March 29, 2021 · 7 min read
How an Individual Entrepreneur can open a current account, and what to pay attention to when choosing a bank
- Is an Individual Entrepreneur obliged to open a bank account?
- What an Individual Entrepreneur should focus on when choosing a bank
- How to choose a bank and what documents are needed to open a bank account for an Individual Entrepreneur
- What operating mode do Ukrainian banks have?
How an Individual Entrepreneur can choose a bank to open an account
When you start entrepreneurial activity, a lot of organizational work arises, and many different documents need to be processed quickly. This is accompanied by a series of questions that are difficult to answer without practical experience. Therefore, this article will be useful if you are a novice entrepreneur who is just planning to start your business. You will be able to learn about important aspects of working with banks and bank accounts for individual entrepreneurs, and what to pay attention to so that resolving business issues with the bank does not take much time.Is it mandatory for an Individual Entrepreneur to open a bank account?
Legislation does not stipulate that an Individual Entrepreneur is obliged to open a bank account. This means that if you only work with cash, the question of opening a bank account is at your discretion. However, if you plan to accept online payments from customers to a bank card and pay bills related to the Individual Entrepreneur's activities without cash, then you need to open a bank account.What is important when choosing a bank, and which bank is better to open an account with?
In Ukraine, there are many banks: from state-owned to branches of foreign banks. An Individual Entrepreneur can open an account in any of them.What you need to do before choosing a bank to open an account:
- Analyze the reliability rating of banks. This important point will help you protect yourself from unreliable and problematic banks. Quarterly, the Ministry of Finance assesses the rating of stability of Ukrainian banks.
- Evaluate the list of banking services according to your business needs. Assess the terms under which various necessary banking services are provided. Take into account planned revenues, the presence of hired employees, and other factors.
- Study the tariffs for banking services: the cost of opening a current account, the amount of the monthly fee for using the account, the amount of commission for making payments, withdrawing/depositing cash, the cost of issuing a card, the cost of using internet banking.
- Check on the map if it will be convenient for you to get to branches, ATMs, and partner banks.
- Find out about the operating hours of the bank and cash desk.
- Read user reviews about internet banking and the mobile application. Are they convenient, understandable, and easy to use?
- Find information about customer support, quality of customer service, and operating hours. Various situations may arise where only a bank manager can help you, for example, when you need assistance filling out a payment order, or need to change your client-bank password or generate client-bank keys. Therefore, it is best to save the phone numbers of customer support and bank managers, and clarify their working hours.
What are the conditions for opening a bank account?
You can open an account at a bank branch or remotely. Remote account opening is becoming increasingly popular, as you don't need to go to a branch or bring documents – everything can be done online.The procedure for opening an account in banks is as follows: you provide the necessary documents, fill out applications/forms, conclude an agreement, and that's it – the account is open.
If you decide to open an account, special attention should be paid to banking service tariffs, namely:
- cost of opening an account: most banks (e.g., Raiffeisen Bank Aval, Credit Agricole, PrivatBank, Monobank) offer free account opening for Individual Entrepreneurs
- monthly subscription fee or account maintenance fee (some banks do not charge such a fee for Individual Entrepreneur accounts)
- commission amount for transferring funds to accounts of other banks, for crediting money to the account, for withdrawing funds, and so on
- whether the bank provides acquiring services (merchant/internet acquiring) and its cost. This is important if you plan to accept card payments online or via a POS terminal.
Requirements for opening a current bank account for an Individual Entrepreneur
- be a registered Individual Entrepreneur
- have the necessary documents for the chosen bank, an electronic digital signature (for online account opening)
- be a client of the bank. This usually means that you should have a bank card, an open deposit, etc. Most often, this is not a mandatory requirement.
Regardless of whether you open an account at a branch or online, this procedure will not take much time.
What operating mode do banks have and is it possible to pay taxes after midnight?
The question often arises: can I make a payment today if it's already eight in the evening? The answer is yes, you can, because Ukrainian banks switched to a 23/7 banking day on August 3, 2020.What does this mean? The Electronic Payment System (EPS) is available for interbank payments 23 hours a day, 7 days a week. EPS participants can transfer funds from 01:00 to 24:00. There is a one-hour technological break in the system's operation during the transition to a new banking day – from 00:00 to 01:00.
Keep in mind that banks operating in 23/7 mode is voluntary. Although the Electronic Payment System has provided for 23/7 operation, each bank independently determines its operating mode, which may be less than 23/7. Therefore, consider and clarify this information with your banks if you have important payments. You need to know when banks operate and at what hours they process payments.
For example:
- Raiffeisen Bank Aval processes payments that do not require bank verification from 4:00 to 23:00
- Credit Agricole Bank - incoming payments: 8:30-24:00, outgoing payments: 9:00-21:00
- UkrSibbank – incoming payments 8:30-24:00, outgoing payments 8:30-18:45
- PrivatBank states on its website that they ensure 24/7 payment processing.
- An Individual Entrepreneur can open a bank account in any bank, however, legislation does not stipulate that an Individual Entrepreneur is obliged to open a bank account.
- when choosing a bank, you should focus on your business needs
- banks operating in 23/7 mode is voluntary. Although the Electronic Payment System has provided for 23/7 operation, each bank independently determines its operating mode, which may be less than 23/7.
From it, you can learn:
- whether a buyer can pay for goods/services to an Individual Entrepreneur's personal account
- whether an Individual Entrepreneur can spend money from their business account for personal needs
- whether an Individual Entrepreneur can transfer money from a business foreign currency account to a personal one
- how to withdraw funds from an Individual Entrepreneur's account
- what an IBAN account is and why it is needed.
