Opening a Business Bank Account

If you run a business then opening a business bank account is a pre-requisite of doing business in the UK.

All banks offer free business banking options, internet banking, current accounts and savings accounts for businesses you just need to choose the right one and prepare in advance.

Why Do You Need a Business Account ?

Banks won't allow you to deposit personal funds into a business account nor add business funds into personal accounts if you are a limited company. If you are a sole trader then you can continue to use your current account but will need to split the business and personal expenses for your accounting especially if you deal with other currencies such as the Dollar or Euro - it just makes it easier if you have a separate account.

What you should look for in an account

All the major banks such as Barclays, HSBC, Lloyds TSB and Natwest have been offering bank accounts for business customers for years and most offer some form of free business banking but only for a limited period of time and then the fees kick in. There are 2 former building societies that have transformed themselves into banks that offer free business banking for life so you don't need to worry about fees after the initial period.

If you run a standard business and are unlikely to need extended overdraft or loan facilities then these could be for you although they do run like "real" banks and offer the full range of banking services.

Business customers seem to get a raw deal from banks and this is where they can make most of their money by charging high fees for items so you need to compare business bank accounts from the major banks in your area first.

As current interest rates are so low it's best to look at the fees charged rather than interest earned as most banks are only paying near 0% on deposits at the moment and even the highest rates are in low single figures.

What Else Do You Require ?

If you think you'll need to be in contact with your bank on a personal level then you may need one of the banks business advisors or banking managers to help you with your project for a longer term then it may be that you simply walk down your local high street and meet with all the banks concerned and see what they can do for you and your business and if you like the people in your branch.

For most businesses telephone and internet banking are sufficient and this keeps the banks and your costs as low as possible.

How To Open Your Bank Account

Once you have chosen which bank you wish to go for you'll need some documentation to take along when you open it and prove that you have a viable business. Ask your bank what they want to see but most will ask for the following

• Certification of Incorporation for Limited Companies
• VAT Registration Certificate
• Copies of previous accounts
• Current business plan
• Information about signatories (who can sign cheques etc)

Banking Offers

Banks are in the business to make money so only take a product if you really think you'll need it. Some will try and get you into a form of "business club" but there are generally better alternatives that can offer you business planning software or accounting software. And the Federation of Small Businesses offers lifetime free banking with the Co-op bank as well as free legal advice for just £100 per year.

Ask about different types of bank accounts. For example with HSBC they offer a completely fee free option if you only bank over the internet or telephone and have your statements sent to you every 3 months - cutting costs or saving them is vital for any startup organisation or regular businesses where profits and cash flow are everything.

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