Choosing a business bank account

As you get started with a new business, having a bank account that you can receive and make payments from will be vital. We’re pretty sure you already realise this, but did you know there are different types of bank accounts that would be more suitable for you depending on what type of business you have. And did you know that some will charge you more or less bank fees for the account you choose? In fact these days some of the more progressive app based bank accounts will help make doing your accounts really easy too.

That being the case it’s really worth making sure you pick the account that’s right for your stage of and approach to business. If you’re starting out as a freelancer/sole trader it might be possible to have a standard current account without banking charges. But if you’ve set up a company with additional directors and plan to seek seed-funding before getting started you’ll almost certainly need a business account in your company name.

Things to consider:

  • What business charges are there? Is there a charge for making or receiving payments?
  • Is there a grace period where you can have all the services without the charges?
    • Some accounts make it particularly easy for startups as they understand your 1st twelve months will be extremely challenging. So it is in the bank’s interest to help you have the best chance of success, on the expectation you will stick with them and pay higher bank charges down the line.
  • Do they provide access to high street branches and is this important to you?
    • In the booming internet age some banks are beginning to create accounts that are administered entirely online. Very convenient and immediate as long as you can do everything you need to do. However, if you receive cash or cheque payments to your business it will be much more difficult to get that money into your “online only” account.
  • Do you want to be at the cutting edge?
    • In the last couple of years there have been some very interesting approaches to banking in the “smartphone” era and we are now seeing a number of new institutions setting themselves up to allow you to do your banking within an app, solely on your smartphone. Some use apps that sit “on top” of a more traditional bank (such as Fire) and others are setting themselves up as ratified banking institutions such as Atom & Monzo. You’ll need to consider how you feel about using unproven technology however as these guys are really pushing the boundaries of what we’ve had in this sector.
  • Are the ethics of your bank important to you?
    • I suspect many of us don’t give this much attention. Either we assume if they’re on the high street they must be “okay” or we realise how this can be quite challenge to investigate if we want to do it properly and find a bank that matches our own ethical and moral outlook. The basic question here is not whether the bank is profit driven or not but where they use and invest your money to make their profits. If it matters to you, definately do your research.
  • Do you need multiple currency?
    • If you need the option to receive or send payments in a currency other than sterling make sure you ask the banks you are considering what their charges are for exchange rates and additional processing costs. We’ve found that using payment processing from the likes of Transferwise is a much less costly option in comparison to traditional banks. So, make sure you are clear on ALL the costs and consider some clever alternatives now that modern web technology makes this possible.
  • Have you got a business address?
    • If you’re setting up a new bank account you’ll need an address that your business is registered to. Don’t forget, if you don’t want to use your home address for this you can use our Virtual Office services so that your business has a prime Central London address instead.

Talking of pushing the boundaries, a supplementary option to a business bank account could be a single credit card that can act as any other credit card from your selection at the push of a button…

One Card to Rule Them All.

If like us you’re often frustrated by how many cards you have to hold in your oversized wallet due to carrying around both your personal cards as well as business cards you could consider the Curve Card. A number of us in the office were early adopters of this particular card and speaking personally, there’s been no looking back!

In essence, through the use of an associated app you have one card which can then be made to act as another one from any of your cards (once set up) at the touch of a button. Need to make a biz spend? Just choose the right card in the app and away you go. Got to buy some flowers on the way home? Just choose your personal card in the app and now your card functions as per your choice. You can now literally leave all your other cards at home and have one card to rule them all!

As with all the options we’ve discussed, you must do your research. Costs, percentages, rates and fees are often in a state of flux and what might be true one week might not necessarily be true the next week. Make sure you get all the information you need. Run the maths so you know how it looks when all the different layers of cost add up and then choose the best option for you and the stage you are in business.

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