The time has come to open a business bank account, but which one suits you and your business best? With all the options out there, it’s easy to get confused. We explain what to look out for and how to get the best out of what the banks offer.
Let’s start with an honest truth; business bank accounts charge. Whether it’s per transaction or per month there will be some sort of cost connected to running the account.
A lot of banks do offer a period of free banking, which can be anywhere from six to 18 months,
after which a charged tariff will take effect. So the key is to get the most out of the tariffs on offer, and that all depends on your business activity.
For new businesses, not having any charges for the first few months can be appealing, as it’s one less thing to worry about while setting up for the first time. It also means any profit you make in the first 18 months won’t disappear into bank account charges.
But wait, how many businesses make a profit within the first 18 months? Not many. This means you may not be making the most of a charge free period if your account isn’t processing a high volume of transactions or turnover. This is especially true if you don’t take cash, as standard charges for cash tend to be higher than electronic payments.
So what should you be looking out for? Well, first of all you need to know what type of transactions and services your business is likely to use.
As mentioned above, cash tends to be the most costly transaction, so if you think your business is going to be cash heavy then look for a tariff that charges a lower rate for that particular transaction.
If you do go with a free banking tariff make sure you know how much you’d likely be charged once the free banking period is up. It’s easy to be caught out with high charges once a free banking period comes to an end.
For some businesses it could be beneficial to open an account that charges a set fee regardless of how many transactions you make. This way you know how much to factor in each month or quarter so you don’t get any surprise invoices.
And of course, if you’re an existing business and have a high turnover of transactions you’re more than likely to make the most of a free banking tariff. Just make sure there aren’t any transaction limits attached to the free banking arrangement.
Who should I bank with?
It’s completely up to you. Some banks may offer better rates on lending products such as overdrafts if you already bank with them personally, but this doesn’t necessarily mean you’ll get the best deal on the market. Be sure to research what’s out there first if you’re thinking of taking advantage of something like this.
Some banks hold ethical values and will only invest their (your) money with companies they believe hold similar ethical beliefs. If your business or you yourself hold an ethical stance and want this to reflect in your business banking, then there are options out there to accommodate this.
Review sites are a great place to see how other customers feel about a bank or service you’re interested in taking up. It’s common to see a representative from a bank reply to online reviews, especially if they’re negative. This is a good way to get a feel for how a bank responds to and resolves complaints from unhappy customers.
Online and Mobile Banking
All banks offer some form of online and mobile banking, and with the disappearance of more and more high street branches, it’s something all new and existing small businesses need to embrace. So it’s important to make sure you get a service that works for you and your business.
Have a look on a bank’s website and you’re likely to find videos and guides, showing off the many features and benefits of banking online with them. If you’ve already picked your accounting software then check it’s compatible with any reports or transaction information you may need to download. If you need help with this, a quick question to the bank’s Twitter account usually gets you the response you need. If you’re not on Twitter you could also look for an Online Banking FAQ on the bank’s website.
Running a Business Bank Account with a Disability
Banks have come a long way in the last 20 years in being more accessible to people with disabilities.
For example, if you use a Type Talk system or something similar on your phone or require your statements and letters in braille, this can be easily implemented into your banking services. However it’s highly recommended that you make sure the bank you’re interested in can facilitate your needs before you sign up. This will not only reduce the stress on yourself while going through the account opening process, but could also make your decision on which bank to go with even easier.
If you prefer to visit a branch rather than call, then accessibility is crucial. This can be checked either by contacting your local branch directly or via social media, to ensure you’ll have sufficient access to all branch services.
Let’s not forget the latest in high street banking trends – web chat. This type of service has exploded over the last five years and is set to be at the core of customer service as banks reduce the number of branches and call centres become smaller. A lot of your queries and concerns can be raised this way and a dedicated team will get you the answer you need. With secure web chat on the horizon, it’s only a matter of time before you’ll be able to do your everyday banking in this way too.
If you’re a new business looking for start-up funding, then this is likely to be a key factor when choosing your bank account. Due to the financial situation of the last 10 years, a lot of banks hold off on offering credit to new and even some existing businesses.
If applying for a business account is dependent on your business securing lending first then make this clear in any discussion you have with a bank. They may even be able to do some preliminary checks with you to see if you qualify.
TIP: Some banks can also hold off opening the business account until a lending application has been agreed. If lending is a priority, then ask the bank if they can get an answer first before continuing with the business account. This means if your lending application is declined or they aren’t able to lend to you for some reason, you’re not left with a business account you don’t really want.
All banks deal with lending slightly differently so don’t be afraid to ask about lending first and bank account tariffs second if it’s a priority to you.
Existing businesses may need to look at this slightly differently. If you’re looking to move your account and lending facilities to someone else, make sure this is clear from the start. Most banks will probably want to know your lending commitments as part of your application anyway so make sure you have any documentation together before approaching the application stage.
Are you a new or existing business who have just set up a new business account? Have we missed anything? Let us know in the comments.
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About The Author
Forensics graduate-turned copywriter and blogger. I love turning complex topics into easy to understand, yet engaging pieces of content.