When running a business in the UAE, it's critical to have a system in place that allows you to make payments to your clients and partners quickly and easily. Some experts recommend opening only one business bank account for your business in Dubai to make transactions go more smoothly, while others propose opening a second business account.
In this blog we will cover all the reason as to why you should consider having multiple Business Accounts.
So, without any further ado, let’s learn!
If your company is already registered in the UAE but you only have one business bank account, you might consider opening a second one for the following reasons:
Your Company's Funds could become Inaccessible
Finding out that your business bank account has been locked might be a rude awakening. When a bank freezes your account, you still have restricted access to it and are unable to review your previous transactions. However, until the issue that caused the account to be frozen is fixed, you will not be able to receive or transfer money. As previously stated, one of the most important aspects of any successful organization is how quickly and efficiently it operates. Time is as valuable as money in the corporate world.
You could lose a lot of money while waiting for the frozen account to be cleared by the bank. It will be essential to review the reason for the blocked business bank account in the UAE by proving documents and handing in the final decision to resolve the issue, which will take several days on its own. The worst part is that if the authorized signature is out of town for an important business and the accountant made a minor error with the narration or communication with your RM, your business could be in a tangle for some time, not to mention the additional costs of rescheduling flights on an urgent basis.
If your client has a bank account in Dubai, they will almost certainly prefer to make an instant and absolutely free payment through the mobile app, which is only a click away. Your foreign clients or suppliers who have accounts with international banks prefer to receive or transfer funds to your corporate bank account in the UAE. Another explanation could be the simple division of some clients and providers into distinct sectors.
Keep in mind that if your UAE bank account is with the same bank as your clients', you will get their payment immediately. Not a few working days, not a few hours, and certainly not a few minutes. Internal bank transfers are credited right away.
Benefits of Multiple Perks
While you may prefer a bank with an ATM close to your home or place of business, online banks often offer better interest rates, banks that offer better rates for Letters of Credit (LCs), Issuance of Letters of Guarantee (LG), or even better, rates for currency exchange have more interesting loan rates for your business's growth.
Furthermore, if the majority of your employees have a salary account with the same bank, moving their paychecks to them on a regular basis from that bank will not incur any service fees. If you have a corporate bank account with two UAE Bank Facilities, you may be eligible for benefits from both banks.
You can test out both local and international banks to see how effectively they serve their customers and keep yourself safe.
This is the granddaddy of them all. You, like any successful business, want to maintain your financial resources intact at all times. Or, in Buffet's words, "don't put all your eggs in one basket."
If you're putting money aside for a variety of reasons
It could make sense to open multiple savings accounts to save money for different objectives. For example, putting money aside for a short-term aim such as equipment upgrades against a long-term need such as emergency savings. Some business banking providers, such as Novo, include capabilities that allow you to set aside funds for specific goals without having to open and manage multiple accounts.
If you wish to keep some expenses separate
For example, if you want to keep better track of your salary and incoming client payments, you may set up a separate business checking account for each. Businesses that pay quarterly estimated taxes may benefit from having one or more checking accounts since they may separate the funds needed for the tax payments. However, because you would earn interest on your amount, a business savings account may be a preferable alternative in this circumstance.
What to keep an eye on if you have multiple Business Bank Accounts?
If you aim to integrate several corporate bank accounts into your financial processes, the first step is to understand why you're doing so. This is especially true if you decide to open multiple business bank accounts of the same type.
Juggling many business bank accounts can be difficult not only for bookkeeping, but also for managing the accounts themselves. To prevent paying excessive fees, for example, if you open multiple company checking accounts, you'll need to know facts like the minimum balance and transaction limit for each.
How to open Several Bank Accounts for your Business?
Every firm has its own set of financial requirements, but there are a few steps to follow if you wish to open numerous business bank accounts:
Obtain an Employer Identification Number
EINs are free to get, and most financial institutions will want your EIN when you open an account. To open a business bank account, you'll almost certainly require additional proof, such as a government-issued photo ID.
Fill out an application for a Business Checking Account
For practical reasons, this should be your first company account: Paying bills, managing payroll, and getting paid by clients are all easier with a business checking account. It also aids in the formation of your company and provides a solid foundation for the remainder of your financial requirements.
Determine what other accounts your company requires
You can open a second checking account as long as you match the requirements set forth by the provider. A business savings account might let you put your money to work by earning interest if you have cash reserves.
Thus we can conclude with the fact that having multiple Business Accounts can be very beneficial for you as well as your company if you are operating in Dubai or as the matter of the fact, any other city in United Arab Emirates. The above mentioned information has been carefully curated by our experts at Dhanguard, to give you the optimum banking and business experience in UAE. Thus we hope this blog provided you with incite full information. For more information on other related aspects, feel free to checkout our website as well.