For any London-based entrepreneur or business owner, there a million and one things to do when running your own company. From dealing with customers to ordering new stock and keeping up with your social media presence, there are sometimes not enough hours in the day. However, one key thing to make time for is opening your own business bank account.
What is a business bank account?
In simple terms, a business bank account is just a bank account that you use only for business transactions. If you are a limited company in the UK, it is a legal requirement so that all the company’s financial transactions can be clearly traced. It makes sense even as a sole trader though, as it makes it much easier to have your personal and business finances kept separate.
What should you know about before opening one?
Luckily, opening a business bank account is as straightforward as opening a personal account. However, there are still some things to know about before you begin the process:
- Choose the type of account wisely – When it comes to opening your new account, there will be lots of deals on offer from many banks. Taking the time to make sure you understand the account you sign up for and all the details is key. Packaged accounts are becoming a hot banking topic in the same was as the current PPI scandal, which involves businesses and people being mis-sold bank accounts that weren’t suitable or appropriate to them. Many people have made a PPI claim in the past to recover money, and this may happen again with packaged accounts.
- Decide on who the authorised signatories are in advance – When setting up your business bank account, you will need to identify who the authorised signatories are for signing things like cheques. You will need to think about this before going in to create your account to avoid any issues later on.
- Your current bank might not be the best option – With so many deals out there and little time to check them all out, many business owners just stick with the bank where their personal account is. While this can work out for the best, it could mean you miss out on a more advantageous deal elsewhere. Take the time to research at least a couple of other options to make the most of your options.
- Charges may apply – This is normally the real eye-opener for anyone setting up a business account. Some banks will charge fees each time you make a transaction, use the company debit card or make a cash withdrawal. Shop around to see if you can find a bank that does not, as it will save you lots of money in the long term.
Make your money work for you
The decision on whether to open a business bank account or not rests on if you legally need to as a limited company, if you would like to as a sole trader and how large your business is. A sole trader with a small business may not feel the need. However, many do for the convenience it brings to their financial records. Whatever you decide to do, make sure to fully research all the options first.