When setting up your business, money is a central part of its success. Therefore, you want to make sure you put your money in the protection of someone you can trust. Choosing the right business bank account is an important decision to make. The right account can set your business off on the right foot and set you up for success.
However, it can often be difficult to know if you’re making the correct choice for your business. It is important, then, to do your own research to ensure you’re making the most informed and best decision.
Like any business decision, choosing the best business bank account requires thinking ahead. Use your research to see how things will look in the future for this account. Learn how the bank you choose can facilitate your growth whilst growing alongside you. So, where should you begin?
What Should You Keep in Mind Before You Choose an Account?
The first thing you should do before you select a business bank account is to consider the targets and goals of your business. This is because different businesses have different distinct requirements and needs to be met.
“Small business owners will need to understand what type of services their business will require before they begin their search.”– Jacob Dayan (CEO and co-founder of Community Tax and Finance Pal)
For example, the needs of a small Etsy business will have different financial goals and needs from a larger scale company. While both are equally as legitimate businesses, they will have different expectations from their bank accounts and what support the bank can offer them.
To understand best what your business needs, ask yourself some important questions.
- What are you trying to achieve? This can be in terms of projected sales or profits.
- What is the scale of your business? Be realistic with yourself. Consider how many people you are reaching with your marketing and how many sales you’re making over a period of time.
- Are you planning to expand? Looking ahead will help you choose a bank that will support you scaling your business in the future.
- Do you, or will you, need a loan in the future? Having a business account can facilitate this.
These things will impact whether smaller sole traders will actually use a business bank account. It will also impact what kind of bank account they will go for by what it can provide and offer.
Are you wondering whether you need a business bank account at all? Read the importance of opening a business bank account here.
What Should You Look for in a Business Bank Account?
The biggest things to first consider when setting up a new business bank account is what they can offer you. Don’t just go for the bank you personally bank with! Make sure to shop around before settling on anything. It all depends on what you prioritise about your finance management and what you want to get out of the account.
Business.com explains that “the best business checking accounts combine quality customer service and software integrations with several business-specific features.” It is usually best to create a document where you can compare what each bank offers.
This will help you make the most informed decision as it gives you a visual of each element you need to consider. There are helpful websites such as Money Supermarket or Which?, that can create a comparative list as a great basis for your search.
Here are some things you should consider when selecting an account.
Interest rates. These are often most applicable to business checking or savings accounts. Ensure that the interest rates are not offset by high fees elsewhere. Check the rates that different banks offer, as this can increase your investment in that bank.
Any monthly fees or service fees. Some business accounts come with monthly maintenance fees. It is important to check for any hidden fees, such as transaction fees or fees for transferring or withdrawing funds. Make sure you’re aware upfront of anything you’ll have to pay out to keep the account running.
Internet banking. This can be beneficial if you work online a lot or make a majority of transactions online. You may not need the access to a physical branch, so this can be a great way to manage your finances from anywhere. Banks that are online-only also may offer perks like higher interest rates than brick-and-mortar banks, so this is something to keep an eye out for.
Physical branches. This may be a deciding factor if you prefer the ability to visit a branch and do your banking in person. This can also be helpful if your business handles a lot of cash and needs to make physical deposits often. However, you should also consider the distance you would have to travel to get to these branches – that cost and effort adds up!
Any bonuses or incentives for joining. Most banks will offer benefits for signing up for their services. This can be a reward for depositing a certain amount into your account, or even things like gift cards for joining. However, you shouldn’t make your decision purely on the joining perks, as they may be negated elsewhere. This should simply be a bonus!
Don’t feel pressure to go with the big high street banks. Remember, bigger banks do not equal bigger and better returns or accounts, so make sure you thoroughly research each one!
How Do You Actually Open the Account?
Opening a business bank account is a very straightforward process. It is essentially the same as opening a personal account but can require a few more documents and a little more time.
Documentation is always needed. You will first need to provide proof of photographic identification. You’ll also need to provide your contact details, the estimated turnover of your business, and the companies house registration number. You may also need to prove your own personal financial situation. This is to prove you have a good and/or clean credit and banking history.
Opening an account online. This can be done completely online with some banks. However, not every bank enables this for business accounts. You can sometimes begin the application process online and finish it in person.
But SmallBusiness.co.uk warns that “the bank will also need to meet face-to-face at least one of your company representatives in the UK to sign a bank mandate so the business bank account can be opened.” Therefore, they will bypass the online element altogether in favour of efficiency.
How long can it take to open the account? The usual timeframe is usually 1 to 4 weeks to open a business account. This is normally due to the bank having to check your documents and identity thoroughly. But it can be dependent on other factors too, like whether you already have a personal account with that bank for example.
A business bank account is a necessity. It is one of the most important choices you’ll make for your business. Make things easier for yourself in the long run and put the work in to choose one at the beginning, and then reap the benefits as you go.
Ultimately, a lot of the business accounts you see will be relatively similar to one another. Choosing the best account requires you to use the nuance of difference between them to best meet your needs.
Like any relationship, your relationship with your bank and account must always be maintained and checked on. If it doesn’t work for you, don’t be afraid to move on and change. Make sure your business bank account serves you and your business the way it deserves!
- Do You Need A Business Bank Account?
- How to Switch Business Bank Accounts
- How To Save Money With Your Own Business
- 7 Different Types of Business Credit and Debit Cards
- How To Legally Reduce Your Corporation Tax Bill
- How to Apply for a Loan
- SIC Codes: A Complete Guide
Do you need the help of a financial expert in choosing which bank account works for you? Contact Count here, and check out our available services!