The difference between a business account and a personal bank account
A business bank account is designed to hold and manage money generated solely by your business. It allows you to carry out your daily business transactions such as payroll, purchase of materials, and payment for goods and services. Conversely, a personal bank account is for personal finance.
Often the tools, features, and fees differ between a business bank account and a personal bank account, although this can vary from vendor to vendor.
How to choose the best business bank accounts for you
There is a wide variety of business checking accounts available and while it may seem obvious to apply for a business bank account at the same establishment where you have your personal bank account, it is not always the best choice. When deciding on an account taking into account the following:
Account Fee: Although many online business bank accounts offer a free period of banking for basic services, you should check that the tools available are sufficient and determine if you will need to upgrade to a business bank account with monthly account fees.
Operating costs: Take into account your account usage and any business bank account fees you may be subject to, including cash withdrawals, payment fees, transfer fees, ATM fees, and any other associated costs. If you need help with accounting, check that the vendor offers free accounting software.
Discovered: If it is possible that you need overdraft facilities, check that the provider you are considering offers this option.
Commercial loan: Few online bank account providers offer business loans. Starling generally has an application topic, however, this has been suspended at the time of this article. Cashplus offers a loan and is worth considering if it is a priority for your business.
Interest: Very few online banks offering a business bank account offer interest on funds held in your account. This is a downside if you are in the dark and looking to grow your funds. In that case, you may want to consider Wise Assets, which offers the option of investing funds held in your business checking account which you can access normally. You can also consider a business bank account which also gives you access to an interest savings account.
Pay in tools: Are you likely to need to pay in cash and / or checks? Make sure to check the fees and convenience level, because unlike traditional banks, online banks don’t have physical branches. Many will let you pay to your account at a post office or pay on-site, and some, like Starling, have the option of paying by check using your phone’s camera.
Characteristics: Make sure you’ve considered the features and tools that will benefit your business. You may need separate pockets for tax funds or the ability to store and file your receipts in the app.
Who should have a professional account?
If you have a limited liability company, it is your legal obligation to have a business account because your business finances should be kept separate from your personal finances.
Should an individual trader consider a professional account?
As an individual entrepreneur, you are not legally required to have a business account. However, a business account can be useful to anyone, including freelance traders and freelancers, as business bank accounts keep finances separate and make tax filing easier. A small business bank account can help manage business finances and free up time to run the business.
What is the current account change guarantee?
If your new bank offers the change of current account guarantee, that means that it offers to take care of all the administrators involved in the transfer of your account from your old provider to your new provider. This includes transferring your balance and changing your payments.
Is it possible to open a business bank account with bad credit?
Bad credit can make opening a business account more problematic, and you may not always have the choice you might have otherwise. However, there are professional account providers that will allow you to open an account without a credit check, like Tide.
Do traditional banks offer online and mobile banking services for businesses?
Yes, there are many banks that offer online and mobile business banking services, including the Royal Bank of Scotland and the Co operative Bank. However, there will be costs associated with it and you may not have access to the same features as those of the challenger banks.