How to choose your bank provider
Table of contents:
Which type of bank account is suitable for your business
Are you starting a new business or considering changing your existing business banking?
It can be tough to navigate your way through the many options available when it comes to choosing the right business bank account for your needs.
With so many options available, it can be difficult to know where to start. Here are some tips to help you choose the right business bank account for your needs.
Why is it important to have a business bank account?
As a small business owner, having a dedicated business bank account is essential for several reasons. We cover this topic on this article, but let us give you some insights:
Firstly, it helps automate your tax preparation by keeping all of your business income and expenses in one place, making it easier to track and manage. This can save you time and effort when it comes to preparing your taxes.
Secondly, having a business bank account allows you to accept credit card payments, which can be a significant advantage for many businesses. Without a dedicated business account, you may be limited in your ability to accept credit card payments, which can hurt your sales and growth potential.
Thirdly, having a separate business bank account can help with accounting and bookkeeping, making it easier to keep track of your finances and ensure accurate record-keeping. This can help you make better financial decisions and plan for the future.
Finally, having a dedicated business bank account can make you look more professional and legitimate in the eyes of customers, clients, and potential investors. It also provides a sense of security in the event of a tax audit or legal action against your business.
Choosing the right business bank account: understanding your unique needs
When selecting a business bank account, it's crucial to consider your specific needs and how they can be met by different banking services. Each bank offers different services and features, and the requirements of your business may vary based on its size, goals, and long-term plans.
Let’s see some examples:
- Startup companies: For a new business, it's often important to keep costs low. Many banks offer free business banking services for a certain period, such as the first six or twelve months. A startup might also consider looking for a bank that have experience with small business and can adapt to their product needs.
- Freelancers or self-employed individuals: For those who are self-employed or work as freelancers, it can be helpful to have a separate bank account for business expenses. Some banks offer business banking services specifically for sole proprietors, which can help keep personal and business finances separate.
- Established businesses: A larger or more established business might prioritize a bank that offers a wide range of services, such as payroll management or international banking options. They might also look for a bank that offers dedicated account managers or other forms of personalized customer service.
Doing some research and comparing different options can help you find the best fit for your company.
Top features to consider when choosing a business bank account
Feeling confident in your choice of business bank account can make a big difference to your overall experience as a business owner. To help you make an informed decision, there are several important features you should consider when searching for the right business current account.
Online and mobile banking: You might prefer to go on the traditional way and open your account on a banking branch. However, one of the most important features is online and mobile banking. If you prefer to manage your finances on the go, make sure you can access online or mobile banking with your business bank account. This will give you 24-hour access to your funds and offer benefits like secure transactions and automated payments.
Customer support: Another key feature to consider is customer support. As banks have moved towards more automated and self-service options, customers have found it increasingly difficult to connect with a human representative when they need assistance. Look out for bank providers with good reputation on customer support, with as many channels as possible to connect with them: email, phone, chat... This can make a real difference to your banking experience and help put your mind at ease if you ever need support.
Pricing and monthly fees: When researching your account, compare costs like monthly account charges, cash deposit fees, and withdrawal fees. A 2019 study by UK Finance found that small business owners rated monthly fees as the most important factor when choosing a bank account, with 60% saying it was their primary consideration.
In the UK, many banks offer free banking services for an initial period of 12 to 24 months. However, after the free period ends, monthly fees can vary significantly, ranging from as low as £5 per month to as high as £40 per month or more, depending on the bank and the type of account. It's important to carefully research the different options and compare the costs of each account before making a decision.
In addition to monthly fees, other costs to consider may include cash deposit fees, withdrawal fees, international transaction fees, overdraft fees, and more. Some accounts may also require a minimum balance to be maintained in order to avoid additional charges.
When comparing costs, it's also important to consider the value and benefits offered by each account, as a higher monthly fee may be worth it if it comes with additional features or benefits that are important to your business. For example, some accounts may offer free accounting software, discounted loans, or cashback rewards.
Free everyday banking refers to bank accounts that don't charge monthly fees or transaction fees for everyday banking services like withdrawals and deposits. While many UK banks offer free banking for a limited time to new business customers, it's important to compare fees and charges after the initial free period ends. Some banks may also require a minimum balance or charge for additional services like international transactions or overdrafts.
Understanding transaction limits: which can vary depending on the type of account and bank. Some banks may have daily or monthly transaction limits, while others may have per-transaction limits. For example, some business accounts may have a monthly limit of £50,000 for free transactions, with a fee charged for each transaction over this limit. It's important to understand the transaction limits of your account to avoid unexpected fees and to plan your transactions accordingly.
Accepting card payments is crucial in today's cash-free world. Check if the account offers card payment services that you’ll be able to access. Also, look out for bank accounts that offer business savings accounts if you’re looking for somewhere to put spare pots of money.
A bank shouldn’t just be a place to keep your money, they should be with you throughout your business journey, offering expert guidance and support whenever you need it.
By taking these important features into account and forming a good relationship with your bank, you can feel more prepared to make a choice and manage your finances better, helping your business to excel.
Are you ready to apply for a business bank account? Our team of experts is ready to help you navigate the process of opening a business bank account and answer any questions you may have. Contact us today to get started and take the first step toward managing your business finances with ease.