What is business deposit

[Mutt]

A business deposit is a special deposit in a bank, on which the bank charges interest to the owner for the storage of funds of an individual entrepreneur or a legal entity.

Legal entities operating large amounts of funds received from clients, with the right approach and business conduct, often accumulate surpluses remaining after salary payments, purchasing new consignments of goods, paying taxes, etc. - that is, net profit. If, according to the terms of the company's charter, dividends are paid to the owners once a year (no more than once a quarter), then it is logical to put the accumulated funds in the bank at interest, which will ultimately bring even greater profit.

Individual entrepreneurs can withdraw profits for their own needs without any problems (including without registering the payment of dividends). In this case, the bank's depository services allow you to increase your savings by simply storing funds in the account.

Features of deposits for business

1. The bank will not charge interest “just like that”. In order to benefit from your assets, he needs to perform some actions with money. This means that at the time of their use, the client should not withdraw the invested funds from the turnover, since this promises the bank growing risks and problems. Therefore, the possibility of withdrawing cash from the deposit is clearly stipulated in the service agreement. Credit organizations set different minimum terms for calculating interest, but the bottom line boils down to one thing - the longer the deposit is kept, the more banks are willing to pay. However, in accordance with the current legislation, the bank cannot block the withdrawal of money from the account. Therefore, a premature withdrawal in case of urgent need will deprive the account holder of the promised dividends.
2. Many banks offer custody services in conjunction with settlement and cash services. But this does not mean that you can or need to keep a deposit only in the bank in which you keep a current account for your business. You can transfer and store surplus in any other bank.
3. There is no need to notify the tax or other state services about the opening of such an account.
4. Since the interest received on the deposit is classified as income (this happens at the time the money is transferred from the depositary to the current account, before that the deposit is not considered by the tax as an asset of the enterprise), they must be posted in accounting, and taxes must be paid from the amount received ( the payment scheme depends on the form of taxation).

How to choose a deposit for a business
Credit institutions offer a wide range of custody services. The main parameters of deposits are the following:

1. Rate. This is the accrued interest when the terms of the deposit agreement are fulfilled. The accrual scheme can be different - upon the expiration of a short period of time (day, month, quarter, year) or upon the expiration of the entire term of the agreement (only at the end);
2. Minimum amount. Individual banks can limit the amount of the initial contribution to the deposit, in fact, as well as the maximum amount;
3. Replenishment. In some cases, the bank may refuse additional contributions to the depository account (difficulties arise with the calculation of interest, the amount of the initial payment specified in the agreement changes, etc.). Although individual services may even involve repeated replenishment of the deposit within a certain period (for example, at the beginning), no more than a fixed value (more often expressed as a percentage of the initial contribution) or not less than any value (amount or percentage);
4. Partial withdrawal. The invested funds can be returned without prejudice to interest. However, deposits / deposits with partial withdrawal may have a minimum balance and lower rates compared to other types of deposits;
5. Early withdrawal (revocation). In most cases, early termination of the deposit agreement entails settlement with the client at the rates of demand accounts (current bank accounts with a low interest on the balance, for example, 0.1% per annum). But some banks provide for a complete termination of the contract with the calculation of the due amount based on the number of days during which the deposit was available to the bank;
6. Prolongation. Upon the expiration of the term of the agreement, the funds from the deposit can be returned to the owner by transferring to the current account together with the due interest. Prolongation allows you to automatically renew the agreement between the client and the bank. The accrued interest will be transferred to the current account, and the deposit itself will remain in the bank, as when concluding a new agreement;
7. Capitalization of interest. Capitalization allows you to turn accrued interest into a deposit. The amount received at the end of the first contract is included in the principal amount of the installment and the contract is renewed.

To choose the right deposit, you need to analyze and calculate all possible options, which will require a lot of effort and time from you.
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