If you’re a sole trader you aren’t required to have a business bank account. But it’s a good idea to have one anyway, as it means you can separate your business and personal expenses which in turn makes bookkeeping easier.
So what should you look for if you’re planning on opening a business bank account? All business bank accounts offer a cheque book and paying in book, but there are other features you’ll want to consider too:
We’re all used to our personal bank accounts being free of charges, so it can be a shock when you’re charged a fee for paying in a cheque. You could also be charged for withdrawing or paying in cash, writing a cheque or a monthly or quarterly fee for having the account. These can vary from account to account and can also vary depending on the number and type of transactions you make in a month. So it’s important to pick an account that best suits your business and the transactions you’ll be making.
Free banking for a limited period
Some business bank accounts do not charge fees for the first year or eighteen months. Don’t forget to weigh up the charges though as you’ll need to start paying these once the introductory period is over. And while you can change bank accounts, it can be an effort and there’s no sense in doing it more often than is necessary.
Cashflow can be one of the biggest challenges of running a business and so access to an overdraft is vital for many businesses. If an overdraft is something you might need, check that this is available and what you will be charged for it.
Business banking advisers based in branches can be useful sources of advice and information, as well as being well connected to other local businesses. Check the level of support you’ll get from business advisers as it can be easy to assume that you can drop in to a local branch but find that this service isn’t available as part of your account.
Some of the online business bank accounts have lower fees but the services you can get from a bank branch are limited to just paying in and withdrawing money. Many small home-based business consider this to be a fair trade-off, but you need to know exactly what to expect before you open the account.
Other things you might like to consider
These are less important than the items above, but you still might like to think about :
- Does the bank offer a good deal if you also have a personal account with them?
- Can you take credit card payments over the phone or at events and what is the charge for this?
- Do they have a good deal on business credit cards too?
- Can they demonstrate their online banking service so you can see if you like it before you open the account?
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