Unless you operate a sole proprietorship or a partnership, your business is a different entity from you: legally and financially.
One major act of establishing financial autonomy for your business is by opening a corporate account for it.
This ensures that the finance of your company is not intertwined with your personal finances. You cannot really claim to have fully founded a company.
As simple as this sounds, many inexperienced entrepreneurs underestimate the urgency of opening a business account for their company. This results in messing up the financials of their newborn enterprise.
The Importance of Opening a Corporate Bank Account in Nigeria.
1. Corporate Image
Opening a corporate account consummates the incorporation of your business in Nigeria.
As you already know, it is one of the last and major boxes you must tick while establishing your company.
Imagine trying to run a company with your personal bank account? Trying to access credit facilities and funding with it?
None of the financial institutions or individuals you approach for funding will take you serious.
It is an integral part of your brand identity and communicates to everyone that you are ready for business. Separating your personal accounts from your business accounts proves that your business is not a hobby.
Simply put, it gives you a professional image.
2. Financial Obligation
Your business, like that of others, will pay taxes to the government.
The amount you will pay will depends on the estimation of the Federal Inland Revenue Service based on the cashflow of your business.
Using the same bank accounts for business and personal use will lead to inaccuracies in your tax deductions.
You might be taxed much more than you ought to be or below the true amount, in which case you might be punished for tax evasion.
Having a separate account for your business makes auditing your financials easy and time-saving.
Whether internal or external, auditing helps you evaluate the financial health of your business. You cannot improve your financials if you cannot measure it.
Having a business account facilitates this process.
4. Tidy bookkeeping
Maintaining the corporate veil between your finances and that of your business makes bookkeeping incredibly clean and easy.
Your personal and business transactions have to be recorded separately to make this process accurate.
How to Open a Corporate Bank Account in Nigeria
Various banks have different modalities for opening a business account, but the processes and requirements are basically similar.
The products and financial services these banks render to businesses range from savings, transfers (local and international), internet banking, credit and debit cards, fintech etc.
Below is an easy to follow guide on how to open a corporate bank account.
- 1. Choose a bank
Selecting the bank you wish to open an account with is the first and an important decision you have to make.
This will require you to do some research on the type of services they offer, their policies and terms and conditions.
This little research will also help you know the specific requirements the banks have. Your aim in this stage is to determine the bank that offer the financial services peculiar to your business or your industry.
You can do this online by checking the banks’ websites for information or physically visiting one.
- 2. Do the paperworks
After deciding on the bank to use, you should proceed to prepare all the documents required for opening the account.
You might be asked to provide your business license, tax identification number, Memorandum of Association, Articles of Association etc.
Then proceed to the bank to initiate the process.
- 3. Download and fill the application form
You can access the application forms on the banks website.
Download and print it out and then fill it as recommended. Then submit it at the nearest branch of your chosen bank.
- 4. Valid Identification
While submitting your documents, you will be required to provide acceptable means of identification of the signatories to the account.
This could be drivers’ license, international passport, national identification number etc.
This is to ensure the authenticity of the signatories and for easy tracing.
- 5. Business License
After incorporating your business, you will be issued a licence by the government which proves the legitimacy of your business.
This document is always required while opening an account to prove that you are legally allowed to do business in the first place.
- 6. Tax Identification Number
This is a ten digit number assigned to every individual of taxable age and every business upon registration.
This helps the Federal Inland Revenue Service (FIRS) tax your business appropriately. It is a must-have for opening a business account.
- 7. Business Name
This is the name with which you incorporated the company. It is unique to your business and stands yours out from other businesses.
DBA; that is, Doing Business As is the name of your company.
This is the name you used to draft the documents you used in incorporating your company like the Articles of Association, Memorandum of Association, Business License , Certificate of Incorporation etc.
The Full List of Doccuments Required for Opening a Corporate/Business Account in Nigeria
- Certificate of Incorporation : this is the document you were issued when you incorporated your business. It accords your business legitimacy.
- Passports photograph of the signatories : for easy identification
- Residential address proof of signatories and directors: for easy tracing of the directors
- Bank Verification Number of directors or proprietor : this unique pin helps regulatory agencies to track the financial activities of 5he company and its operators.
- Legitimate identification document of the directors or proprietors, such as international passport, driver’s license, etc.
- Tax Identification Number (TIN) for the company : This number is unique to your business and will be used by the Internal Revenue Service for tax collection.
- Resolution from the Board of Directors/Proprietor(s) authorizing the opening of the account and approving the account signatories
- A company seal
- Certified Memorandum and Articles of Association
- Completely filled corporate account opening form signed by the company’s designated signatories.
- Utility bill of business addresses such as the Power Holding Company of Nigeria (PHCN), Waste Management Authority (LAWMA for Lagos State, ASWAM for Anambra State), Water Corporation Bill, NIPOST etc.
- Special Control Unit Against Money Laundering (SCUML) registration where applicable: this helps regulators to ensure your company is not a funnel for money laundering.
- Special requirements such as business permit, residence permit, etc. for foreigners.
- 2 duly filled reference forms by corporate account holders.
- Minimum Deposit for a Opening a Nigerian Corporate Account: This is the minimum amount of money you will deposit on opening the banks. The amount of deposit required for opening a Nigerian corporate bank account depends on each bank’s requirements. It ranges from #20,000 to #100,000
Opening a corporate account is an indispensable activity you must perform before fully commencing business.
It makes your financial transactions easier, helps you access funding and ensures you can easily assess the financial status of your business.
If you need help in opening an account for your business, inform us in the comment section.