Is it mandatory to open a corporate bank account? How to use a corporate account? What are the benefits for businesses? fdiinvietnam.com will answer all your questions in this article.
Is it mandatory to open a corporate account?
Many business owners often wonder: “After establishing a company, is it mandatory to open a bank account immediately?”
➜ The answer is not required.
The law does not require businesses to open a bank account. However, currently, up to 90% of Tax Departments require businesses to pay taxes through electronic tax payment to reduce administrative overload. Moreover, bank accounts also help businesses to be more convenient in transactions with customers and partners. Therefore, opening a bank account, although not mandatory, is still necessary for businesses.
What is a corporate bank account?
Bank accounts serve many subjects but are mainly divided into the following 2 groups:
➧ Personal account
Personal accounts are no longer strange, because almost everyone uses at least one account at any bank to deposit, keep money and make daily payments.
➧ Corporate and business accounts
Similar to a corporate account, however the account owner is not an individual but a legal entity (LLC, joint stock company…), a private enterprise.
The purpose of opening a corporate account is to make transactions and pay expenses such as employee salaries, premises, electricity and water, etc.
According to Circular 02/2019/TT-NHNN: “An organization’s payment account is an account opened by an organization’s customer at a payment service provider. The organization’s payment account holder is the organization that opens the account. The legal representative or authorized representative (collectively referred to as the legal representative) of the organization that opens the payment account shall, on behalf of that organization, perform transactions related to the payment account within the scope of representation.”
“In which, organizations established and operating legally under the provisions of Vietnamese law include: legal entities, private enterprises, business households and other organizations that are allowed to open payment accounts at banks and foreign bank branches under the provisions of law”.
Why open a corporate account?
➧ Open a business account for convenience in transactions and work
Using a bank account brings the following values to businesses:
- Pay business license tax, VAT, corporate income tax… without having to go to the bank or treasury;
- Demonstrate business professionalism to partners and customers;
- Convenient in transactions with customers, saving time and costs;
- Control and manage well the spending and financial issues of the business;
- Valid proof for invoices for purchasing goods and services each time with a payment value of 20 million VND or more.
➧ Open a business account to qualify for corporate income tax (CIT) deduction
According to the Law on Corporate Income Tax, a business’s income tax will have non-deductible and deductible items.
Pursuant to the provisions of Clause 5, Article 1 of the Law on Corporate Income Tax amended in 2013, Clause 2, Article 6 of Circular No. 119/2014/TT-BTC of the Ministry of Finance guiding on corporate income tax and Clause 3, Article 1 of Law No. 71/2014/QH13 on tax amended in 2014, enterprises are allowed to deduct all expenses when determining taxable income if they meet the following conditions:
- Actual expenses arising in relation to the enterprise’s production and business activities; expenses for vocational education activities; expenses for performing the enterprise’s national defense and security tasks as prescribed by law;
- Expenses must have sufficient invoices and documents as prescribed by law. For invoices for purchasing goods and services each time with a value of VND 20,000,000 or more, there must be a non-cash payment document (meaning the transaction must be made using a business account). Except for cases where it is not required to have a non-cash payment document as prescribed.
➧ Open a business account to qualify for value-added tax (VAT) deduction
According to the provisions of Circular 173/2016 amended and supplemented, Circular 219/2013/TT-BTC and Decree 209/2013/ND-CP issued by the Minister of Finance, the conditions for input value added tax deduction must include:
- Non-cash payment documents for purchased goods and services (including imported goods) from VND 20,000,000 or more, except for cases where the total value of purchased goods and services per invoice is less than VND 20,000,000 at the price including VAT. Non-cash payment documents include payment documents via bank and other non-cash payment documents;
- Bank payment documents are understood as documents proving the transfer of money from the buyer’s account to the seller’s account. These accounts are opened at payment service providers according to payment methods in accordance with current legal regulations.
For example:
Checks, payment orders or payment orders, collection orders, bank cards, credit cards, phone SIM cards (electronic wallets) and other forms of payment as prescribed. Including the following cases: The buyer pays by account from the buyer to the seller (in the name of the private enterprise owner); the buyer pays by account from the buyer (in the name of the private enterprise owner) to the seller.
Thus, if a business wants expenses to be deducted when calculating corporate income tax and input VAT to be deducted, expenses of VND 20,000,000 or more of the company must be paid from the company’s bank account.
Therefore, opening a corporate bank account is necessary. Enterprises need to notify all corporate accounts to the Department of Planning and Investment according to the law to avoid being fined for late notification of changes in bank account information.
How to use corporate and business accounts
➧ Withdraw money from corporate account
Withdrawing money from a company or business account for consumption to serve the company’s production and business activities is not as simple as a personal account. To withdraw money from a company account, you need to use a check.
Businesses can register to buy checks at the bank where they have opened their business accounts. Checks for withdrawal must be stamped with the company’s seal and signed by the legal representative, and have the information of the person withdrawing the money to be accepted by the bank.
➧ Transfer money from company account properly and legally
In fact, due to lack of knowledge of accounting and tax laws, many individuals have used personal accounts to pay suppliers, as well as used company accounts for personal consumption, leading to quite serious risks for businesses. Some common mistakes are as follows:
- Corporate account receives money from personal account;
- The director transfers money from the company account to the partner’s personal account;
- The director transfers money from the company account to the director’s personal account;
- Transfer money from a business’s personal account to another party’s company or personal account;
- And many more…
Improper transfer or receipt of money through a company account will affect the company’s books and may result in the company being fined for administrative violations of accounting that do not comply with the prescribed content of the accounting account as prescribed in Article 10 of Decree 41/2018/ND-CP.
Therefore, when conducting transactions with corporate accounts, business owners should follow the following two principles:
- Transfer money from company account to partner’s company account;
- Payment in cash or transfer from personal account to personal account for expenses without invoices (this form is considered cash payment).
How to fix mistakes when using corporate accounts incorrectly
Depending on each case, the error when using the company account will have different solutions. Online Accounting will guide you in detail on how to handle each case as follows:
➧ Case 1: Use a corporate account to transfer money to a personal account
A company is a separate legal entity, so transferring money from a company account to a personal account is considered a violation (whether for personal or business purposes).
In this case, the possible risks are:
- Unable to separate expenses for company operations and expenses for personal operations, leading to difficulty in monitoring business performance and profits and losses;
- Increased risk of company assets being misappropriated for personal use;
- Administrative penalties may be imposed for violations of regulations on accounting documents according to Decree 41/2018/ND-CP;
- Criminal liability may be prosecuted for acts of abusing power to appropriate property if causing serious consequences according to Penal Code No. 100/2015/QH13.
Remedy:
For private enterprises or single-member LLCs (director is the owner of the company):
- Use an advance request form (for small amounts);
- Use a loan agreement (company lends money to director or individual lends money to company).
For a single-member LLC (different director and owner), a LLC with two or more members, a joint stock company, a partnership, or a joint venture:
- Establish strict cash and bank deposit control procedures;
- For each transfer order, signatures from authorized positions are required, for example, a transfer order must have at least the signatures of the director, chief accountant and the individual performing the task (if any).
➧ Case 2: Using personal account to pay company expenses
The following items are not included in the business expenses when settling and cannot be deducted from the VAT amount in the accounting period:
- Invoice from 20,000,000 VND or more (including VAT);
- Or the total value of input invoices issued on the same day by the same company is from 20,000,000 VND or more.
If the enterprise still declares VAT and the above expenses, the risks that may occur are:
- Tax authority deducted expenses;
- Subject to collection of corporate income tax and VAT;
- Fines include late payment fees of 0.03%/day (calculated from the time the tax liability arises) and administrative fines of 20% of the tax arrears (Clause 2, Article 10, Decree 129/2013/ND-CP).
Remedy:
- The company decides to authorize an individual to make payment or as stipulated in the company’s regulations;
- Proactively exclude expenses and VAT when preparing tax reports and year-end settlement reports to avoid being collected and fined by tax authorities according to tax law;
- In case the business promptly detects the payment to the wrong account, it can legalize it by contacting the partner to make the transfer payment using the company account and receive the first payment using the personal account.
Note :
Invoices for purchasing goods and services must have the business’s information, must have documents for transferring money from the personal account for payment, and documents for transferring money from the business to the individual.
Which bank should I open a corporate account at?
1. Which bank should I open a business account at?
Currently, there are many banks for businesses to choose from, such as: Vietcombank, ACB, MB, BDV…
Each bank will have different procedures for registering to open a corporate bank account. However, normally the director or legal representative must bring relevant documents directly to the bank to complete the procedure.
You can refer to the article below to know how to open a business bank account.
>> See details: Procedures for opening a corporate bank account.
2. Company bank account opening service at fdiinvietnam.com – Free and on-site
Online Accounting has links with a number of banks to simplify the process of registering to open an account for businesses. You can refer to the following table.
| Ho Chi Minh City | Hanoi | Danang |
| MB
ACB UOB Vietcombank |
MB
ACB BIDV |
MB
Sacombank |
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Currently, fdiinvietnam.com supports procedures for opening bank accounts – on-site and free of charge for businesses using company establishment services at fdiinvietnam.com.
So, if you are planning to open a company, to not only optimize costs and time but also be able to complete many important procedures at the same time, call Online Accounting immediately.
| Free – Bank account opening service
When using company establishment service – service fee is only 250,000 VND |
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Frequently asked questions about business accounts
1. What is a corporate account?
A corporate account is a bank account owned by a legal entity, private enterprise, etc. A corporate account is used to pay for transactions of a company or enterprise.
2. Why open a corporate or business account?
The benefits of a corporate account are:
- Convenience in transactions and work: Demonstrates the professionalism of the business to competitors and customers; convenient in transactions with customers, saving time and costs; valid proof for invoices for purchasing goods and services each time with a payment value of 20 million VND or more;
- To qualify business expenses for deduction when calculating corporate income tax;
- To qualify for VAT deduction.
See details: What is the purpose of opening a corporate account?
3. Is it mandatory to open a corporate account?
However, currently, up to 90% of tax departments require businesses to pay taxes through electronic tax payment to reduce administrative overload. Moreover, bank accounts also help businesses to be more convenient in transactions with customers and partners. Therefore, opening a bank account is necessary for businesses.
4. What to do if you accidentally use your personal account to pay business expenses?
In case you pay company expenses with your personal account, you can refer to the following handling method:
>> The company issues a decision to authorize an individual to pay or stipulates in the regulations;
>> Proactively exclude expenses and VAT when preparing tax reports and year-end settlement reports;
>> In case of timely detection, you can legalize it by contacting the partner to make a transfer payment using the company account and receive the first payment using the personal account.
5. What are the conditions for business expenses to be deductible for VAT?
To be eligible for VAT deduction, invoices for purchasing goods and services each time with a value of VND 20,000,000 (twenty million VND) or more of a business must have a non-cash payment document (meaning the transaction must be made using a business account). Except for cases where it is not required to have a non-cash payment document according to the provisions of law.
6. What is required to withdraw money from a corporate account?
To withdraw money from a corporate account, you need to use a check. Businesses can register to buy a check at the bank where the corporate account is opened. The check must be stamped with the company’s seal and signed by the legal representative, and have the information of the person withdrawing the money to be accepted by the bank.
7. Will I be penalized if I use a corporate account to transfer money to a personal account?
Transferring money from a corporate account to a personal account is considered a violation of accounting regulations under Decree 41/2018/ND-CP, which may result in penalties. In cases where serious consequences occur, criminal liability may be prosecuted for acts of abusing power to appropriate property under the Penal Code No. 100/2015/QH13.
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