Are you looking to establish a bank account for your e-commerce business? If so, keep reading to discover the steps for opening multiple global bank accounts to meet the banking needs of your international e-commerce operations.
Why E-commerce Is a Global Endeavor?
E-commerce, as it doesn't stock inventory, relies on suppliers or manufacturers handling product storage, packaging, and direct shipment to customers. Often, the supplier, manufacturer, or shipping partner and the customer are located in different countries. Manufacturing might be cost-effective in some parts of the world, while customers willing to pay for goods are situated elsewhere.
Importance of Having a Bank Account for E-commerce:
There are numerous reasons why having local or global bank accounts, or a combination of both, is critical for e-commerce businesses. While many e-commerce platforms offer wallet integrations like PayPal and others, having a company-named bank account capable of sending and receiving payments is essential for various reasons:
Cost-effectiveness: Local or global bank accounts are notably cheaper than using online payment wallets like PayPal or Payoneer. For instance, PayPal incurs excessive fees for currency exchange and international transactions. As businesses scale up, they tend to seek cost optimization, including payment and currency exchange expenses.
Enhanced credibility: Maintaining a dedicated business bank account bolsters your business's credibility when making payments to overseas suppliers, vendors, or shipping partners. It signifies the operation of a legitimate and well-organized business. If you’d like to learn more about overseas supplier payments, we have written a whole peace on that here.
Regulatory compliance: In many countries, legal requirements dictate the necessity of a local bank account for e-commerce businesses. Additionally, some local partners might exclusively settle payments to local bank accounts rather than online wallets.
Streamlined accounting: A business bank account simplifies accounting and bookkeeping processes, enabling easy tracking of all financial transactions related to your e-commerce business.
Payment processing: To receive payments from customers via debit, credit cards, or open banking solutions, a business bank account is often required to link to your e-commerce store through payment processors like Stripe or Adyen.
Financial management assistance: Business bank accounts offer tools and features tailored for business owners, including business credit cards, lines of credit, and financial management software integration, aiding in more effective financial management and potentially accessing capital for growth or risk reduction.
How to Open a Bank Account for an E-commerce Company?
Establishing a bank account for an e-commerce company involves several straightforward steps, which we'll outline below:
Determine your company structure, considering how it impacts the type of bank account you can open. The structure might range from a sole proprietorship to a corporation, with offshore jurisdictions potentially influencing account opening complexities. If you have been wondering about moving your company to an offshore jurisdiction, to lower your corporate tax, we have covered some tips and tricks in this article.
Research and select a bank that aligns with your business requirements, considering factors like fees, online platforms, services offered, and specific account requirements. If you would like to receive an up to date list of e-commerce friendly banks, reach out to us and we will share it via email.
Prepare the necessary documents for due diligence, such as incorporation certificates, ownership organization charts, IDs for beneficial owners, proof of address, business plan, and VAT registration.
Review and sign agreements provided by the bank, outlining terms and conditions for your business account.
Upon approval, the bank will furnish you with your new business bank account details for invoicing and other operational processes.
Set up online or mobile banking services to manage your account, monitor transactions, and conduct electronic transfers.
Acquiring a bank account for your e-commerce business is pivotal for financial management and compliance with legal and tax obligations. Following specific bank procedures and consulting with financial experts or legal advisors can be beneficial, especially for complex business needs or legal structures.