Choosing the right business bank account can make your business more efficient and save you time and money.
So why don’t more business owners take the time to shop around and compare services?
With so many banking services for business owners to choose from, separating the wheat from the chaff can seem like a mammoth task.
And picking the right financial solution is made even more difficult by the fact that some banks still don’t operate transparently, making it tough to find simple information about their pricing structure online. Moreover, many business owners are put off changing banks because of the often-arduous application process.
Because of this, many business owners simply open a business account with the bank they use for their personal finances. This option is certainly the easiest, but even if a bank is perfect for your personal use, it may not be the best choice for business banking.
While searching around for the best business bank account may seem like a drag, making the right choice can seriously help your company grow.
There are a few key factors you should consider while shopping around for the best bank account for your small business, including:
Every business is different and has its own financial needs.
Shopping around to compare deals and services will help you to find an account that meets your business’ needs, so you can reduce costs and keep your books clean. You should also be able to rely on your bank to be a supportive and transparent partner.
Below you’ll find 11 excellent business bank account options, great for all kinds of small businesses. We’ve broken these down to highlight what makes them different from each other so that you’ll have an easier time deciding which one to go with.
Within a year of its launch, 1 in 12 business current accounts opened in the UK was with Tide. The account tags income and expenditure with labels to make accounting easy and can be used to create and pay invoices. There are no monthly fees with Tide and normally, it costs 20p for transfers.
Barclays start-up offer is ideal for small businesses just starting out.
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This Santander account is ideal for new small- to medium-sized businesses’ day-to-day banking needs.
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If you have straightforward banking needs, Lloyds provides an accessible and easy-to-use start-up account.
New businesses (or account switchers) receive 25 full months of free banking with this account.
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This bank account is particularly suitable if your business has borrowing needs of up to £100,000.
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This account is a simple and straightforward business account ideal for members of the Federation of Small Businesses.
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NatWest’s Tyl payment solution makes this start-up bank account an attractive option for businesses with a busy cashflow, such as high street stores and e-commerce websites.
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Danske Bank is an excellent option for small- to medium-sized businesses with two different business current account options.
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As our world becomes more and more digital, an increasing number of businesses need a way to accept orders and payments online via their website.
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Opening a new business bank account can require a lot of paperwork and collation of documentation.
To make the whole process simpler and to offer some clarity to business owners, Finance UK have worked with the providers of UK business banks to agree on the basic information that is required to open a business bank account.
Depending on the status of the business and which bank provider is being applied to, business owners may be required to bring some different or additional information. Finance UK has produced a helpful online guide for businesses looking to open a new business bank account.
That guide can be a great tool to help you understand what sort of questions you may be asked when opening a business account, as well as the documentation you will be provided to share.
The services and products offered from one bank to the next vary greatly when it comes to opening a business account, so doing your research and seeing what is on offer is essential.
Here are six things to consider when choosing which bank is right for you and your business.
First and foremost, you’ll need to think carefully about your business plan and your business needs.
As well as a current account, what other products or services will you need, either in the short-term or further down the road? Avoid being short-sighted and thinking only of your current situation. Instead, consider your forecast for the business – in other words, where you hope it can get to.
While it can be a bit difficult to think further than the here and now, you’ll need to make sure you identify the bank that offers a product that best aligns with your needs. After all, you certainly don’t want to outgrow your bank in a year or two and have to start the whole process over again because you didn’t think ahead.
Business bank accounts operate differently from personal accounts, and they often incur charges for transactions as well as a monthly fee.
Some of the actions you may be charged for include making deposits, sending electronic payments, transferring money, and withdrawing cash.
Review which actions your business performs most frequently and pay close attention to the relevant fees – they add up.
Many banks will offer a fee-free period when you first join but make sure you don’t evaluate the banking product on this basis; carefully consider whether this offering will still be the right option for your business after it’s no longer free.
Online banking and mobile apps are unmatched when it comes to convenience and managing your finances on the go.
Make sure you investigate the services that are available via online banking, if any, and whether they facilitate the actions that you are likely to be performing regularly.
If you already have an existing business bank account, look out for business account ‘switcher’ deals.
Some banks offer fee-free periods to business owners looking to switch their banking service providers. Remember, because banks want to encourage you to begin using their services, switching accounts is made as hassle-free as possible.
Everything is now usually handled behind-the-scenes between banks on your behalf, so you won’t have to deal with the logistics of moving your account to a new financial institution.
Your credit score will have an impact on your options have when it comes to choosing a business bank account. So it’s best to know your score before you start shopping around.
If your score isn’t so great at the moment, look into each bank’s credit requirements early on – that way you won’t waste your time on an account you won’t qualify for.
While many of the larger banks may not accept businesses with low credit scores, some of the up-and-coming challenger banks (Like Monzo or Revolut) and online banks don’t even require a credit check to join, making them excellent business bank accounts for bad credit.
If you’ve narrowed your list of potential banks down to a few contenders and you’re still struggling to decide, making a telephone call or arranging a face-to-face meeting often helps. You’re bound to have a few unanswered questions at this stage anyway. Plus, speaking to an advisor should give you a feel for how the bank operates and what level of service you can expect.
While it’s notoriously difficult to find impartial comparison websites for banking services (which is why we’ve written this article), there are a few resources out there that can help you gain some insight.
The Business Banking Insight survey and website was launched by the Chancellor of the Exchequer and is run by the British Chambers of Commerce and the Federation of Small Businesses. At the time of writing, 23,536 small and medium-sized businesses have been surveyed, although this is being added to regularly to keep the information current.
The survey results help businesses obtain impartial insight into the business banking options available to them. Customers surveyed rate their business bank in key areas including charges and fees, transparency, and ease of contact.
The Better Business Finance website was set up by Barclays, HSBC, Lloyds and Santander and is managed by the British Bankers’ Association (BBA).
The website provides impartial advice and support to businesses looking for a bank account or financing.
The Metro Bank Business Current Account is a relatively new service that is already being rated highly by customers surveyed for the BBI’s independent research. The Metro Bank have high street stores that are open 7 days a week, making it easy to get support when you need it. It is simple to open an account; small business owners can walk into a store (or hop online) and open an account without the need to book an appointment. If your balance stays above £6000 for the month then the monthly fee will be waived.
The Co-op’s Business DirectPlus account offers new customers who meet the qualifying criteria free banking for 18 months.
Danske’s large business bank account is also available to relationship managed customers in Business Centres and Corporate Banking.
HSBC Large Business Bank Account customers will receive support from a dedicated relationship manager with commercial expertise. The account also offers two different banking solutions, allowing you to choose the one most suited to your requirements.
HSBC offers switchers 12 months of free banking. Once the fee-free period is over there is also a choice of two different tariffs available and their Best Tariff Promise means your account will be regularly reviewed to make sure you’re on the cost-effective tariff. The account also offers access to finance and borrowing.
Businesses that switch to RBS’s business current account will receive 2 years of free banking. The account offers the option to apply for a fee-free overdraft of £500 and there are no arrangement fees on fixed rate business loans.
Coconut was created with freelancers and self-employed people in mind. You can apply now to join the waiting list for the beta version. The introductory service, called “Side Hustle” costs £3.60 p/m while the more fully-featured version, called the Professional plan, costs £12 p/m.
The account tracks and sorts income and expenditure to estimate the amount of tax due. It also includes invoicing, VAT management and a handy option to share information with your accountant.
It is quick and easy to instantly apply for a Cashplus account online, no credit check, paper forms or interview are required.
There is no credit check required to open a CardOneBanking Small Business Account and you won’t incur any charges for late payments or overdraft fees.
Over time as your business grows and changes you may find that your bank account can no longer fulfil all your requirements. It’s important to stay informed about new banking products, services, and features so that you can be confident that you’re still receiving the best service for your business.
Visit the Explain My Banking website to receive an assessment of your current business bank account’s strengths and weaknesses, as well as a comparison against similar services and advice on how to save money.
Business owners shouldn’t feel reluctant to make the switch if their current business account stops being competitive as switching services now make the process simple and undisruptive. The right business bank account will make your job easier and your business more efficient, so it’s well worth taking your time to find the right match.