When setting up a business account you look at a few different aspects, to make sure you get enough benefits in going with any particular provider. We have looked into a few to help you out so you have some sort of an idea on what you can expect, instead of jumping in head first and drowning in the vast array of options.
We looked at the leading business bank accounts for sole traders and limited companies with no minimum annual turnover requirements. Some of the accounts have added fees that will apply e.g. for foreign transactions, bulk deposits and CHAPS payments but we saw this table on Which? that shows the “main categories” to think about when looking to open or switch a Business Account, when looking at the Terms & Conditions.
https://www.which.co.uk/money/banking/bank-accounts/business-bank-accounts-a6ncf6r8jqz1 : Correct at January 2021. Which? Recommended Provider (WRP) status based on survey of personal current account customers (not business).
With the ongoing evolution and development of technology there are specific banking apps available to use for your business account, everything is electronic. For some people this may be easier to manage, having everything in one place; at the end of your finger tips. For others, it begs them to question whether they are safe to use and really worth the effort.
We Looked into 4 different banking apps currently out on the market: Starling, Monzo, Tide and Coconut, a bookkeeping and tax app. Each of these apps have a range of different features available to help with the day to day running of your business, without having to go out of your way.
If you create an account with either Starling, Tide or Monzo you receive everything, just as you would if you went to any high street bank, but with Monzo or Starling you will need to hold a personal account in order to apply for a business account.
Coconut is a new start-up, designed for freelancers at the forefront. It is a Bookkeeper in your pocket. It makes the whole process of working out and estimating tax-deductible expenses and it can send out your invoices (A Side Hustle account is capped at 3 invoices/month, the Professional account is uncapped).
In terms of the safety for you, both Starling and Monzo are UK-regulated banks, this means that deposits are eligible for FSCS deposit protection (up to £85,000) if they were to go bust and into liquidation. Whereas with Coconut and Tide, they both offer E-money accounts, because this is provided by PrePay Technologies Ltd the money in your account cannot be covered by the FSCS. That being said, PPS (PrePay Solutions- PPT Ltd trading name) is authorised, under the Electronic Money Regulations 2011 and as a licensed e-money provider, so your money must be kept safe in a safeguarding account. This keeps it safe so it can never be loaned out to other customers.
For any of these options you do need to be able to provide the following before opening an account:
Your Business Name - This includes your businesses legal name plus and trading names. As well as the business start date, the business address and any contact details available
Business details - They need to know the main activity of the business and details of your customers and any suppliers you may trade with outside of the UK.
Employees - The number of employees who work for the business. This would need to include; full-time, part time and non-contracted workers.
Your Tax ID - You will need to have your Tax id Number available, as a sole trader, you would need your National Insurance number or as a Limited company or partnership, you will need your ‘unique tax reference’.
You would also have to provide how much money you expect to pay into your business account, your estimated annual turnover and a few details of your source of income.
There are so many different options available out there that you need to make sure you put in the research, so you can get the most out of your account as well as out of your money. Depending on your business depends on what you need out of your business account. If you’re a sole trader, and use your personal account, something like Coconut would be perfect for you as you can easily split up your business and personal transaction as well as be able to send invoices straight from the app. Whereas if you are a larger corporate company a business account with one of the ‘high street banks’ may benefit you a lot more. Of course there are many more things to look at but from what is shown above you get a good idea of the fees and services from each.
Be sure to fully and completely research what is included in your prospective Business account so you know what to expect and what will be available to you.