How to choose the right business bank account in the UK.
Starting a new business comes with its own set of challenges, and one of them is choosing the proper business bank account.
Having a suitable account can go a long way to aligning you with your financial goals.
With the proper business account, you can optimise your financial operations, enhance your professional image, and provide access to the essential banking services you need.
Some business structures, like sole traders, may use their personal accounts for business purposes.
However, with a dedicated business account, you can simplify processes like bookkeeping, increase your accuracy in tax reporting, and enhance your credibility with clients and suppliers.
This guide will explore everything you need to know about what to look for when selecting the right business bank account in the UK, why you should consider getting one, and the important factors to consider before choosing a business account type.
Essential features of business bank accounts.
If you're trying to evaluate different business bank accounts and make a suitable choice, there are some important features you should check out:
- Online and mobile banking: Access to digital banking platforms has become a must-have banking service because, with it, you can manage your finances on the go, make payments, view past transactions, and monitor your cash flow without visiting a physical location.
- Transaction limits: These vary from account to account. It's important to research transaction limits because exceeding them could incur additional fees.
- Fees and charges: These could be monthly maintenance fees, transaction fees, or charges for additional services like overdrafts or international transactions.
- Customer service: Adequate and reliable customer support is non-negotiable. You need swift customer support to resolve issues quickly and efficiently.
- Integration with accounting software: Whichever banking service you choose should be compatible and easily integrated with other financial management platforms that you own.
Why your business needs a bank account.
- Separation of finances
As a business owner, you need to keep your personal and business finances separate for the following reasons:
- It simplifies your bookkeeping when you have a separate account for your business. It makes it easier to track your business’s income and expenses.
- Filing your taxes is more accurate with a dedicated business account.
- Having a separate account for your business adds to your trustworthiness and credibility. Clients are more likely to trust a business than a personal one.
- Access to financial products
Having a business account is usually a criterion for financial products like business loans and overdrafts, especially when you're trying to access funding for your business.
- Building business credit
A separate business account can be beneficial when applying for loans or credit cards in the future because they have a history of your credit over time.
Factors to consider when choosing a business bank account.
Before deciding on a particular bank account for your business, consider these factors to ensure that your choice aligns with your business:
- Type of business structure.
Your business structure plays an important role when choosing a suitable bank account.
For instance, sole traders can use personal accounts for their businesses. Limited companies, on the other hand, need a separate business bank account as it is a legal requirement.
- Fees and charges
Fee structures for fees like maintenance fees, transaction fees, and other charges are another important factor to consider when choosing a bank account. Look for accounts with affordable or waived fees.
- Accessibility and convenience
It should be easy to access your funds and manage your business account whenever you need to.
So, choose banks that are easily accessible to you. If you prefer banking done physically, ensure there are local branches close to you. Otherwise, look out for banks with great online banking platforms and mobile apps for easy access.
- Customer support
Quality customer service on support channels like phone, email, or live chat should be available during convenient hours.
- Additional services
If you want to get more support for your business from your bank, consider choosing one that has extra features like invoicing tools, Integrated invoicing tools, expense management features, international payment support, etc.
Comparing major banks and their business bank accounts.
Now that you know the features to look for, let's compare options from some major banks offering business accounts in the UK:
HSBC business account
Some of HSBC's offerings for small businesses include:
- Free banking for the first 12 months and a ÂŁ10 monthly fee afterward.
- Online banking platforms with mobile app access
- No charges for electronic payments
- Availability of overdraft facilities.
- Good customer support.
Barclays business account
Barclays business accounts are free for the first year. Charges vary afterward and are based on the services used. They also have:
- Secure online banking platforms.
- Access to Barclays’ wide network of branches
- Easy integration with your business accounting software
- A customer support team is available via phone or online chat
Lloyds bank business account
Lloyds offers include the following:
- Waived monthly fees for up to 12 months and ÂŁ6 afterward.
- An online banking platform with a mobile app
- Overdraft facilities available
- Financial management tools.
Starling bank business account
As a business account holder in Starling Bank, you have access to:
- Waived monthly fees, except for certain transaction types.
- Easily integrated accounting tools
- Waived foreign transaction fees
How to open a business bank account in The UK.
Account opening processes differ from bank to bank, but here are some general steps you need to follow before opening a business bank account in the UK:
- Gather the necessary documentation. This includes:
- Proof of identity like your passport or driving license
- Proof of your business address (utility bill or bank statement)
- Your business details, including your registration number.
- Any other financial information requested by the bank.
- Complete Application Form: Carefully fill out the application form accurately with all required information.
- Submit Your Application: Many banks have different options for submitting your account opening form, which could be online or by visiting a branch.
- Wait for Approval and Set Up Your Account: After submission, the bank will review your application and contact you if they require additional information. Once your application has been approved, you will receive your account details along with any necessary banking materials.
Switching from one bank to another.
In the event that you're unhappy with your current bank or wish to switch banks, you can do so seamlessly. The Current Account Switch Service (CASS) of the UK guarantees that:
- You can switch from one bank to another within seven working days.
- The former bank is mandated to close your old account after transferring all direct debits and standing orders to the new one.
- Any payments sent mistakenly to your old account will be redirected automatically to the new one.
When choosing a business bank account, go with one that helps you manage your finances effectively as you start and grow your business in the UK.
When you consider factors such as fees, features, accessibility, customer support, and additional services offered by various banks, it's easy to make an informed decision that aligns perfectly with your business needs.
Having a dedicated business account is the first step towards simplifying your business's financial management and enhancing your professionalism and credibility in the eyes of clients and suppliers.
Carefully compare different options available in the market before making your final decision, as your choice will determine how smoothly you can operate your business financially.
