How do I choose a business bank account?
You might think this is a no brainer, just Google the one with the longest period of free banking. I would urge you to think beyond the free banking period and think about the true cost of the bank account.
Which bank is the cheapest?
Trying to compare banks on cost is not easy as there are so many variables.
If like me, most of your payments and receipts are electronic transfers and you rarely get paid in cash, then Santander’s fixed fee tariff may be a good fit for you. They offer a simple, fixed fee of £7.50 a month. (You must use the ATM for these deposits). This works well for the occasional cheque but would not be practical for businesses that need to pay a lot of cash in.
Another big plus for Santander is that they provide direct bank feeds to XERO for free. Their competitive charges may be why they have been voted the Best Business Account Provider for the last 16 years by Moneyfacts.
Be careful with challenger banks
Starling bank offers ‘free’ banking for businesses. However, at the time of writing (Oct 18) a XERO bank feed is NOT available. The only way to get your bank data into XERO is via a clunky export/import of a csv file. Therefore, the so called ‘free’ account could waste your time and therefore money in tiresome bookkeeping. You may not think use of XERO is a deal breaker, but when Making Tax Digital comes in next April 2019, software that ‘speaks’ to HMRC will be essential to file your VAT return. You can read more on this here.
A friend of mine recently tried to change banks. She had to wait nine weeks to get an appointment with the first bank she tried. Not surprisingly she decided to look elsewhere. Although many of the high street banks are closing regional branches and encouraging you to bank online, very few allow you to open an account online. This means you need to use your precious time to visit a bank in person.
Metro bank are open seven days a week from 8 till 8 week days. Refreshingly you do not have to make an appointment to open an account. They also have a UK based call centre that is open 24/7. These policies show that Metro are keen to provide a superior customer service.
All high street banks claim to care about business. In reality, it will be your local branch that you will go to first when you need help. If they show a lack of care and competence at this stage, I would recommend looking at some other banks, including those that offer a comprehensive online service.
If you are going to be selling at markets or events, you might want to think about payment services.
Barclays Bank have two neat products for businesses on the move.
Mobile card machine with a monthly rental and transaction costs based on volume and value. (As at June 2018, the monthly fee is £20 + VAT per month)
Barclaycard Anywhere with a one – off purchase price of £60 + VAT, pay-as-you-go contract, 2.6% transaction charges (As at June 2018)
Nat West have some fabulous freebies for start up businesses including an app called Receipts
You can use it to capture all your annoying paper receipts by taking a photo and then exporting a report which summarises them by category. I haven’t tried this yet, but it sounds promising and I expect we’ll see more banks developing this type of product with MTD (Making Tax Digital) on the horizon.
Nat West have also invested in ‘Women in business’. They have trained 400 women in business specialists to support female entrepreneurs and held over 300 female-focused events in the last year.
These banks will base their lending and investing policies on their ethics. They are favoured by charities, social enterprises and co-operatives.
The Co-operative bank has set up a useful support programme called the Hive. It provides resources, support materials, access to peer mentors and free workshops for people wanting to start or grow a social enterprise.
Finally, give yourself a pat on the back you are taking an important first step in making your business easier to run. My first recommendation for new business owners wanting to make bookkeeping easier is to separate your business finances from your personal ones. A separate business bank account with the option to easily access online banking is key to this goal.