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How to Choose a Bank for Your Business
Choosing a bank for your business may seem like a straightforward affair – and it can be. But it’s definitely worth considering a number of factors before you do.
First things first; remember that you must have a separate business banking account if you’re establishing a limited company or a partnership (though sole traders can use their personal accounts).
When choosing a bank, check out the best possible deal for your business. The major banks all have different offers on at different times – such as a year’s free banking etc. Try and look at all the offers online. And consider what the longer term charges will be. Remember, there’s no great advantage in staying with the bank you do your personal banking with.
Perhaps the main single thing to consider is the scale of bank charges. Business banking is generally more expensive than personal banking, so have a look at the ‘devil in the detail’ of costs for things like cheques, transfers, standing charges and the like.
Depending on your type of business, you may have a large number of relatively low value monthly transactions to process, for example, so you really need to take a close look at transaction costs.
Most businesses, these days, will require online business banking facilities. This is particularly good if your business is very small as you can transfer salaries and expenses quickly and easily. So make sure the process is straightforward but secure.
If yours is the type of business that is likely to build up a decent cash balance, you need to search around for the best interest accounts. And with Bank of England rates at an all-time low, this is, arguably, even more important as a little can go a long way.
Also, consider a known name that has a specialised small business banking unit as such banks will be far more used to dealing with small businesses and their particular needs. And if you’re likely to need regular verbal contact with your bank, check this out first by contacting the by phone – as you’ll need a bank you can build a good personal relationship with.
Other things to consider are the different types of individual products and services a business banking service provides, their criteria for qualifying for a loan and minimum balances for accounts.
A good accountant may be able to advise on your business banking needs. And remember that if you need finance for your business, you should always seek expert business finance advice in a timely manner.