What Is a Corporate Account? Benefits, Tips & How to Get One

Opening and running a successful business requires more than just a great product or service. You must also be proficient with your business finances. 

According to SCORE, 82% of small businesses fail due to cash flow problems, and they can stem from a lack of funding and poor budgeting, among other things. 

Therefore, as a business owner, setting up a dedicated bank account for your business is a must-do to keep your business running smoothly. 

In this guide, we’ll be explaining everything you need to know about corporate accounts, including their pros and cons, why they’re important, and tips to manage your account.

A corporate account, also known as a business account or a business bank account, is an account that is opened in the company’s name. It is used to keep business transactions and personal ones separate. 

This separation is essential for accurate financial tracking, simplified accounting, organized bookkeeping, and legal protection in case of audits or lawsuits.

Corporate bank accounts are similar to personal bank accounts in that they provide a place to keep the money. With most types of business accounts, a business can save money, pay employees, make investments, and pay bills. 

Typically, traditional banks offer various types of corporate accounts for specific needs. The common types include: 

• Corporate checking accounts for managing everyday transactions like receiving payments and paying bills.
• Corporate savings accounts for saving funds and earning interest, with limits on cash withdrawal and transfer. 
• Merchant accounts for accepting electronic payments from customers, such as credit and debit cards, mobile payments, and digital wallets. 
• Foreign currency accounts for international businesses to hold and manage funds in one or multiple foreign currencies. 

If you regularly receive payments from customers and have expenses like paying staff and suppliers, a separate business account is essential. Keeping those transactions separate from your personal expenses organizes and simplifies business financial management, especially when it comes to accounting. 

Although a business account may not be necessary for all situations, like if you are a freelance or a sole trader, it offers many benefits to SMEs and business owners, including:

• Personal liability protection: Having a separate business account potentially protects your personal savings from business debts and legal issues. 
• Maintains a professional image: A business bank account in your company’s name makes your business look more professional when doing transactions between suppliers and customers. 
• Simplifies tax returns: A corporate account lets you clearly see your income and expenses. This helps you avoid mixing up personal and business spending in order to provide an accurate tax return.
• Helps build the company’s credit rating: If you don’t have a business account, you will have to rely on your personal credit rating. Banks are more lenient when granting loans to corporate bank accounts, especially if they have a good credit rating.
• Access to exclusive benefits and offers: Many banks will have introductory offers on corporate accounts. Other benefits include free or low-cost electronic transactions and better interest rates on business profits.
• Allows for better business organization and management: Managing spending and budgeting is more convenient when a business has a separate bank account because all reports and bank statements only include your business and no other finances.
• Better for business growth, expansion, or sale: If you are ever interested in expanding your business into a partnership, you will need a corporate bank account to facilitate that transition. If you sell your business, a corporate bank account makes tracking the performance of the business easier and provides a clear overview to the buyer.

Corporate accounts and business accounts are essentially bank accounts designed for handling business income and expenses. However, they are slightly different in the size of business they cater to.

While “business account” is a broader term for bank accounts for business entities, including sole proprietorships, partnerships, and LLCs, “corporate account” often refers to a business account for medium to large corporations. 

Moreover, corporate accounts may be more expensive to open and have higher minimum balance requirements. On the other hand, business accounts are more affordable for start-ups and SMEs, and there are various business banking alternatives, such as neobanks. 

If you’re a business owner, opening a corporate bank account should be near the top of your to-do list. There are many benefits to choosing a business bank account, but there are also a few drawbacks you should consider.

Depending on the legal classification of your business, you may be required to have a corporate account. Make sure to follow the laws and regulations in your country, as well as any other country in which you’re conducting business.

Opening a corporate account typically begins with researching and choosing the bank or financial institution, providing the supporting documents, and completing the application form.

Generally, banks will ask you to provide information and documents about your company, including the registered name, the nature of your business, business plan, proof of business address, board resolution, and company incorporation documents. 

For example, you should prepare the following when opening a corporate account in Hong Kong:

• Completed account application form
• Company incorporation documents, including the Certificate of Incorporation
• Articles of Association
• Copies of photo IDs of the directors, shareholders, and UBOs
• Proof of address
• Organizational Chart
• Other forms or documents requested by the bank

It is important to note that different banks in different countries have unique requirements and application processes. Some banks may require you to make an appointment for an interview, while some offer a virtual application process via online banking service. 

Once you’ve chosen the bank or financial institution, contact them to confirm their specific document requirements to avoid unnecessary delays. 

While a business bank account makes your company's financial management easier, here 6 key tips for choosing and utilizing a corporate account to ensure you make the most of it. 

Research various financial institutions, from traditional banks to fintech companies, to find the best fit for your business needs. Consider factors like features, fees, transaction limits, online banking services, and customer service. 
You should also consider a multi-currency business account if you’re doing business or expanding globally. This type of corporate account simplifies cross-border transactions and potentially saves your currency exchange fees.

Another important factor to consider is the size of your business. 

If your business is a medium to large enterprise, opening a corporate account with an established banking institution may be more beneficial, as you will have access to a range of corporate banking services like loans, investment services, and credit cards.

On the other hand, if you are a start-up or SME who prefers a fast account opening process and does not require corporate banking services, consider opening a business account with fintech companies available in your region.  These firms often offer online applications, lower fees, and user-friendly digital platforms tailored to the needs of smaller businesses. 

Banks charge a variety of fees, including maintenance and monthly service fees, for a corporate business account. However, you could be exempt from paying a service fee if you meet the bank's minimum balance requirements.

In some cases, banks might charge an account opening fee depending on their offer or ask for an initial deposit. Some banks also have account closer fees if you decide to close your corporate account within a certain period. 

When comparing banks or fintech firms, it is crucial to consider the pricing and fee structures to find the best fit for your business, especially the transaction fees for making and receiving payments, to ensure that they align with your budget and won’t affect your cash flow. 

If your business relies on cash transactions, also look at fees and limits for ATM cash withdrawals, as they can significantly impact your daily operations. 

Many banks offer introductory offers to get you to open an account with them, as opposed to their competitors.

These introductory benefits can include bonus cash for first deposits, a monthly fee waiver if you maintain a specific balance over a period of time, and a discounted fee for opening an account.

You should carefully research all introductory offers that banks have and see which one appeals to you the most.

Insurance and fund protection are extremely important because they cover your deposit in case your bank fails or closes.

Before opening a corporate account, ensure that the bank you sign up with is a part of deposit insurance or protection schemes. Depending on the country where you are banking, your deposits could be protected by the government’s insurance program.  

If you frequently make online payments and transactions, make sure to check if the bank has a secure banking system, such as encryption, 2-factor authentication, and fraud monitoring to protect your financial data from cyber threats. 

Some corporate accounts allow multiple access to business funds. To ensure the security of your deposits, assign appropriate access and permissions to each user when setting up the account. 

You might consider creating multiple users with varying roles and responsibilities, such as administrators, accountants, and viewers.  

Most traditional banks offer wealth management services or integrated investment platforms to corporate clients, allowing you to invest directly through your corporate account.

The common investment options include:

• Dividend Reinvesting (DRIP): Automatically uses dividends to purchase additional shares of the same stock or investment. 
• Portfolio Rebalancing: Periodically adjust your company’s investment portfolio to maintain your desired asset allocation and risk profile. 

Opening a corporate account for your business can provide many benefits. However, you should carefully consider your requirements, preferences, and expectations from a bank, as this can help you make a better decision based on the nature and size of your business.

If you already have a business in Hong Kong or Singapore or plan to expand into the region, consider Statrys as an alternative for your virtual business account. 

Founded in 2018, Statrys is a Hong Kong-based fintech company providing financial solutions for global businesses, including multi-currency business accounts and company incorporation services in Hong Kong and Singapore.  

Your company can benefit from the following features with Statrys:

• Hold and manage 11 currencies with a single account number.
• Virtual and physical Mastercard® payment cards with built-in controls and limits to manage business expenses
• FX services at competitive exchange rates (spot and forward contracts).
• All transaction fees are cheaper than with traditional banks.
• Integration with Xero for a convenient and easier accounting process.