If you are looking to start a company, one of the crucial decisions you must make is to decide on the kind of business structure best suited as per your needs. LLP or limited liability partnership is one such option. LLP is a company structure that permits partners of the company to administer and manage their internal system based on mutually discussed decisions like partnership firms. However, in the LLP structure, no partner is responsible on account of any unauthorised or independent actions of other company partners, thus preserving the personal assets and securities of individual partners. In India, this concept was started in the year 2008 through the LLP (Limited Liability Partnership) Act. Continue reading to know about the LLP current account benefits and documents required for setting it up.
Advantages of a current account for LLP structure business –
- Ease of conducting daily business transactions
A current bank account makes banking very simple. This account allows you to conduct huge transactions with no restriction on the frequency. Also, the account provides value-added services like free outstation cheque collection, free access at all international and domestic ATMs of the concerned bank, unlimited free demand draft, free cheque collection via speed clearing, free multi-city cheque books, free cash withdrawal at non-home and home branches, free home banking services, free 24 X 7 mobile, net, and SMS banking, etc.
- Simple to manage business and personal transactions separately
An offline or online current account segregates business and personal transactions. Maintaining business transactions separately through a current account allows the maintenance of proper records and shows where LLP business stands on account of profit or loss.
- Enhances credibility
Before providing any loan, lenders ensure to review the LLP’s credit rating. Hence, a bank statement from the current bank account can denote the actual rating of the LLP in terms of its transactions, profits, and losses and potential to repay the loan due on time and in full. Often, the lender also requests a letter of guarantee from the bank with whom you hold a current account. Doing so allows the lender to get an idea about your credibility.
- Professionalism
Professionalism is a fundamental need of any business. Holding a current account shows professionalism, which helps increase the goodwill and credibility of the LLP business.
- Overdraft options
Every business requires credit to meet their daily transactions in case of any fund shortage or delay in receiving payments. An overdraft facility is one of the features of current account offered by the bank to manage the regular activities of a business with ease. Banks usually charge an interest constituent on the amount withdrawn through an overdraft facility.
What are the documents required for setting up an LLP current bank account?
The crucial current account documents you must keep handy for a hassle-free LLP current account opening process are –
- PAN card in the name of the company
- LLP agreement
- Resolution for bank account opening
- Certificate of incorporation issued by Registrar of Cos
- Beneficial owner details and KYC (Know Your Customer) documents
- Address and identity proof of the partners (Aadhaar card, passport, driving license, voter ID, PAN card, and letter issued by the NPR (National Population Register))
Conclusion
A current account is an initial step an LLP company must consider taking after registration. Doing so helps the business conduct huge transactions daily with ease using a current bank account. Besides this, the account also provides benefits like an overdraft facility, free outstation cheque collection, business debit card, better forex rates, cash management services, POS (point of sales) services, a dedicated relationship manager, etc.
