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Background - Current account

Background  — Fri 21 Jan 2022

This term is still widely used. Yet it is quite old. Every time you read it, you can imaginatively read it as 'checking account'.

What is a current account?

A current account is a checking account in a company that can be used by the director and/or partners (shareholders). Each a separate one. Each withdrawal can be seen as a loan provided by the company. These are small amounts (up to € 17,500) that are booked back and forth. These amounts must also be repaid again; this generally happens fairly quickly. When amounts exceed € 17,500, they even have to be repaid with interest.

Does every company have a current account?

There are companies with and without a current account. It depends on the legal form of the company.

  • With unincorporated companies, the owner's title is 'owner'. The owner and any shareholders deposit and withdraw from a category on the balance sheet called 'Private'. Each withdrawal can be seen as salary. While regular employees receive salary in a different way.
  • With incorporated companies, the owner's title is 'director'. Directors and any shareholders can temporarily borrow money from the company through a current account. In other words, a checking account with their own company. Each withdrawal can be seen as a loan. Salary is paid in a different way, similar to that of regular staff.