Often small business owners will simply open a savings account with their existing banking provider, but with a bit of shopping around you’re likely to be able to find a much better deal. Make sure that you understand minimum balances and any time restrictions on access to your money.
Virgin Money Business Access Account
Interest rate
0.3% AER variable
Term
Instant access
Minimum deposit
£1
Maximum balance
£2,000,000
Virgin Money 1 Year Business Fixed Rate Savings Account
Interest rate
0.35% AER fixed
Term
20 September 2022
Minimum deposit
£1
Maximum balance
£2,000,000
Nationwide Business Instant Saver
Interest rate
0.05% AER variable
Term
Instant access
Minimum deposit
£5000
Maximum balance
£10,000,000
Nationwide Business 35 Day Saver
Interest rate
0.2% AER variable
Term
35 days notice
Minimum deposit
£5000
Maximum balance
£10,000,000
Aldermore Easy Access Account Issue 8
Interest rate
0.5% AER variable
Term
Instant access
Minimum deposit
£1000
Maximum balance
£1,000,000
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Businesses of every size need to hold cash reserves at different times, whether it’s to cover a future tax bill or simply as a slush fund. However, current accounts are often not the best place to do this.
It might well be that a business savings account is a better option if you need somewhere to hold a balance. It can be tempting to just open an account with your existing banking provider - but, with a bit of shopping around, you might be able to find a better deal.
First, though, a note of caution. Currently, interest rates are close to zero with virtually every banking provider, mirroring the years-long low interest environment in the UK. This means that you’re unlikely to be generating much income from your savings, even on large balances. However, there are still a few deals to be had, especially if you’re willing to put your money away for a set period.
It’s also important to understand minimum deposits. Many business savings accounts can be opened with a sum as low as £1,000, but some require an opening balance of around £5,000. You’ll also need to think about the speed with which you might need access to the money. Some accounts offer instant access, while others require a notice period. If you take a fixed rate deal then you are unlikely to be able to withdraw your money before maturity. It’s crucially important that you think about your cashflow situation and your potential need for the money you’re putting away. To help you do this, you might use cashflow forecasting or scenario modelling in your accounting and bookkeeping software.
Most business savings accounts are available to all businesses, whether you’re a sole trader or a limited company. Most are also available to registered charities. However, you should note that some banks operate a limit on the number of employees or a company’s total annual turnover.
For a more detailed look at the various accounts on the market and how they might work for your business, please check our reviews section.
