It may not be the safest idea to have both your business banking account and personal banking account with the same bank. Some banks specialise in small company banking, so it is always worth shopping around.
There is also the risk that your company banking may cause problems with your personal banking and visa versa: don’t put all your eggs in one basket and keep your company bank separate to your personal bank account.
If you are planning to start up a large-scale company, then it is better to speak to one of the larger bank branches. They will have the expertise at hand and may be able to make decisions quicker than a small branch.
Shop around for the best banking account; some will offer good interest rates others will offer free banking for the first year or more. Go and meet the bank manager they will be able to give lots of advice, but be honest with them, they can only advise on the information provided.
Do I need a Business Bank Account?
If you are a limited company you will need to open a business account, as the business is a separate legal entity.
If you are a sole trader you do not need a business bank account, but it makes sense to get one. There are advantages including keeping track of the company finances and completing the accounts.
Many of the cloud accounting software packages include a free bank feed; it can save lots of time entering bank transactions and also reduce the risk of errors.
How to Choose the Best Bank
The are many banks that offer business banking, but choosing the best one can be difficult. Here is a list of things to look for:
- Bank charges – look at paying in cash, depositing cheques, overdraft and monthly fixed rates
- Overdraft facilities – some offer a free overdraft
- Does it offer a bank feed to accounting software?
- Do they offer any other support?
- Is there any free banking available in the first year
If you have bad credit you may have to shop around for a suitable account, but it is worth looking.
Business Banking Charges
Business banking charges vary from bank to bank. Before you open a new account check the charges fully, some bank charge per transaction. Most banks do not charge for bank transfers, but I came across one which charged £1 per transaction and this soon added up over the month.
If you are a business that mainly deals in cash, you will need to ensure there is a local branch to you so withdrawals and deposits can be completed easily. Check the charges for depositing cash.
Bank Loans and Overdrafts
A bank loan or overdraft can help to keep your business going if funds are tight. Check before you open the account if you are offered the facilities that are needed by the company.
If you are looking for a bank overdraft or loan, the bank will require cash forecasts and a full plan for your company. Some banks include templates to ensure all the correct information is provided.
A good place to look for a business bank account is Money Saving Expert, they compare the best accounts and let you see a breakdown of charges
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