One of the first things you must do when starting a new business is open a bank account for your business. You will have to consider several things including transaction and borrowing costs, what facilities the bank offers, and the type of relationship you want with a bank. A business account is essential if you are setting up a Limited Company or Partnership. While you can use your own personal account if your business is a sole proprietorship, it is advisable that you have a separate business account to manage your business finances.
Now that you are aware that you have to open a bank account, how do you go about it? Can you use the same bank that you use for your personal accounts? Of course, you can! But they may not offer the best deal for your business. The considerations for opening a business account are quite different from a personal account – you could be missing out on lower charges and higher interest on a credit balance. Over a long period, you could be depriving your business of a significant amount of money. Before you sign up with anyone, look around and understand what's available out there.
We've put together the 5 most important factors to consider before choosing a bank account:
1. Bank charges – This is a key point that you have to consider – how much will it cost you to have a business bank account? Ensure that you know exactly what charges will be levied on your account before signing up. The more check and cash transactions you have, the higher the charges you will end up paying.
2. Online services – Does the account offer online services? This is an increasingly important service, and most banks now provide an internet service so you can check the status of your account day or night. By using this service, you can manage your account transactions in a fraction of the time it used to take in the old days.
3. Interest rates – The interest rates can vary from bank to bank. Consider the overall benefits an account would provide to your business and decide accordingly.
4. Small business advice – Select a bank that has a specialized small business unit. This could be of big help to you when you are setting up your business and if you establish a good working relationship with them, you can reap the benefits of their expertise.
5. Shop around-Make sure you compare several business account offerings, and compare the costs and charges associated with each one. Typically, you should compare at least three accounts before zeroing in on one.
Choosing a bank account for your small business is an important stage in the startup process. So, spend the necessary time and effort to get the best banking deal for your business.