A business bank account might feel like a low priority when you’re starting out. Perhaps it’s on your ‘to do list’ but it’s not something you see as very important at the moment. You can manage everything through your personal account for now right? While that may be true, there are other reasons to consider for opening a business bank account sooner rather than later…
Why business banking?
It saves you hassle
Probably the most obvious reason for opening a business account is that it helps you to separate your personal and business finances. This will make life a lot easier for you when the time comes for you to complete your self-assessment tax return.
Claiming Business Expenses
If you want to claim business expenses, then HMRC must be confident that they are legitimate. It is much harder to show this if all of your expenses come from the same account. You will be able to show a clear breakdown much more easily if you have separate accounts for personal and business use.
When you work with customers and clients, your business will appear more professional if you operate from your own business account rather than a personal one.
What to look for in a business bank account
When looking for a business account, you may be tempted to go straight to your personal account provider. However, it is always worth shopping around as different companies will offer a number of differing rates and benefits. Here are a few things to look for during your search for a business bank account.
- Do they offer the support of a personal adviser?
- Is there a free introductory period?
- What are the annual charges?
- What other charges are there (eg. transaction fees)?
- What online banking facilities are there?
- Is out of office hours support provided?
- Are there foreign currency facilities?
- Is an overdraft included?
Not all of the above factors may be important for you and your business but this list should help you to clarify your priorities and make your search for a business account easier.
Before you apply
As with any type of bank account or credit, it is always a good idea to check your credit report before making an application. That way you can try to resolve any potential issues before you apply. Experian account offers a completely free score (followed by an optional upgrade to the full credit history for a monthly fee of £14.99) and allows you to view your report and get help and support with improving it.
Things to look for:
- Make sure you’re registered on the electoral roll. Lenders use the electoral roll as a way of verifying your identity so sometimes, not being registered can cause you to be declined.
- Check for any misspellings. These days most credit searches are automated and something as simple as a misspelled name or address can cause issues.
- Do you have any late payments, defaults or county court judgments
Any of the above can make it hard for you to get accepted for a business account. You will need to look specifically for lenders who have products for those with a poor credit rating.
Business banking with bad credit
If you do discover that your credit report has a few issues then don’t despair. There are lenders who have products specifically for you. Another option is to open a card account. This will give you the basics you need to get started until your credit report has improved and you can move to a business current account.