A good business bank account is a fundamental in the financial management of both new and established business. We offer some tips on how to make this choice easier and also better value.
Just as with all other financial products, when choosing a bank account for your business it is imperative to evaluate your company's specific needs, then compare business bank accounts to find the option that gives you the best value.
If your business is a limited or incorporated company you must have a business account.
If you are a sole trader or partnership it is still highly advised as it gives you a clear and transparent view of your finances.
Free Banking
Currently there are a number of banks that offer free business banking for up to 2 years - some do this just for start up businesses, and others for all businesses.
However, most banks charge an account fee for their business services after this ends so you'll need to do your research and also take the future into account even if you are only looking for a basic business bank account.
You can check our business account comparison to get an idea of the options the best business accounts offer.
Charges
Most banks will charge a monthly fee for their business banking services, others an annual fee, so look into this to make sure the service you're getting warrants this charge.
This monthly fee is sometimes dependent on the size and annual turnover of your company, and small business bank accounts will often attract a lower fee than those designed for larger corporations.
Others apply charges for cash withdrawals, BACs transfers, cheques (both cashing and issuing them) and foreign transactions.
Small charges can add up to run up the cost of current account businss banking so consider which facilities you'll need to use and then look at the prices the individual banks charge for each of these so that you're in a position to decide who offers the best deal for you.
Overdraft
An overdraft can be a useful addition to your business bank account as it will help to give you a little leeway on your in-credit balance, and provide a means of avoiding the expensive charges applied for bounced cheques and payments.
However, the cost of a business overdraft account can be significant so it's really important to look for a competitive rate of interest rate.
You'll find that overdraft interest rates and charges vary between banks, as do the overdraft limits on offer.
Look for the business account that offers the highest overdraft limit, with the lowest rate of interest for maximum flexibility for minimum cost.
Having as much leeway in this area as possible, will see you avoid paying significant charges. Also, be aware of the high charges that result in going over your overdraft limit and avoid this wherever possible.
Extras
Business accounts also often come with debit cards and cheque books for those eligible, so being aware of the criteria you need to meet if you want one before you can get an account can be a frustration saver.
These days, good online facilities are also an imperative for business banking. Online banking is faster, cheaper and time effective. A bank with a good reputation for online security is necessary to feel comfortable when banking online.
Happy business banking
If you do open a bank account and you end up feeling you’re not getting the service you require you can change accounts easily and within minutes – a huge improvement on the past.
So, compare business bank accounts and open the account you feel is the best fit and offers you the lowest cost and best service.
