How to Open a Small Business Bank Account - Tips & Setbacks
Are you planning to start your own business or expand your operation? Do you need to open a business bank account and don’t know where to start? Opening a business bank account is the first hurdle that every entrepreneur needs to overcome. Fret not - read on to understand the process of opening a small business bank account in Hong Kong.
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Challenges of Opening a Business Bank Account for SMEs
In July 2022, the Financial Secretary, Mr. Paul Chan Mo-po, mentioned in the “Money Laundering and Terrorist Financing Risk Assessment Report” that Hong Kong is one of the world’s freest economies. It is also among the world’s largest and most sophisticated financial centres. While these longstanding strengths have given Hong Kong many competitive advantages, they also carry risks, including attracting money laundering and terrorist-financing activities. The money laundering and terrorist-financing landscape has continued to evolve, particularly in regard to digital financial technologies.”1 The Anti-Decpetion Coordination Centre (ADCC) has provided advice on anti-money laundering measures to encourage banks to use compliant technological solutions to prevent the misuse of banking services for illegal purposes and to support banks in their risk management and compliance work. Banks are required to fulfil their compliance obligations1 and must exercise stringent gatekeeping; they cannot afford to be lax in handling business account openings. This following may provide a detailed explanation of the process of opening a business account for SMEs and practical tips on opening a business bank account# with a bank.
SME Business Account Opening Tip 1#: Prepare All Documents
To speed up the process of opening a business bank account, the company applicant should prepare all required documents when submitting an application to save time and avoid the need to resubmit missing documents. Details of the documents needed for the application for a business bank account online with DBS SME Banking can be found here. Additionally, suppose the company is a start-up founded within one year from the application date. In that case, the applicant is required to submit a business plan and LinkedIn pages/resumes of the company founder(s)/beneficial owner(s) or a contract/quote/letter of intent for investment with a business partner.
SME Business Account Opening Tip 2#: Specify Business Nature on the Business Registration Certificate
The Business Registration Certificate should clearly state the scope and nature of the business. Upon incorporation and before the commencement of business by local limited companies, the nature of business is shown as “CORP” in their Business Registration Certificate. Therefore the company is required to notify the Business Registration Office of the Inland Revenue Department (IRD) of business’s name and the business nature in writing within one month after the company has commenced its actual business2, e.g., what type of services or products will be provided, etc.
SME Business Account Opening Tip 3#: Applicant’s In-Dept Knowledge of Company’s Operation
Banks are interested in acquiring more information on the applicant’s company plans, business scope, cash flow management, etc. The applicant should demonstrate in-depth knowledge of the company’s operation during the meeting with the bank’s representatives. This enhances the bank’s understanding of the company’s business, future cash flow plans, etc.
SME Business Account Opening Tip 4#: Open a Bank Account Online
DBS SME Banking has been awarded “Hong Kong’s Best Bank”* and “World’s Best SME Bank”*. Opening a business bank account online is quick and easy. Click here to submit your DBS online business bank account application anytime, anywhere, without visiting our branch in person. You can set up a business account online in as fast as 2 working days^.
Article published on 18 October, 2023
1Source: Countering Money Laundering and Terrorist Financing - “HONG KONG MONEY LAUNDERING AND TERRORIST FINANCING RISK ASSESSMENT REPORT” P.5 Foreword by Financial Secretary, 2022 (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.fstb.gov.hk/fsb/aml/en/doc/Money%20Laudering%20Report_2022_EN.pdf)
2Source: Inland Revenue Department News Archives - INLAND REVENUE DEPARTMENT NOTICE
BUSINESS REGISTRATION (https://www.dbs.com.hk/sme/disclaimer.page?url=https://www.ird.gov.hk/eng/pdf/2018/br_201810.pdf)
* DBS Hong Kong received the following awards in 2020: ‘Hong Kong’s Best Bank’ and ‘World’s Best SME Bank’ from Euromoney’s Awards for Excellence 2022, ‘Hong Kong’s Best International Bank’ from Asiamoney’s Best Bank Awards 2022, ‘Best International Bank in Hong Kong’ from FinanceAsia’s Country Awards 2022 as well as ‘Bank of the Year – Outstanding Performance’ from Bloomberg Businessweek’s Financial Institution Awards 2022
#Subject to eligibility and conditions.
## Online reference only. The success of account opening depends on the approval process of the relevant bank.
^Terms and conditions apply.
***Subject to eligibility and conditions.
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