Table of Contents
- Work out what you need from a business account to narrow down your options
- Consider the features different accounts offer to find a good match
- Factor in the fees charged to make sure an account is worthwhile
Finding the right business bank account can save you time, money and effort as a business owner. Whether you’re a sole trader or limited company, a startup or more established, here’s our guide to choosing a bank account to suit you and your business.
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Identify your business needs
Choosing the right business bank account involves finding an account that best caters towards your business needs and goals.
So if you’re just starting out, an account that offers basic banking services and has no or low fees might fit the bill. But if your business has been going a while, your priorities may be different – for instance, you might want an account that includes certain tools, perhaps to help with specific tasks or monitoring performance.
Essentially, different business accounts offer different features and services, while different businesses have different wants and needs. The key is to match them up.
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What to look for in a business account
Fees
Comparing the fees and charges on business bank accounts is a must. Take into account monthly fees, transaction fees and any charges for the features you might use.
If keeping costs down is a priority, there are free business bank accounts. These have no monthly charges, and often offer free basic transactions, making them a good option for startups and smaller businesses.
Accounts which do charge monthly fees tend to offer more features in return. If you’ll make use of the features, paid-for accounts can be worthwhile. But there’s no point paying for options that you don’t need.
Transaction limits
Some business accounts set a limit on the amount or size of transactions that can be made for free in a certain period of time. Similar restrictions can also apply to cash deposits.
When deciding between accounts, consider how such limits fit with your business and the costs of exceeding them. If your business involves a lot of transactions, or regularly takes payments in cash, look for a business account with more generous limits, or none at all.
It’s possible that paying a monthly fee for an account that allows unlimited transactions will be worthwhile.
Features
Making sure a business account can do what you need it to do is essential. This means paying close attention to the particular features an account offers and looking out for other tools and extras that could make running your business easier. There are many benefits of a business bank account, so make the most of them.
Some of the main features to consider include:
- Payment options: Whether your business mainly transacts online, in-person, or a bit of both, check the options an account allows for accepting and sending payments and make sure they work for you. Some banks will provide card readers or help facilitate taking payments through your mobile phone. Alternatively, bank transfers and Faster Payments might make up the bulk of your transactions.
- Cash and cheque deposits: If your customers tend to pay in cash or by cheque, you’ll probably want a business account that allows deposits either in a branch, at the Post Office or PayPoint, or via a mobile app – not every account does.
- International payments: If your business has customers or suppliers abroad, you’ll need an account that allows international transactions, so you can make and receive overseas payments – but watch for charges that may apply.
- Invoicing and receipts: Some business bank accounts include tools that issue, monitor and, if necessary, chase invoices automatically. Similar tools may also be available in respect of managing receipts.
- Accounting software: Many business accounts come with accounting software included or allow it to be integrated, making it quicker and easier to file taxes and monitor performance.
- Multiple debit cards: If you have employees or other partners, some business bank accounts provide the option to issue multiple debit cards for business spending. Cards may be both physical and virtual, and it might be possible to receive instant notifications and set individual spending limits.
- Expense tracking: Certain business accounts automatically track and categorise the spending made from an account, making it easier to keep on top of expenditure. Digital receipt capture saves even more time.
- ATM withdrawals: When it comes to accessing funds, some accounts may limit the amount or number of withdrawals that can be made from ATMs, or impose charges.
- Savings pots and rates: Some business accounts can automatically set aside as savings a certain amount of the payments you receive. This is useful for making sure tax bills are covered or simply to create a savings fund. If you’re regularly in credit, look out for differences in interest rates too.
Incentives and rewards
Many providers offer incentives and promotional offers to persuade you to open a business account with them.
Typically these might involve monthly or transaction fees being waived for a certain period of time, or a free trial of accounting software to use with an account. Other popular offers include cashback on card spending and discounts with certain retailers.
Such incentives can be valuable, and should be taken into consideration. But check terms and conditions carefully, particularly around fees, and don’t choose a business account based on incentives alone.
Credit facilities
Businesses often need to borrow money, whether out of necessity or in an effort to support growth.
If your needs are short-term, perhaps to cover an unexpected expense or late payments, some business bank accounts include access to an overdraft facility, which makes funds available even if there’s no money in there.
Alternatively, if you need a larger amount, or want to borrow longer term, some providers might offer a quicker and easier pathway to taking out a business loan or a business credit card if you already hold a bank account with them.
Eligibility
Some providers set eligibility criteria that your business must meet in order to open certain business accounts. Often, such requirements involve a business having a minimum turnover or trading history – although startup business bank accounts may require that you’ve only been trading for a short time.
To avoid disappointment and wasting time, it’s a good idea to check for qualifying criteria early on. Even if you’re ruled out of getting a certain account, other options you are eligible for are likely to be available elsewhere.
Online or branch
Consider how you need, and prefer, to manage your finances when deciding on a business bank account.
If you’re comfortable banking online, and the nature of your business means you shouldn’t need to visit a branch, an app-based or online business bank account could be a good fit. But if you regularly need to deposit cash, or prefer speaking face-to-face, a provider with a high-street presence might be a better option.
Many banks offer a mixture of branch, phone, online and app support, keeping all avenues open. But take note of the opening hours of customer support – while some accounts offer assistance 24/7, with others it may be limited to weekdays or certain times of the day.
Business banking insight
- 70% of business owners would open a business bank account from a provider which has no branches, according to the latest NerdWallet UK business banking survey.
Timescales
While most providers now offer online applications, some business accounts will still be opened much faster than others.
If speed is of the essence, instant business bank accounts can often be applied for in a matter of minutes and, all being well, could be up and running the same day. Other accounts might take a few days, or sometimes weeks, to be fully open, though patience can be rewarded if it’s the right account for you.
Protection
The level of protection over your funds should something go wrong can vary between providers, so check the cover that applies carefully.
For banks covered by the Financial Services Compensation Scheme (FSCS), eligible deposits of up to £120,000 should be protected if a provider fails. Alternatively, where an account provider is an e-money firm, safeguarding measures apply which are different to the protection offered by the FSCS.
Customer service
Look at reviews of providers to research the quality of customer support you can expect to receive. Check how easy it is to find a contact phone number on provider websites, or it might be that you prefer a UK call centre. You could also check The App Store or Google Play to see how existing customers rate the apps of different providers.
Depending on the industry you’re in, or the stage your business is at, you might also value access to a dedicated relationship manager, which some banks provide. Typically, they’d provide more tailored, in-depth guidance and support than you’d get from front-line customer support.
See our business bank account reviews
How NerdWallet can help you choose a business account
Our range of business bank account roundup pages are designed to point you towards the accounts that are right for you. Whatever you’re looking for in a business bank account, the aim should always be to find the account that best suits you and your business.
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