When forming a limited company, we strongly advise you to open a bank account that will be solely used for the business. Whilst, this isn’t a legal requirement, it will make managing the company’s money that much easier.
It is worth taking the time to choose a bank that you feel you can use for the long term, as switching accounts can be a real headache. Here is what you need to consider when finding the best business bank account for your limited company.
What options are available for business bank accounts?
Nearly all high street banks offer business banking. It’s a good idea to also look at lesser known banks to see what they can offer. Some that come recommended are Handlesbank, a Swedish bank who has around 128 branches in the UK and MetroBank who has around 50 branches in the UK.
What to consider
The easy option when looking to open a business bank account is to use the bank that handles that your personal banking. However, this could cost you money in the long run as they may apply high fees. It is better to do your research and ask:
What are your fees?
Most banks offer an assortment of enticements to get people to sign up. The most common being an initial period of free banking, lasting around one or two years. Whilst it’s easy to be drawn in by the offer of free banking, you need to understand what the fees are once this period is over.
Banks levy charges in different ways. Some have a flat fee they charge each month, others levy charges for depositing money into the account by cheque.
To keep costs down, we advise that you try to calculate how much money will be going into the account on a monthly basis and how it will be paid. If you have customers who continue to pay you by cheque, make it easy for them to pay by debit or credit card.
Another question to ask the bank is if they pay interest on balances. Some banks do, and others don’t. Interest rates on deposit accounts are generally low. They do tend to be a little higher on savings accounts. Which is useful if you are planning on opening a separate account for your tax liabilities.
Are you near me and when are you open?
If you’re comfortable with online banking, you’ll have little need to visit a branch. However, if you prefer to visit the branch or need services that are only available instore then you should consider how easy it is to get to a branch. The standard opening hours for banks in the UK is 9 am to 5 pm. If you need access outside of these times, check if they offer extended opening hours.
How do I set up a business bank account?
What you’ll need to open a business bank account will depend on the bank’s rules. Typically, you will be asked to present:
- Name and addresses of the company directors
- Photo ID, like a passport or driving licence
- Proof of date of birth, nationality and residency status
- Limited company details
- Proof of address
- Certificate of incorporation
- Letter from your accountant
- Letter from HMRC or certificate
- Personal current account details
We feel it’s important to point out that most banks require you to visit a branch to open a business bank account. Depending on what appointments are available you may have to wait some time to do this. So, the earlier you can do this the better.
If you need further guidance on how to open a business bank account, give us a call on 01962 867550 and we can answer any questions you may have.