Update (12/05/2011): This article was written by Marie back in mid-2008 and was originally posted on Pigmata blog which is now taken down. Although this was already 3 years ago, I think the process is still the same and a lot of people find it useful so I’ll repost the entire article here for others to see.
Because I know not all of you will want to deal with banks and I really wish someone had told me all this before, I’ve eliminated the guesswork, so read on…
TITF 101 (Treasurers In Trust For)
You’ll have to deal with a bank even before you’ve incorporated. So you and your friends have decided to go the corporation route for your startup? Part of the SEC Requirements is to open a Treasurer in Trust For (TITF) Account.
Let’s talk about your new corporation; and I’ll give illustrative amounts. The authorized capital stock which is the ceiling amount for the capital that can be invested in the company is P1 million. The Corporation Code requires that 25% of the authorized capital stock is subscribed and 25% of the subscribed capital is paid-up. Did I lose you?
So, we’re talking about the P1 million right? You and your fellow incorporators (5 to 15 incorporators are allowed) subscribe or promise to invest at least P250,000 (25% of the P1 million).
If you guys don’t have that amount yet, that’s okay. You can start with P62,500 (25% of P250,000) cash. It’s really just easier to use cash, because if you guys invest property (like a car, or a computer, or furniture) there’s a lot more documentation needed. You don’t wanna go there.
To open the TITF account you’ll need:
- P62,500 cash investment
- Notarized Treasurer’s Affidavit (From SEC Online Registration)
- Completely signed and Notarized Articles of Incorporation and By Laws (From SEC Online Regsitration)
- Two valid IDs of the Treasurer and ID photos
- Roster of Officers - certified by the Secretary
- Board of Directors - certified by the Secretary
- List of Stockholders - certified by the Secretary
Requirements may vary from bank to bank. Call the branch to verify the requirements, speak in English — DON’T walk in to inquire. We did ours with BDO Bagtikan and it was the biggest hassle.
Be sure that when you fill out the Treasurer’s Affidavit form, you specify the bank name and branch. Check the amount and of course the treasurer’s name and notarize.
So they open your TITF account and you get a passbook. The amount is on hold until you submit a copy of your Certificate of Registration given by the SEC. You pay around P100 to P300 for a Certificate indicating that you have P62,500 in a TITF account at their branch. You have to notarize this paper too. You bring this together with your other SEC registration papers to Greenhills.
Once you get your SEC Certificate of Registration — it’s green and there’s a gold seal, make about 20 copies. You’ll submit one copy to the bank so you can close your TITF account and open your real business checking/savings account. You can do that in the same bank or somewhere else, but be sure to keep the P62,500 intact.
Opening a Business Checking Account
First, a refresher on some basic accounting:
The Imprest System
Small or miscellaneous amounts are paid in cash out of a Petty Cash Fund (say P5,000 or P10,000 depending on your spending behavior). And all other expenses, including electricity, salaries, broadband, rent, etc are paid by check.
Checking Account
So, you need to open a checking account. Here are the minimum amounts for just the regular non-interest bearing checking account. Just a place to store and spend your money.
- Metrobank, Unionbank, BPI - P10,000
- UCPB - P20,000
- HSBC - P300,000
From our TITF Account Example, you have to deposit the entire P62,500 into this new account.
Who are the Signatories?
Most likely, you’re investing with friends so you want to be careful with each other’s money. Always have at least two signatories — that’s AND, not AND/OR. Better if the Treasurer is always one of the signatories.
Which bank?
Considerations might be online banking, maintaining balances, proximity to your office, affiliation with Paypal, etc.
I sent an inquiry fax and/or email detailing our concerns to the branches of all the major banks within walking distance.
- BPI – emailed and faxed to the Buendia branch. No response.
- BPI Family Bank – emailed and faxed to the Mayapis branch. No response.
- Chinatrust – faxed to Buendia branch. Sales officer visited our office to explain options and requirements.
- Export and Import Bank – tried to fax to Chino Roces/Main branch. I finally got tired of calling to get their fax number.
- Landbank – faxed and emailed to Dela Rosa branch. No response.
- Metrobank – faxed. Branch manager visited our office with Lawrence from the Head Office’s Cash Management department to explain their online banking service.
- Planters Development Bank – emailed to Buendia/Main branch. Branch manager visited our office discussing options. Really geared toward SMEs.
- PNB – emailed and faxed to Buendia branch. Branch manager emailed in a matter of days, called, and was willing to set an appointment. I know PNB to be always crowded though so I didn’t pursue.
- Security Bank – quick email response by the Dela Rosa branch manager. Their online banking starts at P500,000. When I replied that we can’t maintain that much and what were our options, she didn’t get back to me.
- UCPB – I made an OTC deposit once and left my card with the sales officer. She followed up and then visited our office with the branch manager.
- Unionbank – faxed and followed up thrice at the Vito Cruz branch. Relationship Officer visited our office. Online banking, 1hub.gov pay to SSS, Philhealth, and Pag-ibig.
Prepare your Requirements
You’ll need:
- SEC Certificate of Registration — remember I told you to make about 20 copies of your SEC documents?
- Photocopy of Articles of incorporation
- Photocopy of By Laws and all other SEC docs
- Photocopies of 2 valid IDs each of the signatories
- List of Stockholders
- Roster of Officers
- Notarized Secretary’s Certificate – request for the template from the bank. Each bank has a different format.
Requirements may vary from bank to bank. Call the branch to check. Best if you meet with the branch manager when you open your account.
The Secretary’s Certificate just says that “your Board of Directors has decided to open a checking/savings/term deposit/etc account at Bank X Branch Y” and so on. The authorized signatories are Name – Position – Sample signature and so on. This is certified to be correct by the Secretary by his signature and then notarized.
Keep a copy of the Secretary’s Certificate in a folder labeled “Bank Account – Bank X”. Keep another one in a folder labeled Secretary’s Certificates. You’ll only need to submit 1 copy to the bank.
You fill out account opening forms of the bank and deposit the P62,500. For now, pay out of your own pocket the checkbook fee which is P250-P500 and just reimburse it when you establish your petty cash fund. You now have a business checking account.
Tips for Hassle-Free bank account management
- Store the account number on your phone or PDA — always good to have it handy.
- Store 5 to 10 deposit slips so you come to the counter prepared.
- You don’t need withdrawal slips because all cash disbursements will be made by check.
- Reconcile your checkbook every month with the statement given by the bank. I picked the statement up personally with our old bank. Together with the statement are the canceled checks, i.e. checks that have cleared.
How I wish someone had told me all this before we started!
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