Singapore Business Accounts: How To Choose The Right One

What is a business account?

A business account is quite simply a bank account you use for your business as opposed to your personal finances. For a newly set up company, a business account might not be too different from a consumer account. However, as the business grows, you might need a more specialised account to take care of your changing financial requirements.     

There are obvious benefits to having an account for business purposes. First of all, it separates your personal and business funds, ensuring that the former isn’t affected by your business decisions. Customers and clients perceive companies that use business bank accounts as more professional and credible than those that don’t. Furthermore, accounts for business in Singapore offer several special facilities such as multi-currency accounts, international fund transfers, trade finance, and lines of credit.

Types of business accounts in Singapore

1. Current account

The most widely used business account, a current account allows companies to deposit and withdraw funds with few restrictions. Funds can be transferred in multiple ways – electronically and via cheque or card. Current account funds are always accessible to the account holder. As a result of its liquid nature, current accounts rarely earn interest.       

2. Savings account

Similar to a personal savings account, a business savings account is where you park extra earnings and spare cash you don’t plan to use in the immediate future. The interest earned will give you a higher return on your savings. This will ensure that your business has a financial cushion to fall back on in times of crisis. Funds set aside for taxes can also be parked in a savings account to earn interest, even if it is for a short period of time.

3. Money market account

A money market account is similar to a savings account, although not quite as common. There are more restrictions on free fund transfers than in a savings account and a higher minimum deposit might be required. On the other hand, some money market accounts might offer a higher rate of interest than a savings account, though this is not the norm.

4. Certificate of Deposit account

A certificate of deposit (CD) account offers an even higher interest rate than a money market account. Funds must remain in the account for a set period. A CD account is, thus, suitable for long-term financial planning. However, Singapore banks offer extremely flexible tenors on CD accounts, ranging from one month to five years. What’s more, the funds can be withdrawn in part or wholly on multiple occasions before the date of maturity, with a penalty of course.

5. Merchant account

You’ll need a merchant account if your business accepts electronic payments via debit and credit card. A merchant account acts as the middle man between your business account and your customer’s account. When the customer pays by card, the merchant account provider verifies the transaction with the card provider, checking if the card holds sufficient funds. On receiving the all-clear from the card provider, the funds are forwarded to your business account. To set up a merchant account, you will need to apply to a bank that provides this facility. Approval hinges on several factors such as your credit track record, how long you have been in business, and any history of bankruptcy. You will likely be charged a one-time set-up fee. Fees on individual transactions vary by provider, so it is wise to check with multiple players before settling on one.

6. Others

More and more businesses in Singapore are now operating business accounts provided by non-traditional financial service providers. Aspire’s Business Account is one such example (more on this later). These non-traditional business accounts are fast gaining popularity due to their ease of use and globally competitive pricing. What’s more, they are often known to provide the best banking for small businesses. 

Furthermore, in Singapore, businesses have the flexibility to open a Singapore dollar (SGD) business account or a foreign currency (US dollar, British pound sterling, Swiss franc, Japanese yen, etc) business account.

What you need to know before opening a Singapore business account

Preparing to open a business account in Singapore? Here’s some general information on the procedure:  

Eligibility

Any individual or entity, whether Singaporean or foreign, can open a business bank account in Singapore. However, the applicant company or its directors and shareholders must not have any criminal proceedings or lawsuits against them. The directors and shareholders must also not have been declared insolvent (unable to pay a debt).

Documents

Opening a business account is easy if a company has all the required documents. These include:

• Completed bank account opening form
• Certificate of incorporation of the business
• Resolution by the board of directors sanctioning opening of the account
• Company’s business profile
• Memorandum of Association and Articles of Association (legal documents signed by shareholders and guarantors and containing rules of running the company)
• Identity proof (passport or Singapore national identity card) of all directors, signatories, and ultimate beneficial owners (the individual or entity that controls the business)
• Residential proof of all directors, signatories, and ultimate beneficial owners.    

All documents must be submitted in copies that are ‘certified true’ by a company director or secretary. Usually, banks demand to see the original documents at the time of opening the account. They might also ask for additional documents – such as a letter of recommendation from the bank’s overseas branch or another reputable bank, or documents from the relevant Singapore authority for specific businesses such as financial services and delivery services.

Physical presence

Account opening applications can be filed online. However, most banks require the authorised signatories and executive directors to be physically present in Singapore for the signing of documents. Some banks might allow the paperwork to be processed at an overseas branch or in front of a notary public. It is best to find out about such requirements beforehand.

Fees and pricing

Banks in Singapore don’t normally charge an account opening fee. However, there are initial deposit and monthly minimum balance requirements as well as transaction and monthly maintenance charges to consider. Banks allow a specific number of free transfers in a month, after which a transaction fee applies. Similarly, if the monthly balance falls below the required monthly average, there might be a penalty charge. Some banks offer initial waiver periods on banking charges, so make sure you are aware of these as well.

‍Time taken

Opening a Singapore business account can take up to four weeks, given the country’s strict verification process. The time might be shorter for businesses owned by Singaporeans. If you need to open a business account in a hurry, you could opt for Aspire’s Business Account. Opening the account takes just five minutes and you’ll receive an account number and virtual card instantly upon approval.

For more on how to open a business account in Singapore, click here. 

Pros and cons of different business bank accounts

What is the best business bank account for you?

What is the best business bank account in Singapore for you? It depends on your needs and the size and nature of your business. For instance, a current account ought to be enough for a newly opened company with low transaction volumes. A multi-currency account is a smart choice for businesses with global ambitions. And, if your business is modestly sized, then one of Singapore’s many small business accounts might be what you need. Given that SMEs make up a large chunk of Singapore’s economy, here’s what to consider when opening a small business account:

• Initial deposit: Small businesses have limited resources and funds, so Singapore small business accounts require a reasonably low initial deposit. One of Singapore’s leading local banks, DBS, offers a Business Multi-Currency Account targeted at small businesses that requires an initial deposit of just SGD 1,000.
• Minimum balance: Many small business accounts in Singapore don’t have a minimum balance requirement, which means there is no danger of missing the monthly average balance and paying a fall-below fee.
• Free transfers: Unlimited free transfers are another useful feature of small business accounts. Remember to check if both local and international transfers are included or just one of them.
• Interest-earning potential and cashbacks: Interest rates vary from bank to bank. So, if you plan to leave your money long enough for it to earn interest, it makes sense to go for a business account with a higher interest rate. Many small business accounts also come with free business debit cards that offer cashbacks or rebates on both SGD and foreign currency transactions, increasing your earning potential.

• Banking services: It pays to check if your chosen bank provides digital banking and integration with your company’s accounting software. These features can save you considerable time, allowing you to concentrate on other aspects of your business.

For Aspire’s pick of the four best business bank accounts in Singapore in 2022, click here.  

Key considerations while choosing a business account

Whether you are a small business or an established player, there are numerous other factors that should be considered while choosing a Singapore business account:  

• Reputation: Reliable services, confidentiality, data protection and security, creditworthiness, and an international presence are attributes that build up a bank’s reputation. If you have shortlisted a bank, talking to its customers about their experiences is always a good idea.
• Expertise: To offer your business the best service and guidance, your bank must have experience working in your field. This is because every industry has its own unique challenges. For example, a new business might be better off opening an account in a bank that offers special facilities for start-ups rather than in a popular bank with no such targeted services.
• Special services: Does your bank offer mobile and internet banking, foreign exchange facilities, trade finance, wealth management? Specialist services are always a deal-maker. Fully automated banking services, for example, ease the process of making payments, sending invoices, and tracking online deposits. It’s important not only to check if a bank offers these services but also to verify their quality before you open a business account with them. 
• Fees, interest rates, and deposit requirements: Initial deposit and minimum balance requirements as well as banking charges vary from bank to bank. Remember to compare banks to get the most competitive prices. Some banks charge for telegraphic transfers, foreign currency remittances, and transfers to other banks while others might waive these fees. However, while pricing is important, it shouldn’t be the only deciding factor.
• Easy access: Does your bank have a 24x7 customer care facility and toll-free helpline? Does it have a branch close to your place of business? A bank’s physical presence and remote accessibility are crucial to conducting your business seamlessly.

Try Aspire Business Account

If you need the best banking for small businesses, try Aspire’s Business Account. Built for start-ups and SMEs, it comes with all the trappings of a traditional business account and more. Here are some key features:

• It is fast. Opening an account takes just five minutes.
• It can be opened, operated, and managed online. 
• You can open both SGD and USD business accounts.
• You can send and receive payments in more than 30 currencies and across 130 countries.
• It offers competitive transfer fees and market-leading foreign exchange rates.
• Our multi-currency accounts catering to small and growing businesses are extremely reasonably priced starting at between SGD$12 per month.
• You can manage all your subsidiaries on one platform and switch between business entities with ease.
• Can be easily integrated with your accounting software.

There’s another advantage to choosing Aspire. If you are yet to register your Singapore business, Aspire can do it for you at a favourable price, and you’ll get an Aspire all-in-one business account in the bargain.