If you run a business, you will need a bank account. Most start-ups will opt to go with the same bank they are with for personal accounts at first, because this is a known environment to them. But this is not always the right move, and sometimes it pays to shop around. And as your business grows, your needs may change, along with your bank account. But how do you know what the right bank account is, and what is the best bank account to go with for your business?
What to look for in a business bank account
A business bank account is substantially different to your personal account, as is a business savings account. There will be different amounts of money moving through them, which will need different protections, and may even need cross-currency conversion. On top of that, you are legally required to have a business account if you are running a limited or incorporated company. If you are a sole trader, you may be able to use your personal account, but it will make a lot of things more complicated for you – including your accounts and dealing with HMRC.
There are a lot of different business bank accounts you can choose from, and a lot of providers to choose them from. So, it can be a bit overwhelming to figure out what you need and which bank is best. There are a few things you should check out with every bank account, including:
Standing charges: Many business accounts will charge a monthly or quarterly fee for banking with them. Make sure you know what yours is, and that you take it into account in your expenses.
Transaction charges: Some banks may also apply transaction charges. These are charges made for moving money in and out of your current account, and usually includes physical transactions and automated payments like direct debits and standing orders. This can mean making and taking payments can get expensive, so it is not a good option for everyone.
Internet banking: While most business accounts will provide internet and mobile banking, there are still some that do not, or who charge extra for it. So, if it is a dealbreaker, make sure you talk to the bank about it beforehand.
Interest rates: Higher interest rates mean you will get a better return on your business savings, so if you are keen to make your money work for you, look for a high interest account.
Introductory offers: Many banks will offer short-term rewards for signing up with them, usually lasting a year, but not always. These can include competitive interest rates or free banking, which could make a big difference if you are a start-up or looking to save some money.
Branches: Depending on your business, visiting your bank in person might not be a huge issue. But for many businesses it provides a number of advantages, such as being able to easily deposit cash and cheques and have an in-person relationship with your business manager. Since many banks are minimising their high street presence, if having a local branch is important to you it should inform your search.
Of course, we cannot tell you which bank account would be right for you – you will need to examine all the options available and decide what the best option is for your business.
The best bank accounts
All of that boils down to one question – who has the best business bank account on the market? That is a slightly difficult question to answer because every business has different needs, but thanks to surveys done by consumer insight consultancy BVA BDRC, we do have some insight. Business owners were asked to rank their bank account providers based on overall service quality, online and mobile banking services, business overdraft and loan services, relationship and account management, and service in branches and business centres – so we do have a pretty good idea of what the best bank is for businesses right now, as voted by business owners. This is what the scoreboard looks like:
Overall service quality: Handelsbanken (76%)
Online and mobile banking services: Barclays (75%)
Overdraft and loan services: Handelsbanken (73%)
Relationship and account management: Handelsbanken (86%)
Service in branches and business centres: Metro Bank (72%)
As you can see, there is never a definitive winner in every category. Just like every business has its own strengths and weaknesses, so does every bank. But what that data does is highlight which banks you should look into depending on what is important to you. For example, if you need a local branch to visit regularly, you may be best going with Metro Bank. If you need a good overdraft and loan facility, a good relationship manager and a high-quality service, Handelsbanken may be for you. But in all of these categories we also saw the usual high street banks ranking not far behind, so it is always worth talking to your local banks and finding an account that works for you.
At Purple Lime we are here to help you keep your business in the best financial health possible. That means making sure you have the right business bank accounts, and that they are being used effectively. if you would like to know more, please get in touch by emailing hello@purplelime.uk.com or calling us on 01249 263 333.