Online Business Bank Accounts
What is an online business bank account?
In recent years, a number of online business bank accounts have been launched. They are generally aimed at smaller businesses, start-ups and sole traders who want to have quick access to a simple online bank account. Online business bank accounts will often offer similar features and services to traditional business bank accounts offered by big banks. However, you will need to do some research to ensure that the provider you choose provides the services that you need.
What services do online business bank accounts offer?
Online business bank accounts often offer similar services to those offered by traditional business bank account providers. However, some will be slightly more limited in their offering and many will not provide a credit facility. Do some research to ensure you are getting all the features you need from your online business bank account. Here are some of the services and features that online business bank accounts often offer, although not all online accounts will offer these features:
- Deposits (often accepted in cash at banks and Post Office branches)
- Debit/credit card
- Payments
- Transfers
- Online banking
- Telephone banking
- Accounting tools
- Direct debits
- Standing orders
- Invoicing tools
I’m a sole trader, do I have to set up a business bank account?
No, you are legally allowed to use your personal bank account for all your business transactions as you and your business are viewed as a single legal entity in the eyes of the tax office. However, many sole traders and freelancers want to keep their business finances separate from their personal banking and online business bank accounts can be a quick and easy way to do this. Others enjoy the fact that they sometimes offer online tools and apps that help them send invoices to clients, chase payments or complete simple accounts ready for their annual self-assessment tax return.
How much do online business bank accounts cost?
Fees and charges vary from provider to provider. It is important to do some research and consider how you will use the account before deciding which one is the most suitable for you. For example, if an account charges you a percentage for every deposit made, and you are likely to make numerous deposits each month, it may be cheaper to look for an account with free deposits and a monthly fee instead.
Some accounts may offer an initial fee-free period, but check the rates charged once this period is over.
What should I consider before taking out an online business bank account?
It’s important to consider the fact that you may not have access to a branch and the help of banking staff, like you may have if you take out a traditional business bank account through a high street bank.
You could also find it more difficult to access credit with an online business bank account, so consider this aspect if you are looking for a credit card or overdraft facility. However, online business bank accounts are often very quick and easy to set up and often offer state-of-the-art tools to help you manage your finances, accounts, taxes and invoicing.