Why you need a business bank account

A business bank account is not a legal requirement - but it’s an essential tool for financial management. Here’s why you need one as a sole proprietor in Denmark:

• Most banks will not accept you use a private account for your business, even if it is not illegal. They are under strong supervision by the Financial authorities and do not want any confusion in the accounts they administer due to "Know Your Client" (KYC) rules.
• You need a NemKonto registered with the authorities, a service provided by your bank. Authorities in Denmark will only use a Nemkonto to send money to your company such as VAT returns.
• Separation of Personal and Business Finances: Keeping personal and business finances separate makes accounting easier and ensures compliance with Danish tax regulations.
• Professionalism: A dedicated business account shows clients and suppliers that you are running a legitimate and credible business.
• Tax Compliance: A business account simplifies VAT payments and helps track expenses for deductions.

• Access to Financial Services: Having a business account can make it easier in time to apply for business loans, credit, or payment processing services.

Steps to Open a Business Bank Account in Denmark ​

Opening a business bank account for a sole proprietorship in Denmark involves a few straightforward steps:

1. Register Your Business

Before you can open a business bank account, you must register your sole proprietorship with the Danish Business Authority (Erhvervsstyrelsen). Follow these steps:

• Obtain a Danish CPR number (personal identification number) and NemID/MitID for secure communication with Danish authorities.
• Register your business through the Virk.dk portal. During registration, you’ll receive a CVR number (business registration number) and a NACE code that identifies your business activity.

2. Prepare Necessary Documents

Danish banks require specific documentation to open a business bank account. The exact requirements vary by bank, but common documents include:

• Proof of business registration (CVR number).
• Identification (passport, drivers license and residence permit).
• Proof of address (utility bill or rental agreement).
• Tax declarations and annual statements
• Business plan or description of your business activities
• A financial plan for the first year of operation
• Proof of initial capital
• A description of how you expect you will be using the business account

3. Choose the Right Bank

Research banks in Denmark to find one that caters to small businesses in the service industry. Key factors to consider include:

• Monthly account fees and transaction costs.
• Availability of online banking in English.
• Additional services, such as credit facilities or payment gateways.
• Reputation for working with non-Danish nationals.

4. Schedule an Appointment

Contact your chosen bank to schedule an appointment. Most banks will expect you to apply online, but after the first appraisal, many require an in-person meeting to verify your documents and discuss your business needs.

5. Understand Bank Requirements for foreigners

Many Danish banks have strict compliance measures for non-residents or new comers. Be prepared to explain your business model and provide any additional documentation requested, such as proof of initial capital or tax compliance in your home country.​

Challenges foreigners face when opening a business bank account

For foreigners, opening a business bank account in Denmark often comes with unique challenges:

• Language barriers: While many banks offer services in English, important documents and communications will still be in Danish. This can make it difficult to understand terms and conditions or navigate the application process.
• Strict compliance checks: Banks in Denmark are required to follow stringent anti-money laundering (AML) and "Know Your Customer" (KYC) regulations. Foreigners often face additional scrutiny, especially if they lack a Danish credit history or local business references.
• Limited financial history: Foreigners without a credit history in Denmark may struggle to prove their financial reliability. This can result in higher fees or difficulty accessing advanced financial services.
• Lack of local networks: Understanding the nuances of Denmark’s financial system often requires guidance from local networks or business advisors - resources that may be limited for foreigners.

Tips for foreign-born business owners

 To overcome these challenges, consider the following tips:

• Work with advisors or consultants: Seek assistance from business consultants or accountants who specialize in working with migrant entrepreneurs. They can help you prepare documentation and navigate the banking process.
• Build a credit history: Open a personal bank account in Denmark first. Regular transactions and timely payments can help establish a credit history.
• Leverage online banks: Consider using online banks or fintech companies that cater to small businesses and have less stringent compliance requirements.
• Join business communities: Connect with local business communities or associations that support foreign-born entrepreneurs. They can provide advice, networking opportunities, and recommendations for foreigner-friendly banks.
  

Why Finklusiv is a great solution

Opening a business bank account as a migrant sole proprietor in Denmark can be overwhelming, but Finklusiv is here to help. 

Finklusiv specializes in supporting foreign business owners by simplifying the banking process and offering tailored solutions. Here’s why we are an excellent resource:

• Expert Guidance: Finklusiv understands the challenges entrepreneurs face and provides step-by-step guidance on how to open a business bank account. Their team can help you prepare documents, navigate compliance requirements, and find the right banking partner.
• Access to foreigner-friendly banks: Finklusiv works with banks that are experienced in serving small business owners from different countries. They can connect you with financial institutions that offer competitive fees, online banking in English, and flexible account options.
• Educational resources: From video trainings to online guides, Finklusiv provides valuable resources to help you understand Denmark’s banking and financial systems. 
• Personalized support: Unlike generic banking services, Finklusiv offers personalized support tailored to your unique circumstances, whether you’re new to Denmark or expanding an existing business.
• Focus on Financial Inclusion: As a platform dedicated to financial inclusion, Finklusiv aims to empower entrepreneurs and ensure they have equal access to financial services in Denmark.
• Access to Finklusivs network: Clients who have collaborated with Finklusiv get access to its network, where they can enjoy advantageous prices on administrative and communication tasks, training material, and advice on how to manage their company in Denmark according to the rules. Additionally, Finklusiv supports their efforts to communicate effectively with their client base.​

Conclusion

Opening a business bank account for a small business in the service sector in Denmark is an essential step toward financial success and credibility. While the process can be challenging for small business owners and foreign born entrepreneurs, preparation and the right support can make all the difference.

Finklusiv stands out as a valuable partner in this journey, offering expert guidance, access to friendly banks in its network, and personalized solutions designed to meet your needs. By working with Finklusiv, you can focus on growing your business while leaving the complexities of banking to the experts.

Visit https://www.finklusiv.dk/erhvervskonto today to learn more about how we can support your business banking needs and help you succeed in Denmark.