Small Business Bank Accounts
What is a small business bank account?
When you start your own fledgling business, you will usually require a small business bank account to help keep your business transactions separate from your personal transactions. A small business bank account will offer a range of features that allow you to carry out transactions such as paying bills, receiving payments, taking cash out from an ATM, using a card, paying by direct debit and standing order and keeping track of your finances.
However, each small business bank account is different, and it pays to do some serious research before deciding which account is right for you.
Do I need a bank account for my small business?
If you have set up your business as a limited company, registered with Companies House, then yes, you are legally obliged to open a business bank account. Although the type of business bank account you open is usually up to you.
If you are a sole trader you can use your personal account for your business transactions, although you may still find that opening a business account has its benefits.
Why is a business bank account for your small business important?
Starting a small business means keeping on top of the details. When you’re paying attention to every penny spent, a good business account allows you to track everything from the very beginning of your small business’s existence. Combining your business transactions with your personal transactions can make it more difficult to keep on top of your business accounts.
What do you need to apply for a small business bank account?
Once you’ve made the leap to start a small business, you will usually need proof of ID for all named company directors, such as a passport or driver’s licence, and proof of address. You will also need a certificate of incorporation and the name under which your small business is registered.
How much does a small business account cost?
The fees for small business accounts will vary depending on the provider and the type of account, but you should expect to pay for the handling of your small business’s money in some shape or form.
Your small business can be charged a monthly or an annual fee by your account provider. Your business may also incur a fee when opening your small business bank account.
Another means of paying for your small business account can be through fees paid on deposits. Again, these fees will differ between providers. Other types of transactions may also carry fees.
Some small business accounts might offer an initial period where no monthly or annual fees are charged, although transaction charges will usually continue.
Do small business accounts offer overdrafts?
Some small business accounts will offer you an overdraft facility. The interest charged on your overdraft will differ depending on the account and your circumstances.
Can you receive interest on the money in your account?
Depending on the provider and product you choose you may be able to receive interest on funds within your small business bank account. Different banks will offer different rates, so consider if this is something important to your small business when you begin operating. Bear in mind that you may need to declare the interest earned on your balance in your tax return.