Like it or not, you need a dedicated business current account. Here, Russell Smith at Russell Smith Chartered Accountants guides small business owners through the various options.
For those running a sole trader enterprise, it can be tempting to simply use your personal current account for business transactions, but that can lead to a number of problems.
Confusion on your part and from HMRC may result in both inaccurate tax and business valuation, leading to uncertainty and instability.
For those running a limited company, the choice becomes much easier. As a separate entity, your business requires its own financial resources. Having income registered under a personal account would incur legal complications.
A business account, no matter what type of business you run, is essential. But this begs the question: which one should you get?
Trying to the find the best business current account isnt easy. They each come with their own set of benefits and drawbacks, with varying advantages depending on the current position of your business.
Let’s break down the best business current accounts out there, so you can decide which one fits your unique requirements.
The Royal Bank of Scotland (RBS) business current account for startups
From one of the most recognisable names in banking, we have a business current account designed for those new to the business world. Offered to businesses who have been trading for less than a year, with a turnover of 1 million or lower, the Business Current Account for Startups is tailor-made for businesses looking to keep costs down and growth up.
Account owners receive 24 months of free banking, which means no interest paid on balances and no charges for transactions made through the account.
Youll also receive a 500 no-fee overdraft for the first 12 months of service. Internet banking, direct debits, a mobile app and all the other common features are available for ease of use. Access to a credit card with no annual fee for the first year is also included, if requested.
Limited to 1 million turnover, meaning it isnt exactly adaptive to rapid growth.
This is the perfect business account for small businesses just starting out on their journey. Those looking to go into rapidly growing industries like big tech or finance might consider looking elsewhere, but for most businesses, the free 24 months of banking limited to 1 million turnover will suit just fine.
For evolving or established businesses
The HSBC small business bank account
As your business grows, you may start to feel the limitations of a startup account. Likewise, if you have been trading for over two years, it isnt something that will fit with your business. What you need is something that keeps fees low, while offering a bit more wiggle room. The HSBC small business bank account is your answer.
For those transferring from another business bank account, the process is simple and can be done online. Once you’ve made the move, you’ve got 18 months of free banking ahead of you. No service charges, no interest, just simple ins and outs. The turnover limit is 2 million. With the national average of business turnover currently at 500, 000, that will be more than enough for most businesses.
No free overdraft limit. After 18 months of free banking is up, you will move to their small business tariff account, which will incur monthly fees and service charges. it’s best to consider your options beyond this point and look to other accounts on the list.
One of the best business bank accounts around, the HSBC current account offers business owners room to breathe while avoiding nasty costs. Great for established businesses, anyone coming out of a startup account, or those who are seeing increased turnover.
For growing enterprises
The Santander business current account
While the average turnover for UK businesses is 500k, it is not uncommon for successful brands to break the 2 million mark. If that happens, youll be looking for something a bit more open. The Santander Business Current Account is, potentially, the perfect solution.
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