Photo by Daniel Y. Go
A good relationship with your bank is essential when starting a business. Don’t open a business bank account simply because you personally bank there, as it may not provide the most flexible, cost-effective business deal available.
It’s worth spending time to get it right from day one, although that’s doesn’t prevent you moving the account to another bank should you find a better deal. If you wish to consult someone in person, choose a bank offering a Personal Banking Advisor service. Likewise, if you wish to use internet banking, ensure this facility is available on the account you request.
Sole Traders can use their own personal accounts or may choose to open a business account, like “Jane Smith t/as ABC”.
A business account must be set up if you are starting up as a Limited Company, Partnership or any other business structure.
When researching business bank accounts, I found an extremely useful link via the Business Link website, under its Business Banking section. It suggests comparing business bank accounts via the British Banker’s Association (Voice of Banking and Financial Services) Business Account Finder (www.bba.moneyfacts.co.uk).
The contents of this detailed website include comparative information for:
• Sole Traders
• Limited Companies
• Clubs & Societies
Two other sections include “Introductory Offers” which lists banks and the terms currently offered and “Compare Accounts”. The latter section enables a direct comparison of tariffs, charges and rates of interest between potential business banking providers. This is an invaluable tool when researching the best bank for your business circumstances.
Free banking: Is it too good to be true?
If a bank is offering “free business banking” ensure you check any additional charges built into the service. For example, the terms of the account may only permit you to process a certain number of cheque payments within a period of time without charge, any additional transactions will be charged a small fee per item. Find out whether you will be charged for making transfers between accounts or anything else you feel will be important for your business banking set-up.
Review regularly and avoid apathy
Regularly reviewing the services you receive is recommended. It’s easy and convenient to stay with the bank you chose when starting your business but switching to a new supplier may help you get a better deal.
Increased competition between banks keen to attract small business clients and the development of banking services ensures there are a range of attractive packages available. Banks regularly review the services on offer and develop increasingly competitive deals, so keep an eye on the market. If you don’t want to move your account, ask whether your current bank will negotiate a better package or improved services? If not, then moving an account should be straightforward, with the agreement of many major clearing banks to make the process easier.
The major clearing banks have undertaken to publish information about bank charges and interest rates on current accounts to make comparing prices easier. The Business Banking Code’s Money Facts publication gives details of the standards that should be adopted when you switch from one bank to another.
If, after researching what’s on offer, you remain unsure about the account most suited to your business needs, it is advisable to seek the professional advice of an Accountant. To find your nearest accountant, use The Institute of Chartered Accountant’s website search facility. The process is straightforward, simply type in your town or postcode and all fully qualified, registered accountants will be listed, making contact easy.