What is a corporate account and why is it important for businesses?
Many new and aspiring business owners may have heard of corporate accounts, but others may still be wondering what is a corporate account. The best answer to that question is that it is a tool that functions similarly to any other bank account but will exponentially make business operations much easier.
Keeping company funds separate from a personal account is key to managing business finances. With corporate bank accounts, businesses get to focus their attention solely on business income and expenses without having to worry about those mixing with personal finances.
Corporate accounts also offer multiple features that will benefit business owners, such as transaction approval workflows and accounting integrations.
What is a corporate account?
Put simply, a corporate account is a banking account designed for business purposes. When a business opens a corporate account, it will also be under that company’s name rather than an individual’s name. This helps the business segregate business funds and activities from personal finances and centralizes income and expenses under the corporate account.
For incorporated companies, it should be an obvious decision to open corporate bank account. Not only will conducting business with suppliers and customers be easier, but tax filings will also be much simpler.
Knowing what is a corporate account is crucial for businesses who intend to stay in business for a long time and wish to grow their organization hassle-free.
How does a corporate account work?
For all intents and purposes, a corporate account works similarly to any other bank account. Companies can load, hold, and spend funds for transactions, both online and offline.
However, as the name suggests, a corporate bank account is designed specifically for corporate purposes.
One significant advantage is the ability to manage complex transactions more efficiently. For businesses operating across borders, a multi-currency account can be integrated into the corporate account, enabling the company to hold and transact in different currencies without constantly worrying about conversion rates and fees.
Those who know what is a corporate account will know that several features set it apart from normal bank accounts, such as multi-level approvals during payment processing.
Difference between corporate account and business account
Business accounts can serve as an umbrella term, which corporate accounts also fall into. However, a corporate account is typically designed for medium-sized companies and enterprises, while business accounts are often used by smaller businesses.
In addition to the distinctions between corporate and business accounts, it's also important to understand how these types of accounts differ from personal accounts. To get a thorough understanding of this distinction, visit our blog on Difference between personal bank account vs. business bank account.
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What is the importance of a corporate account for businesses?
Easier financial transactions
Corporate bank accounts are designed specifically for corporations, meaning that the funds they contain are company funds.
It gives businesses an easy way to access their funds and settle transactions without having to worry about reimbursement claims. Transfers can happen quickly.
Builds business credibility
When conducting business, customers and vendors alike are more likely to trust an account under the company’s name rather than an individual’s name.
Knowing what is a corporate account and using one helps build a business’ professional brand and assures customers and vendors that the business is legitimate.
Allows for multiple signatories
Never worry about payment delays when someone is out of the office.
While a personal account will only allow one or two signatories at most, a corporate account is geared toward businesses and allows multiple signatories. This way, business operations can be ensured to go smoothly.
Makes accounting and filing taxes easier
Segregating company finances and personal finances is necessary when it comes to ensuring that business activities are accounted for correctly.
Reconciling income and expenses, especially for tax filing purposes, will be much smoother with a separate corporate bank account.
Improved protection
Corporate banking providers often offer additional features that can improve a company’s fund protections.
Things like user roles and permissions, two-factor authentication, automated tracking, and other security measures help reduce fraud attempts and ensure company funds are safe.
Better personal liability protection
Separating corporate finance activities from personal funds ensures that personal funds will remain untouched even if the company makes a loss.
There is no personal liability for company losses with a corporate account, which is not something that can be achieved with a personal account.
Better for business growth/expansion
It may seem doable to do business transactions from a personal account in the early stages, but this can get complicated really quickly.
To ensure that a business can comfortably grow and expand, it’s best to segregate business finances and centralize them with a corporate account.
If you're considering expanding your business into Australia, check out our blog on opening a business account in Australia from overseas to ensure a smooth and compliant setup.
Factors to consider before opening a corporate account for your business
Be mindful of introductory offers
Many banks and financial institutions have introductory offers that are designed to persuade businesses to open an account with them.
While these can be beneficial, it is also important to look at what the rates and charges look like after the offer expires.
Consider adopting an investment strategy
Businesses that remain in operation for a long time and can achieve good growth have good investment strategies.
After some thorough research in investments, it is a good idea to adopt an investment strategy and choose a corporate account that can support it.
Verify the applicable fees
Different banking providers may have different fees, which is why it’s important to check what the fee structure looks like for any particular provider.
Even if the information is readily available on a website, it’s always best to verify it with a representative.
Inquire about additional services and benefits
It’s always best to do thorough research before choosing a corporate bank account provider. Make sure to look at what benefits the provider offers.
Ask about what additional services are available. This could be anything from overdraft protection to insurance.
Examine local regulations
Australia has local regulations that businesses will have to comply with in regard to corporate bank accounts.
Finance teams and business executives should familiarize themselves with all local regulations and work closely with the compliance team to ensure that the corporate account provider is legitimate.
Investigate access options
Modern banking solutions offer several access options other than having to show up at a bank branch to process a transaction.
Check if a provider has an online dashboard or mobile application that the finance team can use to initiate, process, and monitor transactions.
Evaluate various interest options
When it comes to opening any bank account, interest rates are an important factor—corporate bank accounts are no different.
Interest is especially relevant when opening a corporate savings account, as a higher rate is better. However, there could also be interest charges on features like overdraft protection.
Consider insurance and fund protection
As fraud attempts are becoming alarmingly common, having good fund protection is a must-have feature for any corporate account.
Knowing what is a corporate account helps businesses determine what features they need to have. Built-in insurance, zero liability for misuse, and other security features should be priorities.
Explore diverse features
It’s always good to have a corporate account that has diverse features. The more things the account can do, the better.
Look at all the payment methods available, as well as additional features such as integrations, security, overdraft protection, and more.
To ensure you choose an account for your company that offers a wide range of features, visit our blog on best business bank accounts in Australia.
List of documents required to open a corporate bank account
When searching for what is a corporate account, different sources and corporate bank accounts may have different requirements listed.
This is because it depends from provider to provider, but generally, the following documents will be required by most if not all providers.
● The official name of the business
● Details regarding the business's activities or nature
● Contact information
● Proof of business address
● Documentation confirming the business's legal structure (e.g., sole proprietorship, partnership, LLC)
● Government-issued employer identification documents (if applicable in the respective country)
● Identification copies
● A copy of the board resolution of the company authorizing the opening of the account
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How to open a corporate bank account?
Opening a corporate bank account in Australia is not difficult, but it’s necessary to know what is a corporate account and how to apply for one to ensure that the process goes smoothly. Compile all the required documents and follow these steps.
Register your business
To open corporate bank account in Australia, a business must first be registered in the country.
Most corporate account providers will require an Australian Business Number (ABN) to prove that the account can be registered under a company name rather than an individual’s name.
Select a provider
There are plenty of corporate bank account providers in Australia, so make sure that thorough research is done before selecting a provider.
Knowing what is a corporate account is crucial in determining which provider will be the best fit for a particular business.
Compile essential documents
When selecting a provider, ask a representative what documents will be needed to apply for an account.
Typically businesses will have to provide their ABN, directors’ identification documents, proof of residency, and a few other documents. Prepare and compile them in advance.
Initiate the application process
Once all documents have been gathered, the application process can be initiated and should go smoothly.
Many modern bank account providers offer online application processes, but it’s important to double-check and understand what the process entails with a particular provider.
Review associated fees
Corporate account providers vary in fees. It’s a good idea to get familiar with all the fees associated with the company’s corporate account.
These include but are not limited to administrative fees, domestic transfer fees, international transfer fees, and overdraft interest rates.
Complete fund transfers
As soon as the application has been approved, the corporate account should be ready to use.
Make sure to review what is a corporate account before completing fund transfers with the account, as this will help ensure that finance operations with the corporate account go smoothly.
How to manage your corporate bank account?
Knowing what is a corporate account is useful, but it’s not enough to make the most of the account. To get all the benefits, it is also necessary for businesses to manage their account effectively.
1. Segregate business and personal finances
Make sure that the corporate bank account is only used for business purposes.
Employees should be educated on what is a corporate account and familiarized with the expectations surrounding it. Personal finances should not get mixed up with business finances.
2. Regularly monitor your accounts
The finance team, as well as business executives, should keep a close eye on the business’s corporate account.
Most account providers also offer a dashboard that can be used to view the account’s activities. Monitor and review these regularly to maintain financial health.
3. Maintain accurate bookkeeping
Falling behind with bookkeeping can be fatal. Create a regular review and reconciliation schedule to mitigate this and maintain accurate books.
Some corporate bank accounts may also offer accounting integrations, which enable automated reconciliation and synchronization with the company’s accounting software.
4. Optimize cash flow
Keeping a close eye on company funds helps businesses improve their cash flow. Take advantage of analytic features to identify patterns that can help inform the budgeting process.
Consider the business’ cash inflows and outflows and make payments accordingly.
5. Understand fees
It’s important to understand all the fees associated with a corporate bank account. These fees should also be considered in the company’s budgets whenever possible.
The last thing a business wants is to initiate a bunch of transfers only to later realize the fees are costly.
6. Protect your finances
Implement the right policies to ensure that company funds are protected and secure. These policies should include details on how, when, and where to use company funds, as well as the reporting procedures.
Leverage security features such as two-factor authentication and encourage employees to report transactions in real time.
Charges associated with corporate bank accounts
Businesses that are familiar with what is a corporate account will know that it is not always cheap to maintain one.
It’s important to know what are all the fees and charges associated with a corporate account.
Monthly or annual fee
Most banks and financial institutions charge a monthly or annual fee to all their customers.
This information should be publicly available to potential customers and can typically be found on the banking provider’s website. Those who know what is a corporate account should be able to find it easily.
International transaction fee
International transfers can be expensive. Most banking providers will charge a fee for each instance of international transactions.
This can add up quickly. This can be a flat fee or a percentage of the transferred amount, which is typically around 3%.
Account limits
Most corporate bank accounts will have an upper transaction limit, which will differ from account to account.
Providers may be willing to process transactions above the given limit, but there will be additional costs associated with these. This is also applicable to transferring money above the account’s daily limit.
Account maintenance fee
Banks and other financial institutions have day-to-day operation costs. To help offset these, they may charge an account maintenance fee to customers.
This is often charged monthly and will typically be debited automatically from the corporate account itself.
Establishment fee
While plenty of modern banking solutions have fairly simple application processes, there may be a one-time establishment fee when setting up the account.
Think of it like an application or onboarding fee. Ideally, businesses will want to look for corporate accounts that don’t have a costly establishment fee.
Internet banking fee
To get access to corporate internet banking facilities, there may be an additional fee that businesses have to pay. This can be an upfront or recurring fee.
There are also some corporate banking providers in Australia that will offer internet or mobile banking as a free perk.
Overdraft fee
Many Australian banks and financial institutions offer overdraft facilities, which can be helpful to tide a business over, but it’s important to be mindful of their fees.
Overdraft allows businesses to make payments when there are no funds in the account, like a short-term credit.
Optimize your business with Volopay's corporate account solutions
1. Expense monitoring
Never worry about not knowing how your business funds are used. Get a higher level of transparency and visibility with Volopay’s expense monitoring tools.
Volopay offers automated expense tracking, with every transaction updated on your platform in real time.
2. Corporate cards
Get access to one of the best corporate cards in Australia by choosing to bank with Volopay.
Equip each employee with a physical card that they can use to make transactions on the go and generate as many virtual cards as they need to manage their vendor payments and subscriptions.
3. Regulatory compliance assistance
Get built-in tax calculations when making vendor payments with a Volopay business account. Compliance will never be a hassle again.
Volopay can also automatically flag any transactions that don’t comply with company policies, ensuring that all your transactions are made accordingly.
4. Business account supporting multiple currencies
There’s no need to juggle multiple corporate bank accounts just to process transactions in different currencies.
Australian businesses can leverage Volopay’s multi-currency business account and load, hold, and spend in some of the most powerful currencies globally, all under one account.
5. Affordable global payment solutions
Look no further if you’re in need of a solution to facilitate global business payments.
Make both domestic and international money transfers easily through your Volopay account, complete with affordable transfer processing fees. Get several payment options with low fees and competitive FX rates.
6. Expense management software
Set spending limits and exercise higher levels of control over your company funds with Volopay’s corporate account solution.
Your account doubles as an expense management system as well, with reporting capabilities, multi-level approvals, and departmental or project-level budgets.
7. Simple account opening process
You don’t need to go through the hassle when you open corporate bank account with Volopay.
The application and account opening process can be done fully online, with an easy form to fill out. Our team will guide you through the process.
8. Integration with accounting software
Streamline your accounting processes by integrating Volopay with the accounting automation software your business uses. Setting up integration only takes a few clicks.
You can directly and continuously sync account activities and automatically categorize transactions with ease after the initial integration setup.
9. Improved security measures
Volopay has multiple user roles with customizable permissions to ensure that all data and funds are secure.
Paired with two-factor authentication, predefined spending limits, and many other security features, you’re guaranteed to get improved security over your business finances.
10. Analytics and reporting features
Take advantage of Volopay’s analytics tools to get better controls and make smarter decisions for your company finances.
With an easy-to-use dashboard, everything you need to know about how you’re using your Volopay business account is available at your fingertips.
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FAQs
How long it takes to open corporate bank account depends on the provider and whether or not the business has all the required documents. It can be as short as 24 to 48 hours, but can also take up to 1-2 weeks. Ideally, you want to complete the application and opening process in around a week.
Most corporate bank accounts charge a monthly or annual fee, which will be automatically debited from your account. Aside from this recurring fee, there may also be international transaction fees, overdraft fees, excess transaction fees, and more. Check with your provider what the exact fee structure looks like.
Yes. Most corporate accounts allow multiple signatories. Many modern corporate accounts also offer user roles, which allows businesses to give access to users with different permissions.
A corporate account and a business account function similarly and are both intended for business purposes. However, those who know what is a corporate account might know that corporate accounts are typically geared toward medium-sized incorporated companies and large enterprises. Business accounts, on the other hand, can be utilized by sole traders or small partnership businesses.
If there are any changes, make sure to get in contact with your banking provider. The steps may look different depending on the provider, as a new structure can mean new signatories. When you open corporate bank account with a particular provider, you should also be notified by the provider what all the steps will be.
Volopay introduces security features such as two-factor authentication, simultaneous login limitations, and user roles and permissions, ensuring that only authorized personnel can access the company’s funds and business account activities.
As Volopay has ISO and PCI DSS certifications, you can also rest assured that the security measures in place are industry-standard. Paired, with the multi-level approval feature, fraud attempts are sure to be thwarted to keep your funds safe.
Yes. Volopay has integration capabilities with top accounting software providers such as Xero, MYOB, Quickbooks, and more. You can directly sync transactions and activities made on your Volopay business account with your accounting software to streamline your accounting processes.
Volopay’s business account is an all-in-one solution for companies looking to centralize their finances. This means you can manage all your business expenses in one place with Volopay’s multi-currency wallets, regardless of which country you’re sending money to. Get other benefits such as accounting integrations, reimbursement management, virtual cards, and more by using Volopay.