Choosing and setting up a business bank account is more important and less simplistic than you might first think. It can be time consuming to research and digest what is on offer from the various different providers, but most established business owners would agree that it is time well spent; the right bank and bank account for your business will mean lower charges, reduce the hassle in day to day administration tasks and provide essential support in terms of funding and advice as your business grows.
Avoid the Temptation to Let Your Business and Personal Finances Merge
Many new start-ups and part time business owners operate as sole traders. Sole traders are not obliged to have separate bank accounts for their business finances and are notorious for merging their business and personal money. Although this may be tempting when you first start out because it appears to be the quickest, most convenient and cheapest way of operating, it may not be the smartest of choices. As your business matures and expands, separating your personal and business finances will be vital. Therefore, although there may be some costs involved initially, organising this from the outset will ensure better manageability and save you a lot of hassle at a point in the future when your time and efforts would be better used facilitating the smooth expansion of your business. Claiming expenses, completing tax returns and the importance of the perception of professionalism are just a few of the many strong arguments in favour of keeping your business and personal finances separate.
What to Look Out For and Why When Choosing a Business Bank Account
- The option of a named specialist advisor who you can contact directly – Someone with the knowledge and expertise of start-up businesses can prove invaluable in those all-important early days when your business is in its infancy
- A free introductory period of 12-24 months – It’s well worth seeking out these deals because for most new-start businesses every penny counts but be sure to compare charges and facilities for after the introductory period ends
- Online banking – For the sake of convenience and time pressures, you need to be able to do your business banking wherever and whenever it suits you
- Fee free overdraft facility – An overdraft facility can prove extremely useful (and in some cases lifesaving) to start-up businesses whilst they’re getting off the ground. Be aware though that many banks will ask for a personal guarantee for this. This is fine if you are operating as a sole trader but negates the benefits of operating as a limited company if that is the route you have chosen.
Your business bank account needs to be flexible, easy to manage and hopefully have low charges but avoid choosing the lowest charges over a bank with which you feel you could build a good relationship. A solid relationship with your business bank will help to open doors by offering invaluable support with the management and expansion of your business.
We Understand Your Time Pressures So We’ve Done the Research For You
We know that starting up a new business means a million and one things to think about and do, so we’ve done the bank account research for you. The table below allows you to compare the best business bank accounts currently available to start-up businesses, giving you all the information that you need in order to make an informed choice and ensure that you get the right bank account for your business.
| Lloyds * |
Natwest & RBS ** |
HSBC *** |
TSB | Santander **** |
|
| Initial free business banking period | 18 months | 24 months | 18 months | 18 months | 12 months |
| Internet/mobile/phone banking available | ✔ | ✔ | ✔ | ✔ | ✔ |
| Support from business management team | ✔ | ✔ | ✔ | Relationship manager | Online support & guidance |
| Fee free overdraft facility | No | £500 Subject to status | No | No | No |
| Choice of tariffs to suit your business needs at the end of the free banking period | ✔ | ✔ | ✔ | ✔ | ✔ |
| Additional features | Access to archive of business guides 90 day & free trial of Sage start-up & Sage instant accounts software | No annual fee on your business credit card for the first 12 months, free online start-up courses & 15% off business insurance for the first 12 months | Face to face or online business review, articles, tools & videos in online knowledge centre | 18 months free business banking if personal account also held with Santander | 0.25% gross/AER (variable on credit balances |
* Lloyds start up account is available to businesses with a turnover of £0 – £1 million.
** Natwest & Royal Bank of Scotland start-up bank account is available to start-ups with a turnover of less than £1 million, where the business has been trading for less than one year.
*** Features of HSBC start up account for businesses with a turnover of up to £500k, start up account with different features also available for turnover of £500k to £2 million.
**** Available as a first business account for businesses that have been trading for less than 12 months and have an annual turnover of less than £250k.
We hope that this guide to choosing your start-up business bank account has been useful. If you have any questions or would like to discuss your start-up business with a Free Consultation, please contact Sam on 02475 185286 or complete our online form.
