What business bank should I open?
You need to have a business bank account if you are the owner of a limited company. The limited company is a separate legal person to you. It can agree contracts, buy and sell things. The company needs to have its own bank account.
There are a number of options that you can choose for your account. You can go with one of the high street banks such as Lloyds, Barclays, HSBC or Natwest. These are generally a very safe choice and if you want to be able to go in to a bank and speak to an advisor they are well worth considering
But there are also quite a few challenger banks that you should consider. Starling, Monzo, Revolut and Tide are growing in popularity and offer the convenience of being to do your banking on your phone and are very easy to use.
It’s important to know what you want from your bank. If you want easy access to go in to branch and discuss with a bank advisor certainly the high street banks are going to be a very good choice. If however you haven’t been in to a bank for a long time and don’t need cheques and being able to pay in cash to the bank. You should consider one of the new challenger banks.
How Easy is it to use?
Whatever your choice you need to make sure that it is easy to use. If you use a high street bank, can you easily get in to the branch and speak to someone when you need to?
One of the main issues will be how good the online banking and mobile phone banking apps are? Are they easy to use and reliable and can you use them? This is even more important if you use a mobile only bank such as Starling or Monzo. This will be your only way to access the bank account and it needs to be good.
One thing that Starling lets you do is to have the app installed on more than one phone. This is useful if you have a work and personal mobile phone. You can check the bank account regardless which phone you are using.
Normally the banking apps for banks like Starling and Monzo are very good.
Opening an account is something to think about, is it easy to open and will it take a long time? To open an account with Starling all you need to do is to download the app and go through a simple wizard and it is complete. To open an account with a high street bank you may need to book an appointment and go down to the bank while they open the account for you. It may not be to much of an inconvenience but it will certainly take longer.
Can I connect to my accounts?
One of our main concerns as your accountants is can you connect your bank account to the accounting software that you use. Will it connect to Xero or Quickbooks. Being able to connect to Quickbooks or Xero will save you time each month and make your life much easier.
You need up to date information for your business, to have the bank accounts connected to the accounts will mean that we can always access your latest transactions in your bank at any time without asking and without you needing to do anything.
Having up to date information will mean that you can see where your business is at anytime and you can make better decisions because it is based on real time information not accounts that are nine months old.
Can I get help and finance when I need it?
It was historically the bank manager that was the advisor for a business. When a business owner needed help and advice they would go to the bank manager. They had the knowledge of the local businesses and they had the expertise on how to help. That now seems to be changing and this role is now being done by the accountant.
The accountant is better placed to do this role. They know the business better than the bank manager and understand the reason behind the numbers that the bank manager sees. The accountant will specialise in an industry and will bring that knowledge in to the relationship with the business owner.
They will have knowledge that is better and more relevant.
One of the reasons to see a bank manager was to ask for help and for a loan or overdraft. This again is something that the accountant can do better than the bank manager. There are apps like Capitalise that your accountant can use to connect you to a marketplace of finance products.
Finance options such as loans, equipment finance and invoice finance. These are finance options which are going to be more flexible and cheaper for your business to use rather than asking the bank manager for a loan or overdraft
How do you use money?
How do you use money Do you still pay for things in cash or do you use contactless payments. I almost never carry cash. Even before lockdown I would always pay by card and would only keep loose change for parking.
If you need to pay in cash you will need to make sure that your bank will allow you to do that. If however you only use card and online banking payments most banks including the challenger will allow this.
One area that the challenger banks beat the high street banks is in foreign currency payments. If you buy or pay for software and services in US Dollars or in Euros banks such as Starling will give you a significant saving on the currency charges with your bank.
It might not seem much but they will add to the cost of the software that you buy.
Conclusion
Choosing a bank is a complex choice and you may actually try a couple before you find the one that is right for you. The choice has certainly increased in the last few years with many new Fintech banks now available.
You need to be sure that the bank is easy for you to use and has everything that you need. It’s worth considering the new banks such as Starling and to also be aware that if you do choose one of these banks it does not need to prevent you from getting finance if and when you need it
The choice should be is the bank a good fit for you?
Next Steps
If you need any further help on your choice of bank please arrange a call and we can help you make a choice that will meet your needs. If you just fancy a chat, we’re also happy for you to call.