I still meet studio owners doing ₹50 lakh a year of project value through their personal savings account. Client advances, vendor payments, carpenter salaries, the family grocery run, all in one statement. It works right up until it doesn't: the bank flags the account for business use, the CA spends three days at tax time separating personal from business, and a big client's finance team asks why they're paying "Priya Sharma" instead of "Studio Meraki." If you're running a studio seriously, a current account is one of the first pieces of infrastructure to get right, and this post covers what it is, when you actually need one, what the bank will ask for, and how to choose without getting talked into services you don't need.
What a current account actually is, and when you need one
A current account is a business bank account built for transaction volume. Unlike a savings account it pays no interest, allows effectively unlimited transactions, supports higher daily limits, overdrafts, and business services like bulk payouts and current-account-linked payment gateway settlements.
Do you legally need one? Here's the honest answer: no law says a proprietor must use a current account. But three practical forces push you there fast. First, banks' terms of service generally prohibit business use of savings accounts, and heavy business traffic can get your savings account restricted with your money temporarily stuck, which is a nightmare mid-project. Second, if you've formed an LLP or a private limited company through the MCA portal, the entity is a separate legal person and must bank in its own name, so a current account isn't optional. Third, credibility: clients paying multi-lakh advances, and vendors receiving your POs, take "Studio Meraki Design LLP" a lot more seriously than a personal UPI handle.
The moment I'd draw the line: if you're crossing roughly ₹10 to 15 lakh in annual business receipts, or taking client advances of ₹1 lakh plus, or hiring your first employee, open the current account now rather than later. Untangling six months of mixed transactions costs more than the account ever will.
What the bank will ask for
The documentation depends entirely on your entity type, so first be clear what you are. This table is the shape of it:
| Entity type | Core documents the bank wants | Typical opening friction |
|---|---|---|
| Sole proprietorship | PAN, Aadhaar, plus two proofs of business existence (GST registration, Udyam certificate, shop and establishment licence) | Low, but you need those business proofs |
| Partnership firm | Partnership deed, firm PAN, partners' KYC, business proof | Medium |
| LLP | Certificate of incorporation, LLP agreement, LLP PAN, designated partners' KYC | Medium |
| Private limited | Certificate of incorporation, MOA/AOA, board resolution, company PAN, directors' KYC | Higher, but smoothest ongoing banking |
The one that trips up proprietors is "proof of business existence." A proprietorship has no incorporation certificate, so banks under RBI's KYC norms ask for two independent proofs that the business is real. The two easiest for a design studio are your GST registration certificate and your Udyam (MSME) registration, which is free, takes about fifteen minutes online, and unlocks other benefits I've covered in the context of service agreements and payment protection. Get Udyam done before you walk into the bank and the whole process compresses to a few days.
Choosing the bank: what actually matters
Every bank will pitch you their current account like it's a lifestyle product. Strip away the noise and evaluate five things:
Minimum average balance (MAB). Current accounts typically want a monthly or quarterly average balance, commonly ₹10,000 to ₹1 lakh depending on the variant, with penalties for shortfall. Pick the tier that matches your real float, not your ambition. Some banks offer zero-balance or low-MAB variants for Udyam-registered MSMEs and startups, and if you're registered with Startup India, a few banks have dedicated startup current accounts worth asking about.
Digital banking quality. You will live in the app: bulk vendor payouts, beneficiary management, statement exports for your accountant. A bank with clunky net banking taxes you weekly. Ask to see the business banking app before you sign.
Payment gateway and settlement fit. Your Razorpay or other gateway settlements land in this account. Settlements work with any bank, but clean daily statements make reconciliation of gateway payouts against invoices much easier for whoever does your books.
Cash and cheque logistics. If your projects involve cash-heavy site payments (many do, even now), branch proximity and cash deposit limits matter. Current accounts have free cash deposit limits beyond which charges apply, and site-heavy studios hit those limits.
Relationship lending. Six months of clean current account statements become your case for an overdraft or working capital line later. Procurement-heavy studios eventually need float, because you're often paying vendors before the client milestone lands, and the bank that sees your inflows is the easiest first conversation.
The habits that make the account worth it
Opening the account is the easy part. The discipline that follows is what actually protects you:
Current account discipline for a studio
- Every client payment, advance or milestone, lands in the current account, no exceptions
- Every vendor, contractor, and salary payment leaves from it, never from personal UPI
- Pay yourself a fixed monthly transfer to your personal account, like a salary
- Never swipe the business card for personal spends, even "temporarily"
- Export the statement monthly and reconcile it against invoices and POs
- Keep the GST-registered name, invoice name, and account name identical
That last line deserves a highlight. Your GST registration, your invoices, your agreement, and your bank account should all carry the same entity name. When a corporate client's finance team sees "Studio Meraki Design LLP" on the tax invoice and a different name on the account, payment gets held for verification, and there goes a week. I covered the invoice side of this in how to raise a GST-compliant invoice for design work, and the account is the other half of that consistency.
The month-end reconciliation habit is where most studios quietly fail, because matching bank credits to invoices manually is tedious. This is one of the places running the studio in one workspace pays off: in Designa, invoices carry Razorpay collection, payments reconcile against the invoice they belong to, and the org-wide transactions ledger gives you one view of what came in and went out, which your accountant can then tie to the bank statement in a fraction of the time. The books side of that routine is covered in bookkeeping basics for an interior studio.
What it costs, and what it saves
Let's be honest about the costs: MAB commitment, some transaction charges beyond free limits, maybe ₹1,000 to ₹5,000 a year in incidental fees depending on the bank and variant. Against that, weigh what mixed banking costs you: CA hours separating transactions at tax time, GST input credits missed because a vendor payment can't be traced, a frozen savings account mid-project, and the soft cost of looking small to large clients. In my experience the account pays for itself the first time a client's finance team clears your invoice without a single query.
While you're setting up the financial plumbing, two adjacent pieces are worth doing in the same fortnight: the insurance covers a studio should consider, because the same banks will try to cross-sell you policies and you should walk in knowing what you need, and a clear view of your software costs, which for Designa is deliberately simple, one flat founding price for the whole studio, billed in rupees, no per-seat math, explained in the pricing breakdown.
Getting it done this week
Practical sequence: get Udyam registered today (free, online), gather PAN, Aadhaar, GST certificate, and address proof, shortlist two banks (one where you already have history, one MSME-friendly challenger), ask both for their MSME or startup current account variant, and compare MAB, app quality, and charges in writing. Open the account, move all business flows into it from day one, and set up the monthly self-salary transfer.
And once the money is flowing through one clean account, make sure the paperwork feeding it is equally clean: quotes that become compliant GST invoices in one click, Razorpay collection tied to those invoices, unlimited free client logins so clients see and approve what they're paying for. That's the flow you can try at demo.designa.work, and the founding offer is at go.designa.work whenever you're ready.
Frequently asked questions
Is a current account mandatory for an interior design proprietorship?
Not by law, but banks prohibit business use of savings accounts, and heavy business traffic can get a savings account restricted. For LLPs and private limited companies, banking in the entity's name is mandatory, which means a current account.
What documents does a proprietor need to open a current account?
PAN and Aadhaar, plus two proofs of business existence. GST registration and a free Udyam (MSME) certificate are the two easiest proofs for a design studio.
Do current accounts pay interest?
No, current accounts pay no interest. Their value is unlimited transactions, higher limits, business services, and clean separation of business money.
What minimum balance do current accounts require?
Typically between ₹10,000 and ₹1 lakh average balance depending on the bank and variant, with penalties for shortfall. MSME and startup variants with lower or zero balance requirements exist, so ask specifically.
Should client advances go into the current account or personal account?
Always the current account. Mixing client money with personal funds creates tax mess, weakens your GST input credit trail, and looks unprofessional to corporate clients.