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Business Bank Accounts
Business banking works differently from personal banking. The products on offer are usually tailored towards companies rather than individuals and may have different features and fees. Whether you’re just starting out with a small company or looking to expand an existing one, it’s important that you keep your personal and business finances separate.
What are business bank accounts?
Many of the basic features of business accounts work in a similar way to personal current accounts. You can pay money in, make payments out on a debit card, set up regular bill payments and Direct Debits, and transfer money to other accounts. You just set up and maintain everything in the name of your business.
You’ll also get the usual benefits of an account, such as interest on your positive balance, access to an overdraft for short-term borrowing, and online and mobile banking.
In addition to these standard features, you’ll also have a few business-specific ones. For example, you’ll be able to pay your employees’ salaries using the account and can receive payments into it by credit and debit card. If your customers often use Direct Debit to pay you, then your business bank account will be able to accept them.
Who are business bank accounts for?
If you run either a limited company or an incorporated company, you’ll definitely need to get a business bank account. The need is less pressing if you’re a sole trader or part of a partnership, although it’s still a good idea to have one in those instances.
Having a separate business account means that you can track your finances better. It also means you keep your personal and business interests separate. Not only does this allow you to budget better, but it also means that you can separate your business and personal tax liability.
What types of business bank account are there?
There are a few main types of accounts on offer, although banks generally tend to offer slightly different services. The type of account you’re eligible depends on the type and size of your business in terms of employees and turnover. Usually, you can opt for:
• Sole trader and small business bank accounts
• Commercial bank accounts for small and medium-sized enterprises (SMEs)
• Corporate bank accounts
How much do business bank accounts cost?
The exact services and fees that you’ll get will differ between the type of account and provider. However, you’ll often find that there are more fees associated with business accounts. These include charges for:
• Paying in cash and cheques
• Making bank transfers
• Using your overdraft
• Receiving card payments
• Sending money overseas or receiving it from abroad
Often, banks will offer a free sign-up period for their business accounts. This means you won’t pay a monthly or annual fee and may pay less for some of the activities mentioned above. However, these trial periods usually only last for a year or two. After that, you’ll get charged more.