Bank accounts….boring right?! When it comes to setting up a bank account most people probably think the same thing “aren’t they all the same? What’s the difference between bank X or account Y?” Well, while the differences between the various bank accounts may be subtle, it is still a worthwhile endeavour to make sure you pick an account suitable for your Individual or business needs.
While all major UK banks follow similar practices nowadays such as offering online banking, a cheesy smile, and buckets full of reassurance that they know what they’re doing! There are however some main distinctions between the varying start-up business accounts that, as a prospective start-up, you should consider carefully.
In layman’s terms, the majority of banks offer start-up businesses the opportunity to undertake standard banking activities without incurring any charges. This period will often range between 12 and 24 months. Meaning that any electronic or physical payments, deposits, or withdrawals made during that period will be free of charge! Happy day’s right?
There are stipulations however, albeit not very strict ones, the business must not have been trading for longer than a year, and the business owner, partner, or shareholders must be over 18 years of age. Apologies to any entrepreneurial 17 year olds out there, I don’t make the rules!
Arguably, the most noticeable, and largest differences that will impact your business will be the charges incurred after the fee-free period is over. Well, you know what they say about all good things.
Once the fee-free period is a distant memory, your business could be charged anywhere between £5 and £10 per month for the privilege of having an open account, as well as additional charges for simply undertaking regular banking activity. This is where understanding how you will conduct transactions, and be receiving payments will be invaluable information. Many banks will offer varying price packages to suit your banking habits. Take Barclays for example, they offer an e-Payments Plan that makes all online transactions free of charge, while charging higher prices for physical transactions such as paying in cheques.
Most banks will include extra incentives to ‘grease the wheels’ and to assist your business in matters more than just banking. While every bank nowadays will provide ongoing business support to help growth, some offer more niche services such as a monthly loyalty reward, interest on credit balance, and 50% off DHL international shipping… So there’s that to consider too.
Ultimately, the choice of which start-up bank account to choose will largely depend on how you plan to carry out your account activity. Having a real understanding of payment methods coming in and out of your business will be vital to ensure you keep banking costs to a minimum once the fee-free period has ended.
Here at Price Davis, we would be more than happy to discuss the options with you and help you to figure out what’s best for your new business!