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Choosing the right bank

A practical guide to finding the right bank for you business needs.
By Henry Ong |

One of the first things you need to do when opening a business is to set up a bank account. Good accounting practice dictates that you separate your personal bank account from your business account. This will enable you to properly monitor all business-related disbursements as against your personal expenses.

Setting up a bank account is easy, but determining the right bank for you requires some effort. You need to shop around and compare bank services, just as you would when buying consumer goods.

 

In any case, there are many options and banking services available today that can help you manage your cash efficiently. They range from basic saving accounts to investment instruments, payroll processing, accounts payable processing, online transactions, and even insurance services that can support your business operation.

 

LOOK FOR THE RIGHT FIT

 

So how do you look for a good bank? First is to find out which bank actually meets the banking requirements of your business. The right bank is one that will help you secure the best deal and avoid hassles and unnecessary expenses.

 

For instance, if your business requires you to transact with other countries such that you need to travel a lot and need to access your cash anytime, you should be looking for a bank that has a global presence. On the other hand, if your business is locally based and you have a strong need for personalized service from bank staff, then a small bank may suit you just fine. A lot of times, though, small-business owners prefer smaller banks because they are often friendlier.

 

CONSIDER THE LOCATION

For instance, if you will be handling a lot of cash, look for a bank closely situated to your office or to your store. This way, you can access the bank easily when you need it. You may also need to consider the different banking hours of the banks near you. In the Philippines, banking hours normally end at 3:00 p.m., but there are banks that are open for business from 10:00 a.m. up to 7:00 p.m.

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If your business is in the mall, in particular, your nearest bank may still be open up to 6:00 p.m. It is important for you to determine which banking hours will work best with your own business schedule.

 

 

MAKE A CHECKLIST

In choosing a bank, ask yourself the following questions: Does your bank of choice provide online banking that will enable you to conveniently pay your bills, transfer money in and out of your account, and make other money banking transactions? Can you easily make online downloads of your banking reports and records of banking transaction for your business bookkeeping needs? How many branches does the bank have and where are they? Are these proximate enough to where you do business?

Once you have selected your bank, analyze ahead of time the things you need in terms of services as well as such things as bank charges and penalties. You may also want to research on the bank’s website and get information about the types of checking and savings accounts that they offer, their types of loans and interest rates, and their other special services that you may find useful for your business.

After doing online research on your prospective banks on the service, safety, and convenience aspects, you may then visit them personally before making your final assessment. You can check if the tellers are friendly and professional enough. You can observe if the manager is approachable. You can also check how the bank’s service offerings compare with those of its competitors in the area.

 

THE FINISHING TOUCHES

Once you have decided on which bank to go and once you have understood their requirements, you are now ready to open a bank account. You must then prepare the necessary documentation for opening one. If you are a business owner operating as a single proprietor and already has a trade name, the process is simple.

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You just need to submit to the bank your Department of Trade and Industry (DTI) registration and present valid identification cards, your tax identification number (TIN), and an ID picture of the required size and color. Take note that some banks will ask for the latest business permit issued to you by your local government.

If you intend to incorporate your business, you would need more documentation and follow a longer set of procedures. You need to appoint one of your incorporators as the treasurer, and he or she can then open an account with a bank. Banks require the submission of the SEC registration papers of your business.

 

The initial amount of deposit must be in compliance with Section 13 Title II of the Corporation Code of the Philippines. The Corporation Code requires that for a corporation to be registered, “at least 25 percent of the authorized capital stock as stated in the articles of incorporation must be subscribed at the time of the incorporation, and at least 25 percent of the subscribed must be paid up. Paidup Capital should not be less than P5,000.”


The 25 percent paidup capitalization is the amount required for your business to open a bank account under your treasurer’s name. Once this is done, the bank then issues a bank certificate of deposit, which has to be attached to the incorporation papers that you will be submitting to the SEC.

TIPS:

Wherever possible, duties such as cash collection, maintaining documentation, preparing deposits, and reconciling records should be handled separately by different individuals. If separation of duties is not possible because of limited manpower, you need to implement compensating controls such as strict individual accountability as well as thorough management supervision and review.

 

And to ensure proper cash accountability, you need to conduct regular bank reconciliation procedures using information provided by your bank.

Henry Ong, CMA, RFP, is president and COO of Business Sense Inc., a financial advisory and consulting firm that helps small and medium businesses. Business Sense is affiliated with INPACT International Network of Certified Public Accountants. You may reach him at hong@businesssense.com.ph or www.businesssense.com.ph.



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