5 things to consider when choosing a business bank account
Choosing a bank account may not seem the most important business decision. However, as they are key to managing your day-to-day finances, having the right account can help you to conduct your business while the wrong one can add unnecessary complications to your work.
Because of this, it is crucial to compare business bank accounts and look at all their features and services before making a final decision on which is best for you.
All businesses are legally required to have a separate bank account for their company finances (the only exception being sole traders who can use a personal bank account if they prefer), so there is a wide range of banking products to cater for many different business types and sizes. Whether you have just set up your company and are looking for a start-up business bank account, or are looking for the best account for your established and growing business, there are several key areas you need to consider.
We look at 5 points that will help you to understand how to choose a business bank account that meets your needs.
1. Online or offline
With the rise of online challenger banks, businesses are no longer restricted to choosing one of the “big four” high-street brands as they would have been a few years earlier. Now, they have the option of these newer, online-only banks which use the latest fintech and offer facilities not available with some other providers.
Even though most high-street banks also now have mobile apps, the nature of online challengers means their apps generally offer more innovative technology and flexible services that meet the needs of their customers. Despite these benefits, however, there are other considerations to take into account when deciding on a provider.
For example, if you are more comfortable visiting a physical branch to complete certain actions, you would need to look at accounts from the big-name banking groups rather than online-only providers.
2. Welcome periods
Many banks offer perks for businesses that open an account with them. Whether it’s a cash bonus or a set fee-free period, these introductory offers can be very appealing to businesses. However, it is important to look at these offers in context, as an account’s attractive welcome offer could distract you from the fact that it may have higher account fees and charges than an alternative provider after the introductory period.
3. Fee structure
Although there are some free business bank accounts available, these often have limitations on what actions you can perform until you then need to pay. Most business bank accounts charge monthly account fees, and also set charges for other functions such as cheque deposits, direct debits, transfers, and more.
To help you decide which account will best suit your business, you need to determine which functions you will use the most and compare the fees associated with them. For example, if you regularly transfer money to different accounts but rarely handle cheques, then you should focus on the transaction fees as this will be most relevant to your business operations.
4. Features
Business bank accounts tend to offer the same kind of features, including overdraft facilities, mobile apps, and the ability to integrate with other business systems, but the exact terms and properties can vary quite significantly between providers. So, when choosing a business bank account, it is useful to check that they offer everything you need.
For example, if you already use an accounting software programme or other business programmes, you may want to see which banks can integrate with these systems. Alternatively, if you are a new business and don’t yet use any accounting software, some programmes may be offered as part of your business banking deal.
5. Customer service
In an ideal situation, you won’t need to contact your bank’s customer support. However, if you do have a problem and need further help, you want to make sure the service is of a high standard and easy to access. You should also check that your preferred contact method is available, whether that’s the phone, live chat, or in-person, and you may also be interested to see what other customers say about the banking provider and its service.
About the author
Nic Redfern is a Director at Knowyourmoney.co.uk, a website providing simple and clear comparisons so customers can make their own decisions on financial products.