For anyone setting up their own business, opening a business bank account is one of the first steps to take. Most businesses could not operate effectively without the services a bank account provides and a good working relationship with a bank's business manager can be extremely helpful.
One of the main purposes of having a business bank account is to keep personal finances separate from business finances, as it is crucial to have a clear audit trail of money coming in and out of the business so that book keeping and financial accounts, such as a Filing a Self-Assessment Tax Return are easy to compile.
Business accounts do typically have fees or transaction charges. Like all financial products, offers change all the time and it can be difficult to know which bank account is the best on the market, therefore it is recommended that you shop around for the best deal and take into account the following:
· Use online comparison websites to compare the services, interest rates and charges of business accounts such as:
· Give particular consideration to the different overdraft facilities offered if this is an important factor for your businesses.
· Remember that while online access may be important to your business, online-only accounts may be unsuitable if you regularly deposit cash.
· Be aware of the dates when introductory free banking offers are due to end so that you can budget for the charges that will ensue.
· Consider changing accounts if you can get a better deal from another bank.
· Consider using different banks for different services, for example when one offers a better current account and another offers a better reserve account.
Ideally you want a free business account to keep business expenditure low as possible - however sometimes ‘free’ can mean that other aspects of the service are not available. For example, face-to-face contact with a business banking manager maybe replaced by a telephone service. Therefore, you will need to consider, what aspects of the banking service are important to you and your business when making a decision of which bank account provider to go with.
Key things to look for when choosing a business bank account include:
· Introductory offers. Does the bank offer free business banking for an introductory period?
· Type of account. Will a current account suffice, or does the business need a savings account?
· Means of access. Is online access or counter service required?
· Services provided. Does the account provide ATM access and a debit card?
· Minimum deposit. Is there a minimum deposit attached to opening an account, particularly for reserve accounts?
· In-credit interest. How much interest does the account pay, and is it linked to the balance?
· Standing charges. How much does the account cost per month or per quarter?
· Transaction charges. Which transactions are chargeable and how often will your business use them?
· Other charges. Is your business account likely to require non-standard activities such as making CHAPS payments?
· Overdraft facility. Does the account offer this potentially valuable facility?
· Support and advice. What type of business support is available and how can you access it?
As well as opening a business current account, it is also recommended that you open up a business savings account and have it running alongside your business current account, so that you can transfer a small percentage of money on a regular basis from your business current account into your savings account so that you are prepared for your tax bill.
You can usually estimate what your tax bill is likely to be and the amount of money you will need to transfer into your savings account by your projected cash flow forecast and also attending the HMRC Tax and National Insurance workshop that The Women’s Organisation run on a monthly basis in order to understand the different taxation brackets.
To find out about Tax and National Insurance or Book Keeping workshops running at The Women’s Organisation please contact 0151 706 8111 or email firstname.lastname@example.org
Alternatively visit www.hmrc.gov.uk
Guest blog by enterprise enabler Francine Taylor