German business accounts
They decided to start their own small company. Perhaps you have been successful as an entrepreneur for some time and are looking for a way to keep a constant eye on your income and expenses. The reasons for looking for a business account may vary. Usually, however, you will encounter this question at the latest when you start a business. Although there are only a few legal regulations, a separate account for your business serves above all to simplify payment transactions with your customers and suppliers. In addition, a separate company account gives you a better overview of your business income and expenses as well as the taxes to be paid.
But what do you need to keep in mind when opening a business account? Which company account is the right one and what are the costs? We will answer these and many other questions here.
What is a business account?
The business account is often already recommended with the establishment of a company. This is a separate current account that entrepreneurs can use to book business deposits and withdrawals on behalf of the company. This prevents private and business incoming and outgoing payments from being mixed in the same account.
Almost every bank provides separate accounts for freelancers and entrepreneurs. The conditions for self-employed persons often differ significantly from the conditions for private current accounts. The bank thus takes account of the fact that freelancers and entrepreneurs have different requirements for their accounts.
In addition to the current account for business use, there are also overnight or fixed-term deposits for companies. They can also be differentiated according to the usual accounts for private customers and business customers.
How do classic current accounts differ from business accounts?
The functions of a business account differ only slightly from those of a private account. You transfer money from your business account, order direct debits and set up standing orders. You can withdraw money from an ATM with your EC or Giro card. Cashless payment is also possible. If you have cheque deposits posted to your account or make cash deposits, these work in exactly the same way as with a private checking account.
If you have a credit card issued for your account, you can use it to withdraw money from ATMs outside the euro area. You use your credit card for cashless payments primarily in countries with foreign currencies. Business expenses or purchases on the Internet in the name and invoice of your company are also paid for with the company credit card.
There is often a big difference between classic current accounts and business accounts when it comes to advice from the bank. Corporate customers are a lucrative clientele who are courted by many banks. However, they are also a consulting-intensive target group with special needs. Many banks have recognized this and offer a special corporate customer service. As the account holder, you then have your own personal advisor. He is very well informed about your company, knows the current business figures and has insight into the development of sales and profits. This is particularly important when it comes to granting loans. Therefore, you should seek regular exchanges with your bank advisor to take advantage of his service if it is necessary for your business situation.
A business account - many advantages
For entrepreneurs, a separate corporate account offers several advantages. First and foremost, a business account simplifies the separate processing of private and business payment transactions. This is important for you as an entrepreneur so that you have an overview of your company’s income and expenses at all times. If the transactions mix with your private payments, this overview is not given. If you carry out many transactions for your business, these can simply no longer be overlooked on the private account.
Already as a founder you can minimize your administrative expenses from the beginning with a business account. Especially with an increasing number of business bookings it is easier to start with a separation as early as possible in order to be prepared for the expansion of the business. In addition, early separation will help you avoid the difficulties of later separation. If you change your account afterwards, you will have to reckon with returns and incorrect postings that have to be corrected afterwards.
In addition, a bank may require you to open a corporate account if you have a free private account and a variety of transactions for your business. Other advantages of the corporate account are the additional services that some banks offer their customers. These include, for example, additional credit cards or the management of a foreign currency account. There are only legal requirements for companies with share capital such as the limited partnership (KG), the entrepreneurial company haftungsbeschränkt (UG) and the limited liability company (GmbH).
Also advantageous is the separation of both accounts for the insight of the tax office. The tax authority will usually require insight into your business transactions, while private expenses will not be audited by it. This is easier if you have a business and a private current account.
In what cases is a business account mandatory?
As a freelancer or self-employed person, you are not obliged to maintain a business current account. In these cases it may also be sufficient to open another private account and manage it as a company account. Make sure, however, that the account suits your needs. If, for example, you open a free account with a minimum turnover, you will have to expect additional fees if this minimum turnover is not reached. If, on the other hand, the number of bookings increases sharply, the bank will probably suggest using a business account, which can be more expensive.
You are only obliged to maintain a business account if you set up a corporation. These include in particular the limited liability company (GmbH), the limited liability company (UG) and the stock corporation (AG). With these companies, the founding capital must be paid into the company’s account. A joint-stock company is generally out of the question for founders. The GmbH and the UG are, however, very popular forms for founding a company. If you decide to do so, you must open a business account.
For whom is a business account useful?
In general, however, company accounts make sense for anyone who runs their own business because of the advantages already listed. Business accounts are not only opened by companies, but also by freelancers and self-employed with a trade.
When can which business account be considered?
Not every company account is suitable for every self-employed person. The services provided by banks vary, so it is worth comparing prices and services before opening an account. If, for example, you only do a small business, a free account with a direct bank is an interesting alternative. The netbank, N26 or the Fidor Bank are suitable for this. The Fidor Bank is also recommended as a business account for the holders of a partnership under civil law. Who leads an Onlineshop, has different offers to the selection. If the Onlineshop already reached a certain size, so that many reservations are to be completed, is worth itself a offerer with appropriate quantity discounts. Payment possibilities as the direct debit or a “Sofortüberweisung” should be absolutely possible. For a GmbH it is important to limit the necessary achievements before the account opening. Fidor Bank also offers attractive offers for this type of company.
Find the right company account: What you need to keep in mind Unfortunately there is no blanket recommendation for the right business account. It always depends on your individual needs which account is best suited. So before you open an account, think about what services are important to you. The usual services are usually part of the standard package:
- Carrying out transfers for deposits and withdrawals
- Provision of account statements
- Issue of an EC or giro card for withdrawing cash from an ATM
Further services such as the establishment of a overdraft facility and the issue of a credit card can be added. These two services in particular are cost-intensive and not absolutely necessary for self-employed or freelancers. So consider whether you want to take advantage of them. If you do not do so, you will save money, especially on the interest on the overdraft facility. Your account will then only be managed on a credit basis and no credit line will be granted.
As soon as you know what requirements you have for your company account, compare the providers. In this way, you will find the perfect account for your company relatively quickly and securely.
Open a German business account: You will need these documents
It depends a little bit on the form of the company which documents you have to present for opening an account. As a rule, credit reports are required. In addition, the contract for the account must be completed and signed. If you only need a business account for simple deposits and withdrawals, you can apply for it online at many banks with just a few clicks and easily verify it using the VideoIdent procedure. All you then have to do is enter your tax number.
Some banks may require you as a trader to submit a copy of your business registration. The bank may ask you to provide older account statements in order to obtain an overview of the scope of your previous business activities.
Other documents include your identity card and an extract from the commercial register if your company is registered. If it is a company with a partnership agreement, this must also be presented when the account is opened. If you wish to have an overdraft facility granted for your account, further documents are required. The bank then requires a current income tax assessment, a current assessment for your input tax and a bank statement showing the last advance payment for input tax.
What does a German business account cost?
Unfortunately, there are relatively few business accounts that are provided free of charge. Free business accounts are current accounts for which there is neither a basic price nor expenses for bookings. EC cards or credit cards should also be free of charge. However, such accounts may be subject to conditions such as a fixed minimum turnover. If you do not achieve this turnover, you will have to pay an account maintenance fee. Anyone who carries out payment transactions with foreign countries must pay fees for cross-border payments. Only some direct banks charge no fees for these transactions.
As a self-employed person, freelancer or small entrepreneur, you may find a bank that offers a free corporate account without conditions. You can often use a second private account for this purpose. Entrepreneurs and medium-sized businesses, on the other hand, have to open a company account with all relevant services and pay a basic fee per month. Also the reservations are frequently not free of charge, for cheque deposits or for voucher bookings a fee is due likewise. An enormous cost factor lies in the interest on the overdraft facility. They make up a considerable amount, so you should compare them carefully before opening your account.
Is it possible to open a German business account despite a creditor’s entry?
If you have a negative entry in the Schufa, it will be difficult to open an account with a bank. In particular, it is virtually impossible to set up a overdraft facility in this case. This is due to the fact that the bank assumes with such customers that they cannot repay the credit. An alternative may be to open a business account on a credit basis. No credit is then granted for the company account. Money can only be spent if there is a credit balance on the account. The Fidor Bank is a good contact in such cases. Some direct banks also provide an account if there is a credit entry. The business account of N26 is specially designed for freelancers and self-employed. Other alternatives are Holvi or Penta, which also offer an account for corporations.
In principle one must know that a Schufaeintrag will lead again and again to problems, if one leads a business relation with a bank. It is therefore highly recommended that you first concentrate on fixing the cause of this entry and wait until it is deleted from the creditor’s register before concentrating on a new professional challenge. Every Schufa entry has a reason and starting a business is an enormous burden for the entrepreneur. Therefore, it is better to first settle the financial situation and get the Schufa in order before concentrating on building a business with all the financial uncertainties.