Q:

What is the purpose of a corporate savings account?

A:

Quick Answer

A corporate or business savings account allows a business to earn funds on deposits while maintaining liquidity, according to U.S. Bank. A business savings account includes Federal Deposit Insurance Corporation insurance to applicable limits.

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What is the purpose of a corporate savings account?
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Full Answer

A business owner needs to provide several items of information to open a corporate or business savings account. The bank needs to know if the business is a sole proprietorship, partnership, limited liability corporation, corporation or nonprofit organization. The owner needs the business's Employer Identification Number or the owner's social security number if the business is a sole proprietorship. The owner also must provide a legal document showing when the business was formed and a government-issued photo identification card and social security number for any person authorized to sign on the account, states U.S. Bank.

A business can choose from several different types of savings accounts, according to Wells Fargo. These account types include money market accounts, certificates of deposit and traditional savings accounts. Money market accounts are for a new or expanding business that wants to build its savings. Federal Regulation D limits this type of account to six withdrawals per year. A certificate of deposit account pays a fixed interest rate for a fixed amount of time; this type of account is for a business that wants to earn interest on cash reserves. A traditional savings account is for an established business that wants to earn higher interest rates on larger deposit amounts.

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