Selecting the right business bank account for the needs of your new business is one of the more enjoyable tasks of starting up!
Whatever kind of business structure you go for; sole trader, limited company or partnership you must have a separate, designated business account. It’s a legal requirement for limited companies and highly recommended for sole traders to keep personal and business finances separate.
We suggest you also open a business deposit account. You can put cash aside for tax and VAT payments, and you will earn a little bit of interest on your money (if you’re lucky).
Look for introductory offers and benefits for new businesses
You may have a long-standing relationship with a particular bank as a personal customer, but it doesn’t necessarily follow that they will also be the best bank for you as a business client.
You know what they say about familiarity breeding contempt! Go window shopping, or better, internet shopping, and make sure you compare several business accounts before deciding.
Find out how much it will cost you to have an account with a particular bank. If you have a regular batch of monthly transactions to process, you’ll want to know what these will cost to carry out.
Equally, are any banks offering any cut-cost incentives for business starters? Generally speaking, though, it’s best to look at what is offered in the long run, not just the initial incentives.
Consider the level of support as well as the costs
Some banks offer free banking for life, but the support offered is minimal. Sometimes customers aren’t even allowed to deal with humans in branches; only cash machines. Others do charge monthly fees, but it’s easy for you to speak to a human. You need to weigh up your needs against the cost.
If you prefer the personal touch, find out which banks have a designated team for taking care of small business customers. They will make the whole account set-up process a lot easier and there should be someone there to help you with a problem at any time.
It’s quite common for business bank accounts to offer free transactions or a good rate of interest, rarely both. So it’s up to you which you’d prefer. Most start-ups will benefit more from lower charges in the first few years of operation when there’s little surplus money. You can always switch banks later.
If you don’t already do so, it’s a good idea to sign up for internet banking. Many new business owners find themselves doing financial activities in the evenings or at weekends. So it’s useful if you can get full access to statements and your accounts no matter what the time or day?
For in-depth guides to choosing a business bank account, try our business banking section.
Last updated - 11th October, 2019