Business bank accounts are accounts that are designed to serve business needs of their users. They have the common features of personal accounts such as debit cards but also include extra features such as overdraft options. Most banks also charge higher fees for business accounts than personal accounts. The choice business account a customer opens largely depends on their business needs and its unique selling points. www.bank4pro.co.uk is the go to portal for corporate banking information and has compared the ten best online bank accounts in the UK.
Features to consider when comparing business accounts
-The type of business: most banks offer customized accounts for different types of businesses such as partnerships, sole proprietorships, corporations, and charities.
-Fee structure: most banks charge a fee for transactions completed through the accounts whether it is money transfer, payments or buying goods online. Therefore, it is advisable to look at the fee structure to see whether it will overtax your business. For instance, some accounts charge a fixed monthly fee while others charge per transaction.
-Cash transfers: some online accounts do not accept cash deposits or impose an extra fee for cash deposits and withdrawals. If your business deals with a lot of cash, such an account may not be convenient.
-Introductory offers: some banks offer up to 2 years of free banking to new account holders. Check if the deal is advantageous and the charges they impose after the offer expires.
-Fees: compare the fees charged by different accounts to see which is most attractive.
-Perks: most banks offer rewards such as discounts and cashback for customers who use their accounts for a range of transactions.
Transaction limits: banks impose limits on the amount of money you can transfer from a particular type of account. For instance, a small business account may have a limit of £250,000, which may not be enough for a medium-sized enterprise.
Foreign transactions: Some banks impose extra fees for foreign transactions while others do not support currencies other than pounds, Euros and dollars. If you often engage in international money transfers you need an account that supports a lot of currencies and offers attractive exchange rates.
Mobile integration: some banks do not have mobile applications which may inconvenience people who like to transact on their Smartphone.
Banks with no transaction limit
Barclays opens business accounts for firms with an annual turnover of £6.5 million or less. New customers can transact free of charge for the first 12 months. The monthly fee ranges from £6 to £6.50 depending on the payment method.
Cooperative offers free banking for the first 30 months to both startups and small businesses. They do not charge a monthly service fee for customers who maintain a balance of £1,000 or more. The account is available to all enterprises that qualify as small businesses in the UK.
TSB offers business accounts to sole proprietors, partnerships and corporations. The bank offers free transactions for the first 25 months. The fees rise to £5 per month but is waived if you maintain a balance of £10,000 in the account.
Metro offers business accounts to enterprises with annual revenue of less than £2 million. They do not have an introductory offer. However, they don’t charge transaction fees for accounts with balances of above £5000. They charge a monthly transaction fee of £5 for accounts with balances of less than £5,000.
Lloyds opens business current accounts to firms that have a turnover of up to £3 million. They offer free transactions for 18 months. However, the free transactions last only 6 months for customers who are switching from other types of accounts. The monthly fee is £6.50.
RBS offers business accounts to all adults aged 18 years and above and have the legal right to work in the UK. The Startup offer is open to all businesses with annual revenue of less than £1 million while the business account is available to firms with a turnover of £2 million or less. The free transaction period is 18 months. After that customers pay fees per transaction.
Banks with transaction limits
HSBC offers a small business account for businesses whose annual turnover is less than £2 million. The free banking period is 18 months. The bank then charges a monthly fee of £6.50 for the initial 12 month period after the expiry of 18 months free offer. The transaction limit is £3,000 per month with charges of 0.5% for every £100 above the limit.
Santander opens business accounts for firms that have been in operation for less than 12 months and opening a business account with them for the first time. They offer fee-free banking for 18 months. The charges then rise to £7.50 per month. The transaction limit is £1,000 per month 0.7% for every £100 above the limit. Santander offers overdrafts of between £500 and £25,000 to customers with a good credit record.
Yorkshire allows customers with an annual turnover of less than £2 million to open small business accounts. However, customers must open the accounts within 12 months of starting the business. They offer free transactions for 25 months. The monthly fee is £6.50, inclusive of the business banking tariff. The transaction limit is £250,000 per year.
Clydesdale offers small business accounts to firms with annual revenue of less than £2 million. Customers must open accounts within a year of opening the business. They offer free transactions for 25 months. The fees are £6.50 per month after the expiry of the introductory offer. They impose an annual transaction limit of £250,000.
The type of business bank account you choose will depend on your needs. If you make frequent transactions then banks like Metro and TSB may appeal to you. However, if you withdraw large amounts, then banks with no transaction limit like Barclays and Cooperative may suit you. The introductory offers and fees are relatively similar though accounts that offer incentives for large deposits may suit firms with a high cash flow.