If you’re starting out in business – either as a limited company, a sole trader or partnership, one of the first things you need to do is find the best business account for your needs. So what should you look out for when comparing business bank accounts?
How to compare business bank accounts
Here are some tips from the Bytestart team:
1. Be Objective
Before you start, you may think it easier to stick with what you know – by appointing your personal bankers to act on behalf of your business. We recommend that you try to be objective, as this option may well not be the most cost effective solution in the long term.
2. Free Business Banking
The first thing to look out for is the availability of free business banking periods. Most of the major banks offer a period of 12 months to 2 years of free banking for start-ups, however they are typically far less generous if you are an existing small business switching your bank account.
3. After the Free Banking Period Ends
It is easy to think short-term, so make sure you also find out what fees you are likely to pay following the end of the free business banking period.
Most people are very reluctant to switch bankers further down the line, so take the time now to find out how much your business bank account will cost you on an ongoing basis.
4. Bank Charges
All the major business accounts have standard transaction and related charges. These include fees for standing orders, deposits, and day-to-day transactions. Your account may well be subject to an ongoing monthly fee, and of course – check out the charges for unauthorised (and authorised) overdrafts should the need ever arise.
Find out what interest rate you will receive if your business account is in credit. Chances are you will receive very little interest at all – given the historically low bank rate, however some of the leading banks do pay interest on current accounts.
Most start-ups will be offered a wide range of additional ‘extras’ when they sign up for a business account. These will include: free brochures, software, accounting tools, and discounts on everything from insurance products to Google Adwords vouchers.
Of course, our advice is always to enjoy the perks, but carefully research the fees and charges related to the account.