Corporate, Business, Current Account & their Differences

Bank accounts are mediums or financial accounts maintained by financial institutions mostly banks to safeguard a customer’s money. The account here could either be savings account, corporate account, business or current account as the case maybe but for the sake of this article; we will be looking at Corporate, Business and Current Accounts respectively. We will also look at the features and how to run each of these accounts.

Bank accounts in a layman’s definition is the arrangement made with a bank whereby one may deposit and withdraw money and in some cases be paid interest or pay charges as the case maybe. The type of bank account one intends to open depends on the type of transaction he/she wishes to carry out with the account. Banks and financial institutions have different platforms and services that they provide to their customers in order to meet up to their demand. These platforms are packaged in form of different types of account. Some of these accounts include;

1. Corporate Account
2. Business Account
3. Current Account

CORPORATE ACCOUNT

Corporate bank account is a formalized type of bank account. A corporate account can be defines as an account that specializes in offering services for companies and offshore businesses. It is quite different from personal bank accounts.

Corporate banking is a custom-tailored financing and banking services for corporations. Corporate banking is typically offered by commercial banks, and entails all the services that can be extended on a financial level to corporate entities to ease day-to-day operations. Cash management, working capital loans and commercial mortgages are just some of the products available in this form of banking; some banks even offer financial supply chain optimization.

Corporate accounts provide services that respond to business needs and thus have different regulations in regards to the opening process. Corporate accounts are mainly opened to meet business purposes.

There are a number of advantages in opening a corporate account. Many offshore jurisdictions offer positive tax benefits for companies who wish to open a corporate account.  Many companies are opening corporate bank account overseas with the intention of managing their income and growing their assets in a more profitable offshore environment.

When opening a corporate account it is crucial to choose a recognized worldwide financial centre that reflects your business needs, since each jurisdiction provides different services. Each business centre is regulated by a different financial authority and it is thus critical to make sure that the offshore jurisdiction you select to bank with will address your business objectives.

Corporate accounts are created particularly for offshore companies, their minimum capital requirements for opening the account differ from those of a personal or an investment account. This is because the account will be dealing with different sums of money and for a variety of purposes. Minimum capital requirement usually depends on the offshore jurisdiction you open your account with.

FEATURES OF CORPORATE BANK ACCOUNTS

1. Corporate Account gives access to broad range of transactional banking services – from local collections to international payments.
2. It provides support from a dedicated and experienced business platform.
3. It gives access to financial institutions in overseas.
4. Corporate Account has access to internet Banking services for account information and electronic payment requirements.
5. Corporate Account makes cash available in many currencies.
6. It can be linked to a range of single or multi-currency interest off-set arrangements
7. Corporate accounts services can be accessed in parts of the world, be it Africa, Americas, Asia, and Europe.

MAJOR REQUIREMENTS NEEDED TO OPEN A CORPORATE ACCOUNT IN A NIGERIAN BANK.

Requirements needed to open a Corporate Bank Account in Nigeria include;

1. Resolution from the Board of Directors/Proprietor(s) authorizing the opening of the account and approving the account signatories.
2. Affix Company Seal
3. Completely filled-up Corporate Account Opening Form signed by the company’s designated signatories.
4. Certified true copies of Incorporation documents
5. Proof of Residential Address of Signatories, Directors.
6. Passports Photograph of the signatories
7. Bank Verification Number of Directors or Proprietors
8. Valid means of Identification (International Passport, Drivers License, National Identity Card or Voters card) of Directors/Proprietors
9. Tax Identification Number for the Company
10. Utility Bill of Business Address
11. SCUML Registration where applicable
12. For foreign Nationals require other special requirements (Business Permit, Residence permit etc)
13. Duly filled two Reference Forms by Corporate Account Holders

BUSINESS ACCOUNT

A business will always require a bank account in order to manage its finances diligently.

Business bank account is a type of bank account used for business transactions rather than personal ones.

Business bank account is a company’s financial account with a bank that provides business loans, credit, savings and checking accounts specifically for companies and not for individuals.

MAJOR REQUIREMENTS NEEDED TO OPEN A BUSINESS ACCOUNT IN A NIGERIAN BANK.

Opening and operating a business account in Nigerian banks is totally different from running an individual savings account in terms of its requirements and documentations. To be able to own a business account, the business must be registered with Nigeria’s Corporate Affairs Commission (CAC) or by a relevant agency depending on the nature of business.

The following are requirements for opening a business account in Nigeria:

1. A valid primary ID card
2. Means of address verification (utility bill, etc)
3. Two passport photograph
4. A duly filled and signed mandate form
5. Documentary evidence of address
6. 2 references
7. 2 Passport photograph
8. Valid ID of all signatories
9. Residence Permit (For Foreigners)
10. Forms CO7 and CO2
11. Certificate of Incorporation / Business Registration
12. Memorandum and Article of Association
13. Board resolution
14. Search report
15. Duly executed Terms & Conditions

All these documents will be verified by the bank before opening the account.

CURRENT ACCOUNT

A current Account is an account which maintained with any commercial bank, for supporting frequent money transactions. Current Account can also be referred to as a type of deposit account kept with a financial institution that permits the withdrawal of funds and allows checks to be written against the balance.

Services inculcated in the Current account platform include payment on standing instructions, transfers, overdraft facility, direct debits, no limit on the number of withdrawals/deposits, Internet Banking, etc.

This type of account fulfils the very need of an organization that requires frequent money transfers in its day-to-day activity. An Individual, a firm or a company could open this type of account. Account maintenance charges are applicable as per the bank rules. It is also suitable for making payments to creditors by using cheques. Cheques received from customers can also be deposited in this account for collection.

Note that Current account is different from the popular savings account because it involves a fee known as Commission on Turnover (COT), which is charged per withdrawal in current account.

FEATURES OF A CURRENT ACCOUNT

The main features of current account are as follows:

1. Current bank accounts are operated to run a business.
2. It is a non-interest bearing bank account.
3. It needs a higher minimum balance to be maintained as compared to the savings account.
4. Penalty is charged if minimum balance is not maintained in the current account.
5. It charges interest on the short-term funds borrowed from the bank.
6. It is of a continuing nature as there is no fixed period to hold a current account.
7. It does not promote saving habits with its account holders.
8. Banker requires KYC (Know your Customers) norms to be completed before opening a current account.
9. The main objective of current bank account is to enable the businessmen to conduct their business transactions smoothly.
10. There is no restriction on the number and amount of deposits.
11. There is also no restriction on the number and amount of withdrawals made, as long as the current account holder has funds in his bank account.
12. Generally, bank does not pay any interest on current account.

MAJOR REQUIREMENTS NEEDED TO OPEN A CURRENT ACCOUNT IN A NIGERIAN BANK.

The requirement for opening a current account in Nigeria includes;

1.  Passport photograph:  Two recently taken passport photographs that will be scanned   and uploaded in the bank‘s database.
2. Means of identification: These could be National Identity Card, International Passport or Driver‘s license. Voter‘s card has recently been made to suffice as a valid means of identification that a prospective current account holder can present in a bid to open current account.
3. Utility bill: A Recent utility bill receipts such as NEPA bill, water bill and DStv subscription receipts are needed to open a current account. It acts as a proof that your address exists and that you are currently living there.
4. Two references: Anybody that wants to open a current account must provide two referees to ascertain that the person is whom he/she claims to be. These referees must also be current account holders.
5. Execution of account opening form: Current account opening form must be duly filled and relevant information must be provided when filling the form by the customer that wants to open a current account.
6. Opening balance: This is the monetary requirement for opening current account.
7. Board resolution: This requirement applies to corporate bodies. A board resolution which shows that the Directors of the company met and resolved to open and operate a current account is needed in order to open current account in Nigeria.
8. Certificate of Incorporation: The Certificate of Incorporation is a proof that a company is registered with the Corporate Affairs Commission, as such, it is one of the requirements for opening current account in Nigeria.
9. Particulars of Directors and share allotment: Forms CO2 and CO7 which contain information about the Directors, shareholders and share allotment of a corporate organization is a requirement for current account opening in Nigeria.

Corporate, Business and Currents account are all different types of account operated by banks on-behalf of individuals, businesses and corporate entitles, in order to make transaction both locally and internationally easier for the people. These three accounts (Corporate, Business and Currents account) are quite different from each other judging from their features and the sort of transaction being carried out in each platform. Enquiries should be made from specific banks before choosing the form of account that best suits your business as most banks might have a little bit of differences. Further enquiries should also be made when it comes to the requirements in opening any of the accounts as it might differ according to banks.