After your incorporation with Companies House one of the first things you will want and need to do is open a business bank account. Business bank accounts differ form personal bank accounts and their are many different types of business accounts that you can open with uk banks.
What is a business bank account?
A business bank account is used by business’ as a dedicated bank account so that the business’ finances can be kept separate. It is a legal requirement for all small businesses and startups, unless the person has sole trader status, to set up a business bank account for their new business.
Whilst a legal requirement, setting up a business bank account will also be helpful for managing your business. It will help you to determine your balance, cash flow and payroll.
What to consider when choosing your bank account provider
When opening a bank account for your business, there are various factors you need to consider in order to find the best provider for your needs. Each bank will offer different services and features, so it's important to compare what's available before making a decision.
The first thing to be aware of is that business bank accounts are typically not free of charge in the same way personal accounts are. Business accounts almost always carry a monthly charge which will vary dependent on the product you select. Prices generally range from £5 to £40 per month depending on the nature and level of service. Some providers might also charge an account fee for account opening purposes.
Alongside monthly charges there might also be costs for certain actions, such as making international payments.
It is prudent to have insurance for your accounts to protect you in cases of missed payments. In this case you might want to consider taking out insurance as part of your business account package. If you do elect for a provider that offers insurance ensure that it provides you with adequate coverage.
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Some business bank accounts offer you a personal advisor as a perk of electing their service. When starting out, these can be extremely valuable in helping your business manage its finances effectively. They also encourage their business customers to make the most out of their accounts and the facilities it provides including business loans and other relevant perks. This service is popular with high street banks but less common with online banks.
When choosing your provider you will also want to consider the type of services they provide. Practically, you might want to consider your access to cheque, debit card and business credit card services alongside things such as interest rates on borrowing and fees on overdrafts.
In addition to this you will also want to think about the technology the product can provide you with to make banking and accounting hassle free. For example, you might want to consider a provider who has a convenient and efficient mobile app that can connect to your accounts, such as your business current account or you might want to consider whether the product offers you any discounts or access to accounting software to help you with your tax returns to HMRC.
How to set up a business bank account?
In order for you to open a business bank account you must meet certain requirements and eligibility criteria. The requirements will differ depending on the provider but generally you will need to provide a series of documentation to open your account. Generally, to open a business bank account for a limited company you will need to provide:
- Identification of all company directors
- Your Companies House registration number
- Your certificate of incorporation
- Your VAT registration number (where relevant)
- You will need to provide proof of your business address, evidenced by any address related bills or letters, such as a utility bill
- Contact details, such as a phone number
- Projected annual turnover taking into account profits and expenses
Once you have provided the following information, the application process should be relatively simple and you should be set up with your new account in no time and you can begin to implement your business plan, such as making your first hires.
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