Tips on choosing a business bank account

By Jason Hulott | Guest Authors

If you are running any kind of business, it is important – if only for simple accounting purposes – to keep your business and personal banking separate. If you have set up a limited liability company – making your business a separate legal entity – a business bank account is practically essential, explains Which? magazine.

If you are looking to open a business current account, these days there are many to choose from – not only all the usual high street banks, but any number of newcomer “challenger” banks. Here are some tips on making that choice:

Business advice

  • one of the features that distinguishes the high street bank from the new, online alternatives is the opportunity to build a relationship with your own business account manager;
  • if you are new to business banking, therefore, you might favour one of the traditional established banks, where it is still possible to develop a relationship with someone keen to understand the way your particular business works, its needs and potential;
  • this is a service you are unlikely to find from an online business bank account;

Fees and charges

  • unlike like personal banking account, any business bank account is likely to attract a monthly fee and a charge for each transaction you make – paying by or receiving cheques, withdrawing cash, depositing cash, bank transfers, foreign currency receipts and payments and overdraft fees;
  • when choosing your business bank account, therefore, you might want to compare the fees and charges made by different accounts;

Introductory offers

  • just like personal accounts, many business bank account providers are keen enough to attract your business to offer introductory offers – charge-free banking, for example, a discount on your monthly standing charge, or reduced charges on transactions;
  • introductory offers such as these are likely to last for a typical year or year and a half – so be prepared for those fees and charges you need to pay once the introductory offer has expired;
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Interest rates

  • interest rates on positive balances in current accounts for business are conventionally very low or non-existent – you may want to investigate business savings accounts or other forms of saving and investment for surplus cash;
  • if you are able to earn money on your business current account, the returns are already going to be fairly negligible – and most unlikely to improve at all given the Bank of England’s decision on the 11th of March 2020 to lower the base lending rate from 0.75% to 0.25%;

Services

  • thanks to the sheer number of banks – old and new – competing for your custom, you can choose a business bank account which precisely matches the type of business you are running;
  • if you rely on banking on the go, you may need the kind of mobile banking apps which are the speciality of the newer alternative, online banks;
  • others might make a feature of the services you regularly rely upon – such as cheque clearing, easy deposits of cash takings, or access to overdrafts;
  • if you know you will also be looking for a business loan or other form of business credit, some banks may offer more favourable rates than others;
  • similarly, the processing of international payments and receipts may be easier and cheaper through some business bank accounts.

There is no shortage of business bank accounts from which to choose. Through careful comparison, you are likely to find those that most closely match your particular business needs and requirements.

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About the Author

Jason Hulott is Business Development Director at Digital Marketing Specialists, Speedie Consultants. He is Google Partner certified. His role is to identify and implement traffic generating and revenue increasing ideas for our client base.