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What is a business bank account?
A business bank account is a great way of storing and managing all your company’s income and outgoings. If you’re a small business owner, a business bank account helps separate your personal cash flow from that of your company. “But why not just set up your personal bank account for your business?”. Continue reading to discover:
Can you use your personal bank account for your business?
The short answer is yes. That’s because sole traders are under no obligation to set up independent business accounts. That said, it’s a good idea to have one current account for personal banking and a bank account for the business. This will help you keep your business cash flow separate from your own.
Limited companies legally need a separate account, which should be a designated business account if possible. That’s because the company or business is deemed to be legally distinct and separate from you.
Features of business bank accounts
Most business accounts differ from individual current accounts. That’s why it’s worth understanding what you’re signing up for before you open your business account. For example, there might be costs involved when you open a business bank account that you may not have incurred for your personal account.
Although accounts vary from one provider to another, below are some of the features you should consider when you want to open a business account:
Introductory/open offers
Providers may offer short-term rewards when you open up with them, such as international transfers, competitive interest rates, zero-standing charges, open or online-only offers, or cashback.
Standing charges
Certain online business accounts charge a monthly or quarterly fee when you open a bank account with them.
Transaction charges
These charges are made for the handling of money moving in and out of your current account. Some accounts might offer lower transaction fees for making and receiving overseas payments.
Internet banking
While most business accounts provide internet banking, there are some exceptions, so it’s best to make sure beforehand if it’s essential to your company.
Apps
Many business accounts have dedicated apps that integrate with other services, such as accounting and online invoicing software, once you open your account.
Debit and credit cards
You’ll usually be able to get several bank cards with the account, giving you and any staff access to company or merchant funds.
Interest rates
The higher interest rates that come with business bank accounts can see you get greater returns on your savings.
In-store branches
Some business bank accounts are online only, so it may be worth finding an alternative if this is a priority.
Protection
Some business bank accounts even offer insurance, international assistance, and support in the event of online fraudulent activity.
As a one-stop payment platform gateway, Fondy understands the need for businesses from the UK to the US to accept various online payment methods in various currencies. Want to know more about us? Great. Check out our about Fondy page and discover what inspires us and how that can benefit your business, no matter the size.
What documents do you need to open a business bank account?
Opening a bank account in the UK is a pretty simple process. All you need is all your documents in one place before you apply.
You’ll likely need the following:
- Proof of your identification like your driving licence or passport
- Proof of your address, such as an online utility payment or council tax bill, or a statement from your personal bank account
You’ll also need the following information about your business:
- The full name of the company
- The business’ international postal address
- The business’ main phone number and email address
- The business’ UK Companies House registration number
- The approximate annual UK revenue
How to choose a business bank account
It’s difficult to say which bank offers the best small and start-up bank business accounts. There are so many great banks accounts out there, at home and abroad, each with its own banking and online features.
One of the things most business owners should look for is lower costs – and many banks offer fee-free banking for the first 12 to 18 months. However, there’s usually a significant hike in fees once the opening period is over. It’s worth checking how much these fees will cost your business in the long term.
You should also check how flexible the account is. Just like a mortgage, you should look for the flexibility to switch to a new bank account once the payment fees start to stack up or change when the initial rate is over.
It’s also worth considering which business features your company could benefit from, such as online tools, earning cashback on your purchases, or interest on your opening balance.
Online business bank accounts
If you’re a new business or even just switched to Virgin Money, you’ll get 25 months of fee-free banking. To be eligible, you need to be a new business ready to open an account within 12 months of starting up or a small business or start-up with a turnover of less than £6.5 million.
After the fee-free period, you’ll be switched to the business tariff payment – it’s £6.50 a month, excluding charges for other transactions like Direct Debits and cash paid in. That said, you’ll save £162.50 in just over two years. Virgin Money also offers specialist bank relationship management and an optional overdraft in the UK.
If you’re looking at a challenger bank, Tide and Starling Bank have some of the best online business bank accounts in the UK. Tide has a dedicated mobile-first business current account with three different price plans, from free to £49.99 a month, while Starling Bank has a free account with options for both limited companies and sole traders.
Best business accounts for apps
Running a small business is more complex than ever. As well as business bank account apps, there are a host of other applications that can help with the daily running of your business.
From online accounting to well-being apps, some of the best apps to open business accounts on include:
If you have little or no accounting experience, the QuickBooks app could help. QuickBooks is online accounting software that helps you track all your business’ finances. That’s everything from sales, abroad expenses, profit, and loss reports to invoices.
QuickBooks collects information from your apps and keeps you on top of your accounts. Connect QuickBooks to your online banking, instant receipts, payment accounts, etc., and the app will update and change your company’s books.
From helping with your company’s taxes to your payroll, using QuickBooks can save you around eight hours per week in administrative tasks.
Prices (UK):
£12 per month for a Simple Start account
£20 per month for an Essentials account
£30 per month for a Plus account
Alternatives:
Xero
Sage
Bonsai
When you open a free Uber for Business account, it’s like registering for three apps in one. That’s because you can order taxis, pay for meals, and parcels of up to 22.5 kg (UK) for your team.
Need everything in one place? No problem. Take advantage of easy-to-manage team accounts and monthly payment billing. From staff meals to client pick-ups, Uber for Business is like having a personal assistant in your back pocket.
Alternative:
Deliveroo for Work
Covid-19 means our reliance on video conferencing apps has skyrocketed. From checking in on family to working remotely, apps like Zoom have brought us closer when we sometimes need to stay apart.
For businesses, the evolution of video apps means you can collaborate in real-time with developers in the UK or translators abroad. Simply send your contacts an invite link and use it to dial into the open video call.
If you need recordings of important meetings, Zoom’s cloud featurePaid subscriptions only record and store unlimited video calls. Never miss out on key insights from meetings and open presentations again.
Prices (UK):
£0.00 per month for Zoom Free
£11.99 per month for Zoom Pro
£15.99 per month for Zoom Business and Zoom Enterprise
Alternatives:
Google Meets
Skype
WhatsApp
With workplace messages crossing multiple teams and channels, they can be difficult to separate. You may want to avoid sending emails when a simple thumbs-up will do.
Slack is perfect for quick and discreet conversations that don’t interrupt your team’s workflow. It’s easy to drag, drop and share files in various chat groups and private discussions. Plus, archived messages make it easy for you to find old and compare conversations and notifications.
Prices (UK):
£5.25 per month for a Standard account
£9.75 per month to change to a Plus account
Enterprise GoldPrice on inquiry
Alternatives:
Google Hangouts
Microsoft Teams
Ryver
For businesses of all sizes, LinkedIn may be the most important social network.
LinkedIn is a professional networking site designed to help individuals and businesses make connections, promote their services, and share their experiences.
Whether you’re releasing a new product or expanding to a new region or abroad, share your news on LinkedIn. Use a free account to try out the service, set up a network, join and compare groups, switch on or close notifications, and follow similar companies.
In return, a LinkedIn account makes your company more visible to people searching for businesses like yours. According to LinkedIn, 80% of business-to-business leads come via their platform.
Prices (UK):
£0 for a basic LinkedIn account
Around £22 per month for Premium Career
Around £44 per month for Premium Business
Around £58 per month for Sales Navigator Pro
Around £88 per month for Recruiter Lite
Alternatives:
AngelList
The Dots
Goodwall
Social media can play a big part in your marketing strategy. Managing your social accounts can add to your already busy schedule. That’s where Buffer comes in.
With this free app, you can schedule posts and track their performance across multiple accounts. While the free version is great for small businesses, the paid plans let you connect more accounts and schedule more posts as your company grows.
Prices (UK):
Individual plan: free for one account per platform
Awesome plan: starting from £7.06 per month and up to 10 social accounts
Business plan: starting from £35.29 per month and 25 social accounts
Alternative:
Hootsuite
Perkbox is a platform created to support a healthy work-life balance. From discounts, i.e. perks, on everything from groceries to well-being services, the Perkbox app is an excellent way of boosting team morale. Browse and redeem your perks on the go, recognise your teammates, and quickly respond to company surveys.
Even better, Perkbox has now partnered with payment management app Zip to offer a new ‘Buy Now, Pay Later’ feature. If you’re thinking of making a big purchase, spread the cost and pay at your convenience.
Prices:
Depends on the number of employees
Alternatives:
Perkness