One of the important things to think about when starting your small business is choosing a business bank account.
There are several key things to consider - such as transaction and borrowing costs, what facilities the bank offers, and the type of relationship you want from your bank. Listed below are some suggestions which may help you decide which bank would best suit your needs.
- If you're starting up as a Limited Company, Partnership or most other business structures you must set up a business account. If you are a sole traders it is possible but not recommended to use your personal bank accounts (we would suggest that you should open a new account - "Fred Bloggs trading as ABC" to make accounting and tax easier at the end of the year).
- You may feel more comfortable using a bank you already know personally, but they may not offer the best deal for your business (and you may want to keep the two accounts seperate for other reasons). You do not have to choose a small business bank account simply because you are a personal banking customer at the same bank although some times it may help get a business account.
- Before you decide on which bank to you should make sure you compare the details of several business bank accounts - a good place to start would be with the business or money section of the week-end papers (Saturday Mail or Telegraph for example). These will often provide you with an overview of the costs and charges associated with most business accounts in the UK.
- Bank Charges - A major point to consider is how much it will cost you to have a business bank account. Many banks charge per transaction (although some will have a "free limit" before they start to charge - for example you may be able to pay in 100 cheques and/or £5,000 in cash per month before you are charged). You may have a large number of monthly transactions to process, for example lots of cheques, 100's of standing orders or large amounts of cash coming in to your account, so ensure you know exactly what charges will be levied on your account before signing up. Some of the larger also banks provide "free" banking for a set period (a year or 18 months is fairly normal) to new businesses, so this may also be of interest.
- Online Banking - this is an increasingly important service, and most of the banks in the UK will now provide an internet service so you can check the status of your account at any time during the day or night. 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, it also allows you to make payments online reducing the writing of cheques etc.
- Small Business Team - if possible, go for a bank which has a specialised small business unit. The setup process should be simpler, and they will use dedicated teams who will be used to dealing with all types of small business and their specific needs. Some businesses will need a regular contact with their bankers, if this is the case with your business you should go with a team you feel you can build a good relationship with.
- You may well find that the Accountant that you choose to help you is able to recommend a bank for you to use, the recommendation is often because they have a good working relationship with that bank or know that the charges will be minimal for business start-ups such as yourself, why not ask them for their suggestions. You could also ask your friends in business for suggestions but remember that they may have different banking needs to you.