addition to simplifying your business accounting, opening a business account provides you with more benefits:

  • A safe place to keep your money
  • Possibility of obtaining a business loan or a line of credit
  • Make payments and transfers, including paying taxes
  • Make payroll
  • Possibility of having a checkbook
  • Have a debit and / or credit card

Opening a business account helps you comply with the laws and be protected. It also offers benefits to your customers and employees.

To make matters worse, most business bank accounts offer benefits that standard personal accounts do not have.

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 issue checks to the company and no longer in your name. In addition, you can authorize employees to handle everyday banking tasks on behalf of the business.

Prevention: Business bank accounts generally offer the option of a business line of credit, which can be used in an emergency or if the business needs new equipment.

Buying Power: Business accounts help you manage, invest in the business, and establish your credit history. Business credit is similar to personal credit. Creditors use your credit history to determine how well your money is being managed.

It is 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 is best to have a business account and use it exclusively for business transactions.

Filing Made Simple: Preparing your tax return can be a complex process. If you use the same account for your personal and business expenses, it becomes even more complicated. An error in the movements and deductions can mean losses. Using a business account can help you simplify your tax compliance.

How to open a business account?

Some people open the account for their business at the same bank that they use for their personal accounts. Although this may sound very convenient, we recommend that you compare the rates, commissions and benefits offered by different institutions, as well as the requirements that each one asks you 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 the account for your business, research what documents you will need, who will need to sign and how many visits you will need to make to the branch.

Commissions and charges for a business account

Accounts may have different associated fees, such as a monthly maintenance fee, charges for not maintaining the minimum balance, or fees for making electronic transfers. Read the fine print! It is important to be aware of commissions 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 is better to find an account that meets the needs of your business without having to pay commissions.

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 company's accounting software.

When conducting your search, you should ask enough questions to know if the financial institution offers the services you need. Do not forget to take into account the key factors related to the day-to-day management of the account:

  • Opening offers
  • Interest rates on savings and checks
  • Interest rates on credit lines
  • Transaction fees
  • Cancellation fees
  • Minimum monthly commissions, which are charged if the company does not cover the minimum monthly balance or the minimum required number of transactions carried out.

You should know what is the minimum required balance and how much you will have to pay if you have a lower balance; how many free transactions would you have per month and what is the fee for exceeding the limit; how many cash deposits you have allowed per month and all the questions related to the requirements of your company.

Each financial institution has different requirements for opening a business account, but in general, you can expect them to request the following:

  • An initial deposit
  • A document that corroborates your identity and that of the business
  • RFC or proof of tax situation
  • Your business license
  • Associations and societies may need to provide incorporation documents

The advantages of having a 100% digital business card

At this point, you may have realized that opening a business account with traditional banks is quite a complicated process. Fortunately, now there is 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 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.

Registering with Oyster has no opening cost or minimum balances and seeks to empower you so that you can grow your business. With it, at any time and every day of the week you can make transfers to suppliers, request payments from customers and get access to Oyster Mastercard cards, accepted all over the world.

With Oyster, you will have a CLABE number for your business, as well as a finance app that will make it easier for you to monitor every move you make. If your company is incorporated before the SAT, you can register for free with Oyster. You only need some basic documents and an Internet connection.

Thanks to state-of-the-art technology and human talent, the entire registration process is done within the application and in just 20 minutes. Later, 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 for another financial solution.