Choosing the right business bank account is essential. Bank accounts differ in the facilities offered, borrowing costs and your relationship with the institution. Make the right decision and your account will serve you well as you grow and grow.
What type of business are you?
If you’re trading as a limited company, partnership or other registered business structure then you must use a business account. This does not apply to sole traders who can use personal banking accounts for day-to-day business banking. If in doubt contact a qualified accountant.
Choose a bank account that offers what you need; it may seem simple but some people opt for accounts that are less suitable but cheaper, although these may cost more money down the line. If you require the use of direct debits, standing orders or fast banking services, ensure the account can handle these and that the fees for doing so are not too high. Bring a list of requirements to the bank so there’s no ambiguity over what you need.
Telephone and online access
Telephone banking is standard with most business bank accounts. Online access is extremely widespread but some institutions don’t offer it; make sure that yours does. Being able to move money 24 hours a day is incredibly useful and allows you to take full charge of your finances. It’s a great time-saver, allowing you to check to see where your money is without having to phone your adviser. Some accounts even charge less for electronic payments.
Most business bank accounts will charge per transaction made; the costs may differ based on how the transactions are made i.e. electronic, cheque, postal. Negotiate with the bank to reduce the transaction charges; this is particularly effective if you have offers from other banks on the table. Some institutions offer reduced fees for electronic transactions. If you plan to do a lot of your banking online these accounts may appeal to you. You may also want to look for accounts that offer ‘free’ banking for a set period of time, such as when you first start up.
The best banks will offer a dedicated personal business banker with a direct line. However, this is becoming rarer as banks attempt to cut costs. If this isn’t possible, accounts with dedicated small business teams are the next best thing. They’ll be used to dealing solely with queries from small businesses and entrepreneurs and will able to offer targeted advice quickly and efficiently.
Never go for the first business bank account you see. The industry is fiercely competitive and you may find a better deal from a different institution. Keep notes of what you’ve been offered so you’re in a better position to haggle. The internet is a great place to find special offers – try Moneyfacts for independent financial advice.