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Factors When Choosing A Business Account

Jan 30, 2008
When opening a business account there are a number of things to remember and look for before you choose a bank. Unlike a personal account, when looking for a business account interest rates should not be a major concern, you may think that a high interest rate will be beneficial but this is often not the case. Your primary concern should be the charges that are part of your account.

If you do decide to open an account with a high interest rate the best place to look is online, there are a number of banks who are starting on the internet and hence provide high interest rates as an incentive to customers. However if you do obtain an account with high interest rates the penalties for entering your overdraft may well be close to extortionate.

You may ask if you really need a business account, especially if you are self employed. Business accounts however add an element of transparency to your business practises. Opening an account will achieve accountability for your business finances and also allow you to identify transactions more easily. It also makes responding to tax enquiries far simpler as full financial records are easily acquired from your bank.

Opening a business account will also add credibility for your business. Most banks will not allow you to open an account unless you put forward a detailed business plan. This will not only help you set out a clear set of goals for your business but will also allow your objectives to reviewed and assessed by an external party. Obtaining objective advice from a banking advisor is a great way to measure success.

Business advice is often included in many business account packages and should be a major consideration. A bank's business advisor is often somebody with a great deal of experience and tapping into this knowledge is a useful asset. Most small businesses do struggle with strategy and a business advisor can assist in a number of ways to ensure your business is a success.

It is worth viewing many banks when opening a business account; while a bank may look after your personal finances adequately it may not always fulfil your business requirements. Also it is vital to separate you business finances from your personal; giving a single bank complete control over your finances is often unwise. If you are opening an account with a new bank it may also be possible to get a better deal with introductory offers that you may not find with your current bank.

When opening an account you will need at least a brief business plan, details of where your funding is coming from and a list of the signatories. This is vital so the bank knows who is able to access the account and carry out transactions. Added to this if you are a limited company you will probably have to produce a 'Certificate of Incorporation' to prove your limited status.

Online banking is becoming an increasingly popular choice for businesses as it allows rapid transactions and access to banking services twenty four hours a day. As with opening a normal account there are factors to consider. Firstly see if there is a set up fee and a minimum monthly fee, like every other element of business it is worth reading the small print.

Also find out if there are charges for withdrawals and cheque payments, these in theory should be cheaper than high street banks. Most importantly however is to obtain the online banks response time to emails, if this is too long your business will undoubtedly suffer.

Opening an account can be stressful but it is an important facet of any commercial industry. It is vital to get a clear idea of the services your bank will provide as this will aid the success of your business. If you keep regular correspondence and keep the bank informed of any situations that may arise, your relationship with the bank will be a partnership made in heaven.
About the Author
Financial expert Thomas Pretty looks into what factors to consider when opening a business account. To find out more please visit http://www.lloydstsbbusiness.com/
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