Opening salary account - Is it necessary employee would be permanent?

I want details about the points to keep in mind when opening a salary account for an employee. This is urgent because our company is new and about to open some salary accounts with IDBI bank. Our company deals in market research and web development. Is it necessary for the employee to be permanent (or can they be a freelancer as well)?

Keep in mind the following:

1. Bank reputation and credibility
2. ATM locations
3. Extra facilities in salary accounts like zero balance, charges, etc.
4. Other facilities like withdrawal limit, etc.

Regards,
Nikita

Thank you, Nikita.

Actually, I want to know the related documents/parameters of employees (for permanent as well as freelancers) when opening a salary account.

Regards,
YKSONI.

It depends on the type of employment. For example, if you hire someone on a contract or retainer for a year, you might want to open a salary account because the person will likely be paid a salary. However, if the individual is on a short-term contract (3 months) or is a freelancer, there will be no salary, and only consultancy fees will be given to the individual after deducting TDS. In that case, you do not need to open a salary account with the bank to transfer the amount; instead, you can make a cheque payment.

Hope this helps!

Regards,
Nikita

Hi,

The following documents are needed for opening the salary account:

1. Copy of the PAN Card of the Employee.
2. Address Proof of the Employee.
3. Letter from the company to the banker stating that we have an account with your bank and would like to open a salary account for our employees, whose names are provided below.
4. 2 passport size photos of the employee.
5. If the employee does not have a PAN card, the Form 60 attached to the salary account opening form should contain the employee's signature.
6. The address proof can be a Passport, Driving License, Voter's ID, etc.

Please ensure all the required documents are provided to facilitate the opening of the salary account. Thank you.

There are a few steps to consider when selecting a bank. It's a corporate decision, so check with your finance team. Usually, in a start-up, the company partners with one bank for all financial dealings.

The second step is to check what facilities are provided for a salary account by the bank. The bank will inquire about your requirements, such as the number of employees, their CTC, necessary facilities, location, etc. Based on this information, they will offer you options. The bank will also outline the required documentation. You should discuss any exceptions or alternatives in case the relevant documents are not available.

Once these negotiations are completed, the bank will request certain letters/documents to be signed by the company before proceeding with the formal opening of accounts.

You should designate one point of contact/authorized person to interact with the bank and be aware of the relationship manager/contact person in the bank for any further communication.

Additionally, for salary transfers through the internet, you must follow the necessary documentation as required by the bank.

Hi Mr Soni,

You have raised a very good issue “Is it necessary employee would be permanent (or freelancer also)”.

Before opening the salary account, few points must be considered:

1. The category of staff to which the account has to be opened:

A. If the staff is a contract staff,
Option 1- Pay through an account payee cheque
Option 2- If the staffs are in large; Open a normal account but not the salary account as you are paying them but the payment will not be interpreted as salary in the books of accounts, hence opening a normal account is more logical.
B. Consultant staff not working on regular payroll:
A normal account can be opened.
C. Salaried or Regular Staff: A salary account may be opened in a bank and as be the best offering from the bank.

The opening of salary account is primary evidence of payment of salary, especially when the payment is not a salary and transferred in the salary account of a staff.

You have to look the documents required by the bank. Some times bank requires a declaration from the employer that the person is an employee of the company. Moreover, the bank account opening forms has to be forwarded by the company. Where the relationship with staff is not in the nature of Employee Employer; then these declarations may create a problem to the organization.

The central point is: If the organization is not willing to keep an employer employee relationship; then is should not be reflected from the papers. When the relationship of Employee exist, the payment of PF/ESI/Bonus and many more arises, therefore think about it and act neatly to protect your organization from the probable legal issues
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Dear Friend,

The following documents are required:
i. Memorandum of Association
ii. Articles of Association
iii. Director's Identity proof (PAN Card)

We have recently opened corporate salary accounts with HDFC, and their service is very good. They are offering ATM withdrawal and Nil DD Commission, along with other good facilities.

Hi,

As per my company's agreement with the bank, we are not required to give any of the documents (Address Proof) to the bank regarding an employee. All we need to do is provide a bonafide certificate from the authorized signatory of the company stating that he is an employee of the company.

Regarding salary transactions, it is always safe to use bank transfer. You can obtain a special provision from the bank for opening a Zero Fris Account or a Savings account with the same bank for freelancers to differentiate the person from a normal salary account. This can be facilitated by establishing a personal relationship with the bank.

Cheers,
Gokul Nathan Subramanian
Sr. Executive
Chennai.

Hi all,

I need a format to refer the employees to the bank for salary A/C. Kindly help me.

Aruna.