Business Bank Account
Choosing a business bank account for your small business is an important stage in the startup process. There are some things to consider - such as transaction and borrowing costs, what facilities the bank offers, and the type of relationship you want from a bank.
Business Banking Basics
- A limited company must open a business account; sole traders may use their personal current account for business activities.
- Unless you have good reasons otherwise, you should look for a bank which has a dedicated small business team.
- Find out what fixed charges your bank levies on business accounts such as transaction fees and overdraft fees
- Is there a fee-free period for new customers? (if so, take advantage of it)
- What, if any, 'extras' does the bank offer (e.g. credit cards, charge cards, free statements)
- What are the interest rates on business and business savings account?
- Does the bank offer online business banking?
Opening an Account
Once you have compared several banks, you will need to provide various documents in order to open your account. Depending on how you are starting up your company (or if you are transferring from another business account), you may also need to provide a business plan and details of your business.
- Certificate of Incorporation (limited companies), which you will receive once you have bought the company.
- Identity check (passport, drivers license, several personal utilities bills - the bank will tell you exactly which to bring along).
- List of signatories: It contains the name and the signature of the people that can sign the company checks
- Mandate to open the account (the bank will provide it)
Here are some suggestions which may help you decide which bank would best suit your needs.Choosing a business bank account - tips
- You must set up a business account if you're starting up as alimited company, partnership or any other key business structure. Sole traders can use their own personal accounts (or via a new business account
- Don't necessarily choose a business bank account simply because you are a personal banking customer. You may well feel more comfortable with a bank you already know personally, but they may not offer the best deal for your business.
- Make sure you compare several business bank account offers, and compare the costs and charges associated with each one.
- Naturally, only go for banks that have a strong background - names you will have heard of, or even internet bankingbrands which are owned and operated by the big players.
- Bank Charges - a key point to consider is how much it will cost you to have a business bank account. You may have a large number of monthly transactions to process, for example, so ensure you know exactly what charges will be levied on your account before signing up. Many major banks provide "free" banking for set periods to new businesses, so this may also be of interest.
- Online Business Banking- this is an increasingly important service, and most banks now provide an internet service so you can check the status of your account day or night. At Byte start, and with our previous businesses, this is an essential service. Rather than ringing the bank to check if a payment has been made to your account, you can do this yourself in a fraction of the time.
- Interest - for obvious reasons, you shouldn't hold out for great returns on your business savings income during the current economic climate, but you can certainly choose a bank which offers either free banking, or zero transaction costs.
- Small Business Team - go for a bank which has a specialized small business banking unit. The set-up process should be simpler, and dedicated teams will be used to dealing with all types of small business and their specific needs.Some businesses will require regular contact with their bankers, so you should go with a team you feel you can build a good personal relationship with
Always remember that you're not tied in to your new bank accountfor life - you can switch business accounts later on. By doing the groundwork before you start rather than simply opening up a business account at your nearest bank, you may well save your business money and time.
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