How to choose the best business account for you
Written by Robert Bester, Consumer Finance Expert Robert has been a writer for six years, specialising in consumer finance and the UK lending market. Concentrating on consumer credit products, Robert writes informative articles that help customers manage their personal finances efficiently.
30th November 2020
3 minute read
When it comes to choosing the best business account for you, try considering the following key points:
- Introductory offers
- Ongoing fees
- Online Banking
- Local branch to make cash deposits
You might find it’s not always straightforward when choosing a business account, but the above points might help you make up your mind.
We’ve put together a short guide below to elaborate on each point and give you a bit more information when you come to opening your first business account.
What is the best business account for you?
Whether you’re a start-up business, a sole trader, a partnership or part of a limited company, a business account is required to help you manage your finances effectively.
Choosing the best business account for you comes down to whether an account matches your requirements and gives you the features and facilities to help you day-to-day. It will also give you the necessary support to grow as a business, rather than hinder you as your circumstances change.
Choosing a business bank account
In the first instance, you might find yourself drawn towards a particular bank or building society, simply due to personal preference. This brand loyalty might be due to being a long-time customer, or it might be simply as they have the closest accessible branch to your place of business.
However, try considering the following points (also mentioned above) above all else, as this will help you make your mind and ultimately choose the best business account for you. Trust is still a big part of the process, so try and keep this loyalty on the back burner while you do your research.
1. Introductory offers
Just like credit cards or current accounts, you can often receive an introductory offer simply for opening the account, which can really benefit you as a new customer. In the case of business accounts, this usually involves a certain period of time where you get to use the account for free, rather than paying for monthly maintenance fees.
This is a big positive for those small business owners who could do without paying for maintenance fees until being in a better financial position. The longer you can avoid paying monthly fees on your business account, the better.
2. Additional fees
There are a number of different fees associated with business accounts, some of which you may be exempt from through an introductory offer. If you do have to pay them though, these are the fees you should be watching out for:
- Transaction fees - payments using debit card or online
- Non-standard transaction fees – such as foreign currency or a CHAPS payment
- Internal transfer fees
- Deposit fees - electronic, cash or cheque
- ATM withdrawal fees
- Overdraft fees
From comparing business accounts, you will get an idea of how much you would be expected to pay for these individual fees, and you’ll be able to pick out the most affordable account in this regard.
3. Online banking
This comes as standard with most banks or building societies, but it’s still important to know how easily you can access your accounts from anywhere.
Whether it’s through online banking, a mobile app or telephone banking, access to your business account can make all the difference when you need to check your balance prior to making a payment or transfer.
This is especially important for sole traders or small business owners who may have to juggle many different jobs on an average day and might not have time to visit a local branch. Similarly, this will also help those who need to travel as part of their work too.
4. Local branch or pay point
This isn’t always a necessity, but having an accessible local branch or pay point is a requirement if your business deals mostly in cash. You can also use a post office to make regular deposits too. Having cash pile up at your place of business is never a good, or secure way of doing things, so your proximity to a local branch is important.
If your business deals very rarely in cash, then simply having access to your accounts via a computer or smartphone might be good enough for you. Make sure you still find out where your closest branch is, just in case you need additional support as a new business owner.
Most business accounts should also offer an overdraft facility that customers can dip into during expensive months. This is another great option for those start up businesses who need to borrow money early on to get the business going.
As much as an overdraft is useful, most banks and building societies will still charge a fee for using your overdraft. This means you should only use it as a plan B, rather than permanently being on minus figures, as this can become quite expensive.
Like current accounts or even credit cards, you can also get rewards for using your business account such as cashback or exclusive offers. These will come in handy, especially if certain rewards specifically apply to your business or industry and will help you save money in the process.
If you’re comparing business accounts that seem to be very similar in what they offer, a certain reward might just tip the balance. There are also incentives reserved for those who want to switch to another business account, so it’s worth watching out for these too.
Compare business accounts
Now that you have plenty to think about when it comes to choosing a business account, you can start browsing through our tables to see what you can find.