Given the recent meltdown in TSB’s banking systems hot on the heels of recent failures by RBS and others, more and more businesses are switching accounts. With the market full of different institutions offering a wide variety of interest rates and fee-free periods, which is right for you?
What is a business bank account?
A business bank account works in a very similar way to a personal bank account. Only the very smallest businesses should consider using their personal account for trading but even then, it’s not very advisable for many reasons, the main one which is that it can be difficult to prove to HMRC what is personal spending and what is corporate spending.
We would strongly recommend that you look around before switching your business bank account. There is disruption, albeit it minimal, but it will be one more thing to be worried about. Many business owners are often tempted to keep a business account with their current bank. However, this can mean that you aren’t getting the best deal for your business.
Your business bank account should also offer easy-to-use and comprehensive online banking services. Look for the bank offering the highest interest rates on business savings accounts and the lowest charges on general transactions.
The biggest selling point of this business account is that there is no monthly fee for the account for the first 25 months. The catch is that this is only available to businesses that are operating in their first 12 months of trading (unfortunately ruling most of our customers out) and you must not exceed £2,000,000 in annual turnover.
This account does not offer any interest while you are in credit. You can also use their online banking through an app on your mobile phone meaning that you can take your banking with you on the move.
This business bank account offers 18 months of fee-free banking. After this, there is a 12-month period of a £5.50 fixed cost per month. Once again, your annual turnover cannot exceed £2,000,000 if you would like to use this account.
HSBC also offer what they call a “Best Tariff Promise” with which you will be moved onto a standard tariff if it better suits your business.
This business account offers 12-months fee-free banking to all new customers. This can be extended to 18 months if you sign up to either their 1|2|3 world service or you become a personal Santander customer.
One of the biggest benefits is that you will receive a 0.1% interest rate as long as your balance is above £1. You can turnover any amount of business and still be able to use this account, unlike the others which have a £2,000,000 limit.
The tariff is slightly higher for this account at £7.50 once the free period ends. And the service is only available to businesses who are within their first 12 months of operations.
This account doesn’t require a credit check and it can be opened in 5 minutes via an online application. Naturally, this means that there are higher fees to pay. You must pay £69 annually in order to maintain the account. On the plus side, there is no limitation as to how much your business can turnover while using the account.
We can help
If you are looking for a business bank account for your company, then we are more than happy to guide you through the process.
This legal information is not the same as legal advice and you may not rely on our post as a recommendation of any particular legal understanding. Please, consult an attorney if you’d like to get advice on your interpretation of this article.