When starting up your own business, there are a lot of important decisions that you need to make. Some are simple while others are very complicated. One of the most important decisions that you need to make is choosing the right business bank account.
Can you use a personal account for your business?
Some people do not agree with this. However, if you are a sole trader, then usually you only have a few transactions every month. That is why it is ok to use your personal account for your business. But this is only advisable if you are just starting your business.
It is greatly recommended that you should have separate accounts for your personal and business transactions. In this way, it is very easy to determine which is which. Having a dedicated business bank account is not actually a requirement for sole traders. Although it can make things a lot easier.
Is business banking free for all?
Most major high street banks provide free business banking to their clients who have been with them for a certain period of time. But most often this free business banking only includes general day-to-day transactions including cashing cheques, paying bills, and others. It does not cover other transactions such as stopping cheques, ordering drafts, making international payments, etc. For these transactions, you need to pay a certain amount for the charges. Some banks will conduct a credit check before you can open your business account.
How do you treat your bank?
Banks should be treated as one of your suppliers. They are not your partners. Most business owners think that they should try to satisfy their banks. The fact is a bank is just a supplier of service. You have to treat them just like any other supplier in your business. Keep in mind that you are a client of their bank and they have to treat you nicely.
How many business bank accounts do you need?
When choosing suppliers, you always aim for more than one supplier. This is just the same when obtaining your business bank account. Although, it is not necessary that you should open another high street business account since you can always use your card-based bank accounts.
How to compare business bank accounts?
Since not all business bank accounts are the same, it is highly recommended that you should shop around. You might be surprised to know that there is a big difference in fees between banks. When selecting your business account, you should not depend too much on free banking. Rather you should focus more on selecting the right tariff that is suitable to your business activities such as cash payments or electronic payments.
Finding a business bank account for your business’s finances can be a crucial decision. However, this is an important decision that every small business owner should make. Ideally, you should make this decision as you start your business. Whether your business is new or well-established, there are a few important decisions that you need to make.
Are you going to open a checking account or a savings account?
You need to decide what kind of business bank account you want. There are two basic types of business bank accounts. You must decide what type of business bank account you require at the moment.
A business checking account is ideal for your working capital cash flow since this will permit you to easily access your money whenever you need it. On the other hand, a business savings account is perfect for saving your business’s money and even earning from it.
Overall, if you are just starting your business, then you might require a business checking account. However, if your business is already well established, then most probably you need business savings accounts since you have a lot of cash on hand.
Most customer payments in small businesses are done electronically. This is apparent for online businesses including eBay and Amazon sellers. If you don’t take cash payments or cheques more often, then you can opt for an electronic business banking tariff.
Many small business owners just want a basic business account without any add-ons such as credit card, overdraft, or business loan. All they need is a basic account that can receive and make payments at the same time.
Unfortunately, top high street banks will conduct a credit history check on the owner or directors of the business. In case they fail, then they cannot get an account. There are also fewer chances that they can get an account on other banks. The best alternative would be to open a card-based business bank account.
It’s a fact that people are more likely to divorce their other half than switch their business bank account. If you are worried about switching, then you shouldn’t be as all business accounts are covered by a 7-day switcher guarantee. (Just make sure your bank is registered with this scheme!).
- Don’t just look at the free period, work out how much it will it cost
after the fee free period
- Ensure you know all fees relevant to your business to avoid
- Switching can be done within 7 days
- Make sure that those you bill are aware
If you are savvy enough to use online banking regularly then you may want to ask other business owners what their thoughts are on the application. Standards of online banking vary and no one wants to go backwards when they are trying to move forward.
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About business banking
A business bank account is essential for any business – whether you are a contractor or a large firm with thousands of employees. There are many business account options with different account features based on your specific needs, including overdraft options, online banking, free business banking and interest on in-credit balances.