Choosing a bank account for your small business is an important stage in
the startup process. There are several key things to consider - such as
transaction and borrowing costs, what facilities the bank offers, and
the type of relationship you want from a bank.
Here are some suggestions which
may help you decide which bank would best suit your needs.
1. You must set up a business
account if you're starting up as a Limited Company, Partnership or any
other key business structure. Sole Traders can use their own personal
accounts (or via a new business account - John Smith trading as XYZ).
2.Naturally, only go for banks
that have a strong background - names you will have heard of, or even
internet banking brands which are owned and operated by the big players.
3. Bank Charges - a key point to
consider is how much it will cost you to have a business bank account.
You may have a large number of monthly transactions to process, for
example, so ensure you know exactly what charges will be levied on your
account before signing up. Many major banks provide "free" banking for
set periods to new businesses, so this may also be of interest.
4. Online Banking - this is an
increasingly important service, and most banks now provide an internet
service so you can check the status of your account day or night. At
MoneySuperMall, and with our previous businesses, this is an
essential service. Rather than ringing the bank to check if a payment
has been made to your account, you can do this yourself in a fraction of
the time.
5. Interest - although the major
banks have improved their interest rates on business current accounts in
recent years at the request of the Government, they do vary wildly.
Some high street names pay
virtually nil interest if your account is in credit, but there is always
a trade-off between free transaction costs and interest rates, so do
consider the overall benefits each account would provide to your
business.
6. Small Business Team - go for a
bank which has a specialized small business banking unit. The set-up
process should be simpler, and dedicated teams will be used to dealing
with all types of small business and their specific needs.
Some businesses will require
regular contact with their bankers, so you should go with a team you
feel you can build a good personal relationship with.
For more information on the
practicalities of opening a limited company bank account, read our
article here.
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