Starting a business in the UAE can be an exciting experience. However, when launching a business in the UAE, one of the initial decisions involved in launching a startup is opening a business bank account. A business bank account can help you manage your finances efficiently, ensure your business is compliant with the law, and create credibility in the local market. In this guide, we will take you through what you need to know regarding the opening of a business bank account for startups.
A business bank account is important for every startup for the following reasons:
In the UAE, it is necessary to have a business bank account to legally operate, and you must keep your business transactions separate from your personal account.
A business account allows for easy financial management and accounting and is important at times of tax filing or for obtaining investment from potential investors.
A business bank account will allow your company to have more credibility and trust with clients, suppliers, and partners.
A business bank account will provide you with financial services such as a business loan, credits, merchant service, and online payments.
To obtain a business bank account, you need to meet certain conditions and provide documentation.
Trade License, passport copies of the owners and partners, and proof of street address.
Certain banks may stipulate that one of the shareholders be a UAE citizen or resident.
The requirements based on type of company you are establishing i.e., whether it is a mainland, free zone, or offshore company.
You may also require company MOA (Memorandum of Association), bank reference letters, and your own financials, depending on the bank.
Choosing the right bank for your business account is a big decision. Consider these factors when making your choice:
Here is a simple step-by-step method to open a business bank account for Startups
In the UAE there are various options available when wanting to open a business account, based on choice of banking institution, and type of business planned. The most common types of accounts are as follows:
Often used by businesses which need to access funds regularly and also need a system to accept deposits, payments, and withdrawals.
Savings accounts are designed to allow companies to save and receive interest payments over time. This account is ideal for businesses that have available cash to save.
If you are planning to set up a larger business (Corporate), financial products offered by the banking institution may be more expansive and taken into consideration.
Although opening a bank account for a business may seem straight forward, sometimes it can take a considerable amount of time (and effort) to complete. There can also be challenges faced, particularly with documentation, as outlined below:
Through a business bank account start-ups can benefit from access to financial products like business loans, credit facilities, or overdrafts, providing access to cash flow at all times.
Business accounts sold through all banks to facilitate a/b-c purchases through customers via a comfortable and easy access to a transaction. The business account is advantageous for two reasons described as the transactions themselves, and transparency of process.
Business accounts also provide systematic processes for loan applications, overdraft applications, and credits, with systematic checkpoint processes outlined.
A business account, in general, allows start-ups to gather, organize, and produce accounting entries (and tax filings) seamlessly and will help separate personal versus business documents.
Ultimately, setting up a business bank account in is essential for all start-up businesses looking for a business presence in the territory. As soon you receive your business document from the bank, you will legally be compliant to operate. Note that once established, banking institutions will offer a range of services to you that are designed to grow your capital/account for growth.
Be prepared by knowing your institution of choice, obtaining documentation, or collecting all necessary documents, and the rest will proceed smoothly.
By understanding the process and guidelines, you are on your way to establishing your financial security for your future startup in the UAE.
