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Choosing A Bank Account When Starting A Business

Sep 16, 2008
Starting a business can be an extremely stressful and laborious process although ultimately it is rewarding, especially if success is forthcoming. It is however important to make the realisation that starting out in the world of business is not easy; many have the impression that they will be in charge of a workforce and hence will be able to sit back and relax while the money pours in. This however is a common misconception, even the highest level executives have to put in a great deal of work in order to achieve, its not just about a big fat pay cheque. When starting out however one of the most important considerations is the choice of bank account. In a marketplace stuffed with a vast array of account packages, it is difficult, but with a little research it is possible to find the perfect bank account.

In the inaugural stages of business having a bank account that simply lets you cash cheques and withdraw money when it is needed is preferable. At this point having financial services that do anything more is most probably a misspending of funds. Interest, while a major concern in savings accounts should not be excessively considered; it is unlikely that in the first years of operation that the business will earn enough to warrant interest, it is only after the company is making a healthy and regular profit that interest rates should be researched.

A specialist account is not always a necessity, those who operate as lone traders can use their personal account rather than opening a business variety with the bank. That said, having a specialist package does add a sense of professionalism to the operation, in most cases putting the name of the company on cheques and payments makes transactions look that more professional. In addition, having a specialist financial package makes the process of compiling tax returns that much easier and transparent.

If opening a limited company it is essential that a business account should be opened. The bank will need certain paperwork however during the opening process. Part of this required paperwork will be the certificate of incorporation; this gives the bank certification of the company's status. Without this certification it is doubtful that the possibility of opening accounts will be gained.

While it may be easier to use the bank that holds your personal finances, it is often worth shopping around for the best deal. This is because most banks will offer great rates to customers first using their services; it is sometimes the case that existing customers do not receive the best deals. At this stage however it is important to remember the longer picture, most banks offer start up deals such as a period of no charges; do not be swayed by these however, look in detail at how charges will be compiled after this inaugural period has expired. Fundamentally shopping around is the best advice; with so many packages on the market securing a great deal is a very real and attainable possibility.

As previously stated starting a business requires a large amount of hard work and dedication. The decision should not be taken likely on which bank's services to utilise. The choice of account is vital, get it wrong and the company is not given the right building blocks for success. Get it right however and your business can soon be a successful and profitable venture.
About the Author
Financial expert Thomas Pretty looks into the importance of a business bank account when starting a company.
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