Corporate banking in Singapore can be a real pain in the ass.
Especially if you’re are a small business, or a solopreneur.
Here we are talking about the times when you’re making less than SG$50k a year. In our experience, this is the time when many small businesses start failing.
We feel you.
Deep down. From the bottom of our hearts.
Because we are there.
For all the fancy motivational videos about becoming an entrepreneur, the fact is that after you’ve earned your first 10,000 dollars, getting to the next bound can be incredibly difficult.
We know how it feels.
The time when you’re looking at your accounts, and you realise that the money is flowing into your personal bank accounts, via PayNow. Then the time comes when you have to pay tax. And you go,
Oh no. How do I figure out how much I’ve earned this year?
Or when you realise that you’ve to pay people for work you can’t do.
For example if you were a freelance writer, you may not be able to come up with a logo or an illustration for a client. You need someone else to help.
Or you’re set up as a sole proprietor in Singapore, hear about the latest government grant, and want desperately to get it… but then you see that you don’t have the corporate bank account that can help you get there.
First off, we hear you. But before we go on…
Celebrate yourself, you’ve made it this far
If you’re considering a corporate bank account, give yourself a pat on the back. At least you’ve gotten this far.
You’re at a stage when you’re looking to ‘officialise’ yourself. This is no longer some side-hustle. It’s a real business.
When should you get a corporate bank account?
Ideally, you should start getting a corporate bank account from the get-go. Trust me. It will help you make things clearer.
It seems like a waste of money to be spending $18 a month on your DBS Business Advance Account. You might wonder,
What am I paying for?
Here’s why you should start as early as possible.
Why should you even get one?
Firstly, it delineates your personal and business banking. You don’t want your angbao money to go into the same account where buyers are paying you.
Nor do you want your friends paying you back via PayNow going into where you’re paying suppliers.
It just makes things too confusing.
Don’t believe me?
Just wait till you’re trying to figure out how much money you’ve earned each month. Or spent each month.
That’s why we always suggest that in your business banking, you should have 3 types of accounts.
- Income – where you receive money from buyers
- Expenses – where you’re paying suppliers, or software subscriptions, or buying things for your business
- Savings – for the days when your business doesn’t earn enough money, and you still need to pay suppliers
Secondly, it makes you look more credible, especially if you’re selling to businesses.
In earlier articles, we’ve talked about how businesses buy based on ‘trust makers’, which we define as,
small details that prove your credibility and authority to do business with, such as:
- A business banking account which businesses can transfer to
- A company registration number with ACRA
- Your own website
- An email sent from your own domain, rather than the generic gmail.com
You might think this is a small thing, but if you’re competing in a global marketplace, where any business can today buy from anyone in the world, including some cheapo from Fiverr, then what makes you different from the cheaper service on Fiverr?
And your authority as an expert in your domain.
Don’t read on if you don’t believe me.
Because I’ve heard of entrepreneurs who’ve told me,
Ah John, you’re still small. Why do you need to think of all these big things?
Precisely. If you don’t think of these trust markers, you will continue remaining small.
Here’s a caveat. If your business is a service business such as personal fitness training, or bespoke illustrations, getting a business account works out better if your long term plan is to sell to businesses.
But if your plan is to continue selling to consumers, my experience is that it often doesn’t seem to matters whether or not you have a business account.
My experience since getting a business account
5 June 2020 was the day I paid $300 to get my business registered on ACRA.
1 September 2020 was the first day I got my business account with DBS.
I struggled to figure out why I should pay DBS $18 a month to bank with them, especially when I had close to $0 coming in.
But since then, I’ve seen leads trusting me because of these small markers of credibility. One of the first questions I often get when I meet people is,
What do you do?
When I tell them I run a business, the followup question sometimes is,
How are you set up?
When I tell them it’s a Private Limited, they nod and smile.
I can immediately see myself growing in stature before them.
What then is the Fintech stack you should use?
Following on from what we recommended before on the 3 different types of accounts you should get, this is the stack that we use.
Whilst it may not necessarily be the cheapest stack, it’s what we’ve found to be the most convenient one.
Here are the considerations you should have before building any stack
Here’s why we think this is still the best stack.
|Bank account||Monthly Fees||Initial deposit||Fall below fees?||Minimum balance?|
|DBS Business Advance Account (DBS unfortunately no longer offers this account)||$18||$1000||No||No|
|DBS Business Multi-Current Account||$10||No||No||No|
|UOB eBusiness Account||$2.92, or $35 per year||$1000||Yes, at $15||$5000|
|OCBC Business Growth Account||$10||$1000||Yes, at $15||$1000|
We like the good old DBS account because of the liquidity it offers us. As a business, whilst it’s good to have reserves, we didn’t like being restricted with the need to put up such a huge minimum sum.
It comes with disadvantages though. You would quickly realise that DBS makes money on the FAST and GIRO transactions, charging you $0.50 for each transaction.
You might find yourself stymied in your attempts to move money around.
That’s why another good option, especially without the DBS Business Advance Account now, is for you to use the OCBC Business Growth Account. The initial deposit is low, and they don’t charge for extra GIRO and Fast transactions.
What you start with, is probably what you will stick with
How much can you afford to pay a month?
Frankly, $18 isn’t a lot for peace of mind, and the eventual money you will get from the perceived credibility.
Even though there are companies like Anext that offer free transfers today, my experience trying to get in touch with them has been poor.
Most of the business banking solutions out there need monthly payments.
Those that don’t require payments, often don’t come with the solutions you might need. For example, when you’re registered in Singapore, there are times when the government does give out grants that you can qualify for.
But these often come with the need to have a corporate business account with the 3 big banks (UOB, DBS and OCBC), so that you get your moneys deposited.
The chart below, showing the GIRO Application Form, which will credit the money into your account, shows how you will eventually get paid.
The easy solution? Get a traditional bank account.
What kind of business is yours?
We can only speak from our experience running two different types of businesses.
- A service business in site building
- An online ecommerce business
The service business means that we don’t earn by volume but rather value per transaction.
Each month, we don’t have hundreds of transactions going in and out.
We only have about 6 a month from people paying us, but it earns us enough to keep the lights on.
This will determine what kind of corporate bank account you should get.
In the e-commerce business, you might be more keen to get an account that gives you $0 rates for many transactions, especially if you’re having to pay hundreds of suppliers each month.
Just get started
Honestly, despite us telling you all the advice, my best advice? Just start first, and think later.
You can optimise the few dollars by finding the ‘best’ account, but nothing will ever get you earning as much money as starting your own business, and learning along the way.
Let’s go. You will be glad you started.