Business banking differs from personal banking in multiple ways, so if you are looking for a bank account for your business it is important to know how they work and what is out there on offer.
What Is a Business Account?
A business account is a form of current account (such as the personal ones) that is specifically designed for business users. This is a place for the organisation to store its finances and set up payments as well as generate interest on its savings (the percentage increase of the value of its money). The banks and building societies generally charge for their services, but they will also offer more features that are useful for business owners. It is a commonplace for a business owner to have to haggle with a bank on account restrictions and terms and conditions in order to negotiate a better deal.
The majority of high street banks and building societies offer either business bank accounts or have a commercial banking division.
Facilities and Charges
Most business bank accounts will offer a chequebook, cash card, overdraft facilities, direct debits, standing orders and interest gains. This is very similar to personal banking, but the rates are generally better. Having an account with a certain provider may also allow a business owner to receive better rates on business loans (and can be negotiated with a bank manager just like any other borrowing facility). New businesses can benefit from the Small Firms Loan Guarantee Scheme, where the Government acts as guarantor if the business does not make a loan repayment. As with personal bank accounts, overdrafts can be either authorised and charges (and interest rates) will vary. Charges for an unauthorised overdraft item can be extremely high.
Opening a Business Account
If you are opening a business account you need to consider a variety of factors. See if the bank levies fixed charges or transaction charges. Make sure you find out if you can enjoy any fee-free periods when you open an account. Check to see what comes with the account (credit cards, charge cards or statements). Be clear whether there are any hidden charges. It is important to take your time and shop around, there are many deals on offer because the small business market is very competitive.
When you choose a bank to go with you will need to provide a number of documents in order to open an account. You may need to provide your business plan and details of your operations and you will certainly need to prove that you are a registered limited company and pay your taxes.