One question that our clients have with establishing companies outside their home country, is the same in all our 6 markets: “Can you help us with opening a bank account?”

Today we are covering the topic from the point of non-resident companies established in Estonia.

Probably you have heard about e-residency and how it allows you to run location independent business without hassle. What about business banking for location independent companies? While e-residency really does give access to the set of amazing digital tools, allows to digitally sign documents and avoids a great deal of bureaucracy it doesn´t guarantee you a bank account in an Estonian bank. This doesn´t mean that your company will be denied an Estonian bank account. In our experience, most e-residents will be accepted by Estonian banks, but the banks will want to know who the owners of the company are, what are their previous activities. Also, they choose to accept companies with real connections to Estonia.

But even if your company should be denied by banks, it doesn´t have to be a deal breaker.

Why does a company need a bank account?

• To contribute share capital

Only a few weeks ago paying in share capital from a fintech account was possible, but as of today, it is required to pay it in from an Estonian credit institution. The law will be changed soon, probably still during 2018, to make payments from other credit institutions possible as well. Talking about Estonian OÜ, then share capital contribution doesn´t actually have to be monetary and it doesn´t need to be paid in immediately (however, it needs to be done before the company decides to pay dividends).

• To use bank account with a card

While running a company you probably need to pay invoices etc. Every company can choose where to keep their money. It can be a bank, it can be a fintech company such as Holvi or even an envelope and keep the cash in. If you need to pay invoices, then whoever is expecting your payment probably doesn´t care from which account you make the payment as long as you make it in time.

• To receive payments from clients

The main goal of businesses is making money, right? For that, you need somebody who is going to pay for your products or services. And even though it is completely legal in Estonia to run a company only using cash, it´s probably not the most practical way. Especially for location independent businesses. For getting payments from clients you can use a regular bank account in Estonia or a different country, but you can also use a payment gateway and a fintech service provider. It takes some time to figure out the best solution for you, because not all fintech service providers enable to work with all payment gateways. It depends on technology, currencies used, geographical location etc. This is a rather complex topic and we will come back to this in one of our next posts.

• To grow their business, by taking a loan

This is where fintech service providers cannot help you. Traditional banks can. However, a majority of e-resident company owners don´t consider taking loans as far as we know. And if you should be an exception and still need a loan to grow your business, then banks are not the only place to get the loan.

The “banking” options for your Estonian company

• Estonian bank

Best option if your business has a real connection to Estonia and a very clear business plan. It means that you need to travel to Estonia to open an account because banks always require a face-to-face meeting before opening an account.

• Bank in your home country or another country where your company operates

Banking is considered to be a local thing, and this is the reason why Estonian banks sometimes refuse opening accounts to non-residents. But if most of your business takes place in another country it is also more convenient to use a bank there.

• Fintech service provider and payment gateways

If your business is completely online anyway, then why stick to traditional banking? There are plenty of service providers to choose from (a comprehensive list is here). The accounts can mostly be opened online, so you don´t have to spend time or money on traveling. They need to be researched to find a best suitable option for your company. Another threat to consider is that if in traditional banks your money is guaranteed, while for fintech companies there is no such requirement.

Who can help me with opening a bank account

Now to the most important question – can we in 1Office help you with opening a bank account? The answer is somewhat complicated.

Yes, we can:

• help you with suggesting options suitable to your company;
• inform you about the requirements that banks have;
• help you with filling out forms;
• with some banks help you with getting a preliminary decision;
• represent you in the bank for completing account opening procedures after you have had your face to face meeting in the bank

But we (as well as any other business services provider) can´t give you any guarantee that your company will get an account. Sorry to be so blunt about it, but that´s just the way it is.

Each bank and fintech service provider has the right to choose their clients and the decision is made by them alone. It doesn´t matter how well we, as a service provider, get along with banking service providers. In fact, we have a good cooperation going on with Holvi and every e-resident who decides to establish a company in our Company Formation Portal gets the discount code allowing them to save Holvi´s first monthly subscription fee. And all our clients so far have been approved by Holvi. But this still doesn´t mean that every e-resident company will be accepted by them automatically.