Corporate salary accounts are a type of bank account that organisations (employers) open in collaboration with a bank to pay salaries to their employees. These accounts enable easy disbursement of salaries and provide a perfect fusion of banking convenience and exclusive offers. Despite their usefulness, there are a lot of myths about corporate salary accounts that can be confusing. Whether you’re an employee or an employer, knowing the ins and outs of corporate salary accounts is essential for effective money management. Further, we’ll debunk some of the most common myths surrounding corporate salary accounts and set the record straight on the facts.
Myth: Anyone can open a corporate salary account.
Fact: The employer typically opens a corporate salary account for each employee with a bank. However, in certain cases, banks may allow individuals to open a salary account independently, but they will require employment verification from the employer.
Myth: Corporate salary accounts are only for large companies.
Fact: Contrary to popular belief, corporate salary accounts are not limited to large companies. These accounts can be used by businesses of all sizes, from small start-ups to large corporations. This is because these accounts aim to provide employers with a more efficient way to manage their employees’ salaries and offer them access to specialised banking services.
Myth: Setting up a corporate salary account is difficult and takes time.
Fact: Opening a corporate salary account is relatively straightforward and can typically be completed in just a few days. Banks might ask for specific paperwork and data from both the employer and the employees, but once they have it, they can quickly process the application and open the account. It’s important to note that the procedure and requirements might vary from bank to bank.
Myth: Corporate salary accounts do not provide additional benefits.
Fact: Since these accounts receive a fixed sum of money each month, they are more profitable for banks. As a result, they provide more benefits like zero minimum balance, phone banking, online fund transfer, debit card, personalised cheque book, easy access to loans, and special discounts on other bank products. Comparing the benefits and services of different banks before selecting the best corporate salary account is crucial because some may offer better terms than others.
Myth: You cannot deposit cash in your corporate salary account.
Fact: You can deposit cash into your salary account at any time. However, there may be instances where you need to declare the source of the money, particularly if it is a large amount. This may include money earned from another source or gifted by someone. If the money deposited is additional income, it must be disclosed in your annual income tax returns. If the cash is a gift, it’s wise to determine your tax liability and file your taxes on time. Remember that cash gifts from relatives are typically exempt from income tax. Additionally, there may be a small fee if you exceed the specified number of over-the-counter transactions, such as depositing cheques, cash, or withdrawing cash.
It’s important to remember that bank employees are the only individuals who cannot deposit cash in their salary accounts to maintain transparency in the bank’s business.
Conclusion
Accurate knowledge of corporate salary accounts can help both employers and employees make wise financial decisions. Employees can make the most of their income and effectively plan for their financial future, while employers can optimise employee compensation and benefits packages while avoiding potential compliance issues.
Educate yourself and make informed choices for a financially secure future!
