Business banking

Business Banking

Many people, no matter if they are a small business or larger corporation, choose to change their business bank on a regular basis as many Bank Account providers offer the bonus of Free Business Banking for 12 months. Some, such as Lloyds TSB even offer 18 months Free for new small businesses, but would this be the best business bank account for you?

Once the free banking period has ended charges are applied to the business bank account and due to this many choose to change to another free bank account provider to ensure that the charges are kept to a minimum.

Business Bank Account Example Charges

Standard Business Bank Account charges can soon add up dependant on what as standard your business needs with regards to bank account services, for example:-

Cash Paid In - 57p per £100
Cheques Paid In - 28p each
Cash Withdrawals - 62p per £100
Cheque Payments - 65p
Cash Exchanges - £1.65 per £100
Direct Debit Payments - 40p
ATM Withdrawals - 45p
Phone Bank - 15p
Telepay Debit or Credit - 40p
BACS Debit or Credit - 10p
BACS batch file - £4.00
Unpaid Items - £35 per item
Unauthorised Borrowing - £15.00

So you can see that if you were to make the following transactions each month:-

Cash Deposits of £3000
Pay out 10 Cheques
Exchange £200 into change
Pay 10 Direct Debit Payments
Pay 6 BACS Payments in 1 Batch

Then you would be looking at paying Bank Charges of £35.50 per month, which equals £426.00 per year.

Business Bank Account Options

Abbey have recently introduced a Business Bank Account which is free for the entire term. Included in the package, Debit Card Payments, Bacs Credits, Transfers between Abbey Accounts, £100 Cheque Deposits per month, £100 Cash and Cheque Withdrawals per month, £3000 in Cash Deposits per month,(correct as at 27/10/08). This appears to be a great option for businesses but you should still ensure that you read the Terms and Conditions. Look to compare Business Banking Interest Rates where applicable and Overdraft Facilities to see if this is the best option for your business as although this appears to be a really good bank account it might not actually be the most appropriate for your business.

Free Business Banking Checks

Not all businesses will be eligible for a Free Business Bank Account. Some providers may run credit checks with your consent and you if you do not reach their credit score criteria then you may not be offered a free banking facility. However, no matter which account you open, or are offered here are 10 tips you may need to help you along, keep you in control of your businesses finances and also possibly save you some money along the way.

1) Always keep a record of all transactions in and out of your Business Bank Account.

2) Cross refer your Bank Statements and own records as regularly as possible eg: at least once a week, if you do not have access online to your business account then request that your statements are sent once per week

3) Request Business Online Banking which enables you to be able to check your balance easily, make payments to suppliers, transfer money, set up salary payments and download account information for analysis.

4) Talk to your Bank Manager on a regular basis to ensure a good relationship is maintained and ask for advice on Business Banking Protection.

5) Be aware of any possible Bank Charges.

6) Choose a bank with a Small Business Team which are easily contacted and have a 24 hour facility.

7) Check where the nearest branch is to you to ensure that Cash and Cheque banking is as easy as possible.

8) Check if the Bank Account you are looking to open can support your company.

9) Ensure that you limit the people with access to your Bank Account and that the bank are clear as to who has authority, keep any passwords safe and ensure that no one has access to these details.

10) When opening your account ensure you have proof of ID for all who will have access to the account and also request an account opening mandate, a list of the names of the people who will have authority and a sample of their signature.

When you apply to a Bank for a Business Banking facility ensure that you have prepared a Business Plan or Projection as this may be a helpful addition in indicating to the Bank what your future intentions are. This should also help your application to run more smoothly and enable funding to be considered more swiftly.

where to now? EMA Grants 2009 Budget National Insurance

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Updated on 3rd March, 2009

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