Why open a business bank account is a question I get asked often? One of the key pieces of advice I give to new businesses is to open a business bank account. Sometimes this advice also applies to existing businesses.
It seems such an obvious part of the process when starting and running a business. Unfortunately, it’s one aspect that many overlook. Some choose not to open a business bank account in order to avoid bank account fees and charges. Whilst I understand you want to avoid unnecessary costs, the benefits of a business bank account far out way any potential bank charges.
A limited company is a separate legal entity and should always have its own business bank account. Sole traders and the self-employed should also open one.
What are the benefits you ask?
First and foremost, it’s far easier to keep your business financial records maintained as there are less transactions. If you only process business transactions through your business account, it will save you time and money. This will invariably outweigh any bank account costs.
Opening a business bank account keeps your personal financial affairs private. Your accountants don’t need to see how much you spend on dating app subscriptions in the year.
Most banks will not allow a personal bank account to be used as a business account. Although you may be able to do this, for the reasons stated above and more, it’s not advisable.
Banks offer free banking periods and other incentives to open an account. With the move towards digital and cashless payments some of the challenger banks like Starling and Tide offer very good business account deals as they are branch-less banks with far lower overheads.
Here is a short list of banks offering business accounts:
- RBS https://www.business.rbs.co.uk/business.html
- Starling https://www.starlingbank.com/
- Tide https://www.tide.co/
- HSBC https://www.business.hsbc.uk/en-gb
- Barclays https://www.barclays.co.uk/business-banking/
Business loans and business credit cards can be accessed to assist your business and help keep a clear line between your personal and business accounts. This helps you and your accountant, and ultimately saves you time and money.
How to choose a Bank
When choosing a bank, it’s important to choose a provider that meets the needs of your business. You should be looking for flexibility, benefits and features that apply to you. A few considerations are:
- Introductory offers
- Software integrations, both accounting and payroll
- International payment facilities
- Business debit and credit card provision
- Overdraft facilities
- Interest rates
- Account Charges and charge free periods
- Online banking facilities
- Support and contact options
It’s important to partner with a bank that you can trust and who is there to support you through good times and bad, but don’t be unrealistic with your expectations.
From your customers perspective, it looks more professional and your business more credible if your banking facilities are maintained through a business account rather than a personal account.
Here to help
We can help plan, develop and support your business, nurture key relationships and limit risk.
If you need help and assistance with your business and banking facilities please contact ABK Cloud Accounting via our contact page here https://www.abkuk.com/contact.