How to open bank account for private limited company

Opening a dedicated bank account for your newly registered company is crucial for officially starting your company’s operations. Here are the steps and important factors to consider:

Important factors to decide before opening your bank account

  • Decide the bank and branch to open your bank account.
  • Decide the most suitable type of account.
  • Decide the operating instructions
  • Prepare the necessary documents.

Deciding the bank and branch to open your bank account - factors to consider:

  • Branch coverage: proximity and accessibility from your office.
  • Facilities offered: services provided by the bank for businesses.
  • Reputation: recognition and reliability of the bank.

Note: Only commercial banks can facilitate current accounts where cheques are used for transactions. Licensed finance companies can only facilitate savings accounts for businesses.

Deciding the type of your business bank account

  1. Business Current Account:
  • Necessary if you need to use cheques.
  • No interest income on the funds.
  • Minimum balance requirement (generally LKR 25,000, may vary).

  1. Business Savings Account / Money Market Account:

    • Suitable if you do not intend to use cheques.
    • Minimum deposit requirement (around LKR 1,000, may vary).
    • Offers interest income.

  2. Business Foreign Currency Account:

    • For transactions in foreign currencies.
    • Requires evidence of foreign currency transactions to open.

Expert tip by “Biz Advisor”

Consider opening a business money market account alongside your current account to keep additional funds and receive interest income. You can set up automated transfers between the current account and the money market account to manage your funds efficiently.

Deciding the operating instructions

Operating instructions define how the bank account will be managed.

  • The board of directors must pass a resolution outlining the operating instructions.
  • Instructions include appointing directors, shareholders, or third-party individuals as operators.
  • The bank will only accept instructions as provided by the board of directors.

Preparing the Documents

Ensure you have the required stamps and following documents ready before visiting the bank:

  • Account Opening Mandate/Application Form.
  • Board Resolution: Passed by the board of directors on your company letterhead.
  • KYC (Know Your Customer) Forms: For directors and authorized signatories.
  • Signature Cards.
  • Ultimate Beneficiary Ownership Form.
  • Certified Copies of:
    • Incorporation Certificate (BR)
    • Form 1
    • Form 20 (if any)
    • Articles of Association

Note: Document formats may vary depending on the bank, and additional forms may be required.

By following these steps and considering the outlined factors, you can successfully open a bank account for your limited liability company, ensuring a smooth start to your business operations.