Business bank accounts: what are they?
A business bank account keeps business finances separate from personal ones, and helps you manage cash flow and calculate tax liabilities along the way. It works the same way as a personal bank account, but often includes a few additional features, such as a personal advisor and tailored introductory offers.
Business bank accounts work hand in hand with multi-user accounts like Soldo. Platforms like these enable you to give team members access to their own funds, without giving them access to the business bank account itself. Just transfer as much money as they need, and then capture their transaction data for simpler reconciliation and reporting.
Why is a business bank account important?
With a business bank account, you’re able to:
- Buy what you need, pay those you owe and receive client payments
- Separate business expenses from personal ones
- Gain access to benefits not open to personal account holders
- File taxes more accurately and identify deductible expenses
You’re also able to order credit or debit cards, which you give to individual members of staff. But in doing so, you’re giving them unrestricted access to company funds, which is why you need to be careful who you decide to share them with.
Soldo cards are a better alternative to corporate credit cards. Like credit and debit cards, they give employees the flexibility to buy what they need. But unlike credit and debit cards, they aren’t linked to the company account, which means you can safely allocate as many as you like and decide how much money each cardholder has access to.Supercharge your business bank account
The best business bank accounts – What should I expect?
- Personal support
As a business customer, you’ll be put in touch with a dedicated support team who will guide you through the bank’s services. They’ll be able to offer advice as your needs change, and may offer personalised offers as your business grows.
- Low charges
You need to pay a monthly fee for your business bank account. Cheapers account are usually around £5 a month – but you’ll want to shop around for the best package for you.
- A fee-free introductory period
Many banks won’t charge you for the first year or so after opening your account. Just be sure to do your research on what the fees will look like once this period is over. It can be difficult to change accounts further down the line.
But it’s only with digital tools like Soldo that you can really make the most of your business bank account – even the ones that come with all the bells and whistles.
With Soldo’s payment control console, you can transfer funds for free, check spending in real time and export transaction data to accounting software. And if you deal with overseas clients, you can make foreign currency transfers with low, competitive fees.
Frequently asked questions
You’re eligible to apply for a business bank account if you run a business – or even a charity, club or pension fund.
But if you run a limited company, you’re legally required to set one up. This isn’t the case if you’re a sole trader or freelancer, though it is still advisable as it will make it easier to keep your personal and business finances separate.
Opening a business bank account is simple. Most banks will let you get the process underway online, and once you’ve done as much as you can, you’ll be able to arrange a meeting with a representative to complete the process in-branch.
With most online bank accounts you’ll need to show the provider a variety of documents, which might include:
ID for all named company directors
Proof of address
Full business address
Estimated annual turnover
If you’re a limited company, you’ll also need to provide your Companies House registration number.
It depends on the banks you are switching from and to, but they’ll do their best to make the experience as painless as possible. Of course, the bigger your business is, and the more tangled its accounting, the longer it will take.
That said, it’s always wise to check your deal against the market and see if there’s something better for you out there. This is especially true if you’re growing rapidly, since your needs when you opened your first account are likely to have changed significantly. Just remember to check with your current provider before you do – they will be keen to keep you as a customer and may make an effort to improve your deal.
Just as with a personal bank account, business banks might offer an overdraft in case you overspend one month. The size of this overdraft varies from provider to provider, and so will the interest they’ll charge on it.