Do you need a business banking account ?
When looking at banking for your own business a business bank account is not always necessary. This is certainly true in the world of freelancing where unless you decide based on an accountant’s advice to form a limited company that it can save you money.
Most personnel accounts do not have the high standing charges that business accounts tend to incur and their terms and conditions are far more generous. While working as a sole trader using a separate personal bank account makes life easier and enables you to track things.
Benefits of having a business account
A business current account works in a similar way to a conventional bank account, but enables you to keep your business transactions separate from your personal finances. This makes life much more straightforward when it comes to managing cash flow and calculating your tax liability at the end of the year.
If you have decided to go down the limited company route, then you have to open a business account in the company name. The money in that account doesn’t belong to you until it is formally paid to you by the company.
|Tip: It looks more professional when dealing directly with companies to have a bank account under the name that you are trading under. .|
When considering what to do don’t just stick with your existing bank, take a look around there could be a better deal. Having a relationship with a particular bank does have its advantages as it makes it easier to transfer money between personal and business accounts.
The best business bank accounts will offer you both low charges and decent rates of interest when you are in credit, so make sure you compare accounts to find the right deal to suit your requirements. If you think you will mainly be making payments electronically, go for an account that offers free or low-cost electronic transactions. Alternatively, if you think you'll be using a lot of cheques, look for low charges on paper transactions.
If you are always in credit take a look at an account that rewards you for that , however beware that these often come with a minimum regular payment every month. Some of these also are linked to a credit card that could be of value to your business.
If you sometimes over drawn there are accounts that provided a standard overdraft feature that could be better for you.
When opening you account you will need to provide basic business documents such as a business plan and certificate of incorporation. Again be sure to look out for introductory offers and check if there is a minimum deposit each month.
Most business banking accounts come with an introductory
offer such as free banking for 12 or 18 months. While these are tempting,
always make sure you know how much you will end up paying once the introductory
period is over.
As a general rule, the more transactions you make on the account, the higher the charges are likely to be.