Choosing a business bank account
Choosing the right bank account is important as you need to think not only about charges and features, but how easy it is to operate and what support the bank will provide when you need it.
If you are a sole trader you do not need a separate business bank account (although it is good practice) but all other types of business so.
Look for new account offers such as a fee free period, but make sure you compare the charges after that ends.
Think about what is most important to you – when you start, it will most likely be charges and simplicity of use, but as your business grows it will be a good, supportive working relationship. Many banks have advisers who are on hand when you are starting out, but make sure this will continue in the long term.
When looking at charges, think about how many and what type of transactions you will have. Business bank accounts come with direct charges for most transactions and often monthly fees. Most have a quarterly or monthly fee which gives you a certain number of free transactions such as depositing payments or making withdrawals, but check what level of transactions are included and what the charges increase to once you have hit the limit. It may be worth choosing an account with a high fee if you anticipate a high level of transactions!
Obviously, you need to be able to pay in money, withdraw it, manage your cashflow and settle your bills, but most bank accounts will allow you to do much more than this.
Good internet banking is essential – check out their online account and ask your contacts who they use and how they find them.
Look for additional features such as cashflow forecasting and monitoring, as well as balance alerts (very useful for avoiding unwanted fees!).
Many banks have specialist advisers – as the bank what they do to support new and growing businesses. Some even run networking events which may be useful to you.
Ask what overdraft facilities are available, what rates may be charged and what fees will be incurred. Also ask about other facilities for borrowing if you may need them.
If you plan to trade internationally you also need to consider foreign currency facilities and may need support out of normal office hours.
Look at other options available such as savings accounts, credit cards and invoice financing.
It is best to pick the right bank account from the start – but it may not always be the best bank account for you, so review your business banking regularly – once a year if possible. If you think there is a better deal or service available from another bank, talk to your bank first and explain why you are thinking of switching before you actually do so. Often they will do a deal for you!