A Guide to Business Current Accounts

One of the first tasks for a newly registered business is to find a business banking current account. However, unlike personal current accounts, business accounts will carry fees, even if you are in credit. For example, with business accounts, charges of up to £25 can be issued per transaction, which exist on top of the cost of a monthly subscription.

 

Is a Business Account Essential?

Given the cost of making transactions with a business account, it is advised that small companies use a personal account when possible. For instance, if you are a sole trader, rather than a limited company, then you may be able to use your normal bank account for your business transactions – however; this will be up to the discretion of your bank. Notably, if you are making a large number of transactions, particularly with large sums of money, or need to bank cash on a frequent basis, your bank will likely suggest a business account. However, many business owners would prefer keeping their business transactions separate from their personal finances, both for bookkeeping and accounting reasons.

Benefits of a Business Account

Other than the peace-of-mind of having your business finances separate from your personal, business accounts have a range of practical benefits. For instance, even the most basic accounts will offer your company a chequebook and a paying-in book. However, perks can include free business banking, interest on in-credit balances, and fee-free transactions – all depending on your account provider. Furthermore, having a business account can make it easier to manage cash flow and to complete your tax self-assessment. You may also wish to consider the introductory benefits offered to new account holders. For instance, certain banks will provide deals that can mean that you effectively have free banking for the initial 12 months of your business. Finally, many business accountholders enjoy the benefit of having branch-based advisers, who can prove to be helpful when during the shift from personal to business accounting.

 

Business Current Account Eligibility

As mentioned, sole traders may not have to set up a business bank account, but if you have set up as a limited company or partnership then you will be required to do your banking in this manner. Therefore, once you have registered your company, you will be automatically eligible to open an account. Moreover, many NGOs, clubs and pension funds will also qualify to set up a business account, benefiting from the ease of large-scale transactions that an account will facilitate. However, it should be noted that even limited companies may be precluded from opening a business account if the named accountholder has a poor credit rating.

 

Business Account Applications

When applying for a business current account, research is essential, and it is important not to be swayed by introductory offers, if the long-term charges of a particular account will make even the simplest of business transactions an expensive endeavour. Similarly, it is important not to open a business account based solely on the premise that you use a certain bank for your personal finances, as you may be missing out on deals that can be found elsewhere. In such case, the simplest way to apply for an account is to use a banking comparison website to ascertain which bank you would best fit your requirements