Connor CampbellWhat our Nerds say about joint business bank accounts
If you run your own business, it may be wise to consider opening a dedicated business bank account. And as with normal bank accounts, it is possible to open a joint business account.
This allows you and your business partners shared access to your business’s finances, as well as the various banking benefits that come alongside a business account. This allows you and your business partners shared access to your business’s finances, as well as the various banking benefits that come alongside a business account.
By setting up a joint business account, it can help keep your personal and professional finances separate. This makes it quicker and easier to pay your taxes while building a credit profile for your business at the same time.
And if you already have business banking set up, you may be able to add additional users to your account.
There are a number of different joint business accounts out there, each with their own advantages so it is a good idea to compare the options available. Read on to find out more about how to open a joint business bank account, when you need a joint business account, and what services it can provide.
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What is a joint bank account and how does it work?
A joint business bank account is a business bank account that is opened and accessed by more than one person. Much like a personal joint account, a joint business bank account allows two or more people in business together to pay in cash, withdraw money and use all the other facilities offered by the business account.
The only difference between a joint business account and a regular business bank account is that more than one person can access the former. Other than that, they function in the same way.
When searching for a joint business account, you should also look out for terms such as partnership bank account or joint venture checking account.
Do I need a business account for a partnership?
If your business is a limited liability partnership (LLP), you must set up a business bank account. This is because this is a legally separate entity, and must be managed as such.
On the other hand, if your business is a general partnership, meaning that you’re running a business with one or more other people, then you are not legally required to set up a business account. This is because in a general partnership, all partners are personally responsible for business profits, losses or debts – the partnership is not created as a separate legal entity.
» MORE: Do I need a business bank account?
When is a joint business bank account worth it?
If your business has multiple owners, then a joint business account will allow each partner equal access to the business account. It will also allow you greater flexibility and clarity when it comes to your financial management.
It could make your business appear more professional, and will save you time when it comes to submitting your tax returns to HM Revenue & Customs (HMRC) by separating your personal and professional finances.
And as your business grows, having a dedicated business account that multiple partners in the business can access will help you keep on top of expenses, invoices, transactions and cash flow all in one place.
As well as this, it may improve your business’ credit score, making it more likely that you will be able to access business loans and finance if you need to.
Can I add someone to my business bank account?
It may be possible to add someone to your business bank account, making it a joint business account in the process. Banking providers may allow you to do this online.
When you add someone to your business bank account, you can give them varying levels of access. This could include allowing them to make payments, but not allowing them to apply for loans or make changes to the account itself.
How to open a joint business account
When opening a joint business account, each person you intend to have access to the account may need the following documents:
- proof of identity, such as a passport or driving licence
- proof of UK address, such as a paper driving licence, credit card or mortgage statement
- partnership agreement (if this applies)
- contract of co-partners (if this applies)
- certificate of formation (if this applies)
- evidence of the partnership trading address (if this applies)
- previous business banking details
- Companies House registration number
You will also need to provide information on your business, such as the number of employees, estimated annual turnover, and the full business address.Though it is possible to open a joint business account online, especially with online challenger banks that have no high street presence, many providers will require you to come into a branch in person
What services does a joint business bank account usually offer?
One of the biggest benefits of a joint business account is the number of services that come attached to the account. These can include, but are not limited to:
- mobile and web access to your business account
- specialist support and advice from your banking provider
- integrated accounting software
- ability to automatically set aside money to cover taxes
- creating, sending and tracking invoices
- instant UK bank transfers
- automated expenses
- flexible business bank account overdraft
- IBAN and SWIFT codes for international payments
- Financial Services Compensation Scheme (FSCS) protection
These services are in addition to the usual features of a bank account, such as cash deposits, ATM withdrawals, standing orders, direct debits and more.
What are the benefits of a joint business bank account?
A joint business account can come with many advantages. These include:
- the ability for more than one person to access the business’ finances.
- specialised financial advice and support from your banking provider.
- simplified bookkeeping by separating your personal and professional expenses.
- building a credit profile for your business, potentially opening up access to business finance.
- making your business look more professional in the eyes of customers and suppliers.
» MORE: Sources of business finance
What are the disadvantages of a joint business bank account?
Joint business bank accounts will usually give each account holder the same level of access and therefore your partner could withdraw cash or even run up debts without your consent.
If you are going into business with someone, it’s likely that you already trust them – but it goes without saying that you need to be able to trust the person you open a joint business bank account with.
How much does it cost to open a joint business account and are there any ongoing fees/charges?
There tends to be no initial cost to opening a joint business account. However, depending on your provider, you may be subject to an ongoing monthly fee to keep your account active.
You may also incur other fees, such as on bank transfers or cash payments, but again, this will depend on the terms of your provider agreement.
Some banks may offer fee-free accounts for the first 12 months.
How to choose the best joint business bank account for me?
To be eligible for a joint business bank account, all persons associated with the account may need to be UK residents and over 18 years old.
You will need to pass the provider’s anti-money laundering, know your customer (KYC) and credit checks, and provide evidence of your trading activities.
Providers may not offer business bank accounts to certain kinds of businesses.
In order to decide which joint business account to apply for, you will need to work out what exactly you are looking for from your account.
Do you want free bank transfers and no monthly fees? Is it important to have an overdraft? Will you be accessing your account via desktop and mobile banking? You can compare accounts from different providers to find one that best suits your needs.
What are the alternatives to a joint business bank account?
Of course, if you are a sole trader, you won’t necessarily need a joint business account. Instead you can use a standard business bank account or your own personal account, depending on your business.
There are numerous other forms of business bank account you could also consider.
If you are a start up, you may want to look into a business bank account designed around your needs.
If you are looking to change from one business account to another, you may be able to benefit from the switch.
And if you are concerned about how your credit history may affect your ability to open a business account, then you can find providers that won’t conduct a credit check.
Joint Business Bank Account FAQs
If you are in a general partnership, you do not need a business bank account.
If your business is a limited partnership or a limited liability partnership, however, you are legally required to manage your finances through a business bank account.
Yes, a sole trader could use a joint bank account, but they would have no need to unless they wanted to add someone as an authorised signatory on the account for business purposes.
When opening your joint business account, you can set a mandate on the account to specify who runs it.
This means you can have an account where any spending, withdrawals or changes require both signatures, or one where anyone on the account can do so independently.
Opening a business bank account will help you start building a credit profile for your business, improving your chances of accessing credit down the road.
Some banking providers will also offer business bank accounts with overdrafts.
If you are worried about the spending on your joint business account, then it might be possible to contact the bank and ask them to freeze your account.
However, this is only a short-term solution. At some point you will need to discuss the situation with your business partner.
While many banking providers will conduct a credit check when you apply for a joint business account, it is possible to open a business bank account without a credit check.
It is possible to remove yourself from a joint business account. Depending on your provider, this could be online, over the phone, or in person.
You will need to check if there is any debt outstanding on the account, as banking providers tend to be reluctant to remove names from a joint account if that is the case.
It can be quite simple to close a joint business account. Many providers will have an account closure form.
Depending on the mandate on your account, closing the account may require the signature of each owner or authorised signatory on the account.
You will also need to make sure you have no debit balance outstanding on the account.
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