What you need to know about opening a business bank account

Whether you are a sole trader, a start-up or a larger company that wants to open a new business account, you need to do your homework first before you begin sending your application through. This guide will tell you what you need to look for from a good business account to make the most of your corporate finances.

Why open a business account?

If your business is small, you might not feel a need to have a business account. However, there are several benefits for having a separate area for your professional finances, including:

  • It keeps your business finances distinct from your personal expenditures.
  • It makes it easier to track business incomings and outgoings if they are not mixed with household finances, particularly when you have to fill out your tax return or undergo an audit.
  • Limited companies are required to open a business account.
  • It prevents your personal finances from being liable for business debts in the future.
  • This could be a chance to start a good relationship with your bank advisers, who can help you grow the company in the future.
  • By having a business account, it is easier to accept debit and credit card transactions, which could boost sales.
  • You gain greater benefits by having a business account that could help your firm.

How do you choose a business bank account?

Business bank accounts are available from high street banks and building societies, as well as specialist providers. You should make sure you look for a specialist current account that is dedicated to supporting your business needs, which may be very specific to your company.

Many basic accounts are free, although if you want additional benefits or you have a large firm that requires more complicated services, expect to pay a monthly fee. Do not dismiss accounts that charge, as the benefits they offer may outweigh this cost.

While you might be tempted to look at the interest rates available on accounts, this is less important than when opening a savings account. As the facility is more likely to be for regular transactions, the interest rates are not as significant as other considerations like bank charges and the services on offer.

Benefits available to business account customers

Here are just some benefits you may be able to take advantage of by opening a business account:

  • Higher overdraft facilities
  • Business guides
  • Training materials
  • Business support and mentoring
  • Communal meeting rooms you can use around the country
  • Business class travel
  • Favourable foreign exchange rates
  • Insurance
  • International payments
  • Business charge card that gives you short-term credit to pay for items and withdraw cash, which is paid off every month by direct debit.

When choosing a business account, make sure you take all the benefits they offer into account. Some may also provide a year’s free banking or accept businesses with a short history – and therefore a lower credit rating – so these are things to consider before applying.

The next steps to opening a business account

Once you have decided which account to go for, you will need to make an appointment, bring all the relevant documentation, your business plan, a Certificate of Incorporation if you are a limited company, and evidence of how you are funding your firm.

Any partners should also be present, as well as those you want to be able to sign business cheques. It is a relatively straightforward process and could see you on the way to handling your business finances far more responsibly.

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