5 Mar 2021
An often-overlooked way to cut business costs is to switch your company account to one that provides free banking and other benefits.
Unlike personal banking, business accounts in the UK are not generally free and most have various standing and variable charges. However, a wide range of business accounts are available. Comparing them shows that many waive their charges as an introductory offer and or offer benefits such as free transfers or debits and credits. Over time, these benefits can add up to significant savings.
When choosing a new account, consider service-related factors too, such as complaints data; how quickly the bank opens accounts and replaces cards; when you can get help from a person; and whether you need a branch visit to open an account.
Most UK accounts require you to be over 18 and based in the UK. Some high street banks still want to meet you in person when setting up, especially if you have no existing accounts with them.
If you have under £6.5 million of sales and are switching from an existing account, the popular current account switch service guarantees your new and old bank will handle the transfer for you.
Technologically savvy banks get some of the necessary information from public sources, such as credit bureaus or Companies House, to save you having to provide it. But even the smartest ones still require a lot of basic information, especially if it is your first business account.
Many of the UK’s biggest banks have signed up to standard criteria, listed below, that they require before you can open a business account. App-based challenger banks such as Tide pride themselves on fast opening, and do not require as much information.
The standard criteria require sole traders who operate only in the UK to provide proofs of identity and address; your business’ legal name, plus any other names it uses; business start date, or planned start; plus details of any previous or existing business accounts.
You also need your operational and correspondence address; details of your main business activity; and where your income comes from.
Other necessary details will likely include:
• how you plan to use the account
• employee numbers and employment status
• funds invested or planned
• expected turnover over the next 12 months
• expected payments in over that period, plus method and regularity of payments
• tax details, for example, your tax identification number and VAT status.
Finally, your bank will want personal information such as name, date of birth, nationality, citizenship, country of birth, home address, and contact details – for you and any authorised users.
If you trade outside the UK, the bank may also need details of your foreign customers and suppliers, where they are based and the rough amounts you trade with each.
If you have a limited company, you will need additional information, including your company registration number, certificate of incorporation and Companies House documents, such as articles of association and recent director registration forms.
You may also need shareholding or voting details, and personal information for owners or directors including proof of identity and address.
If your business is a partnership, you may need additional information such as partnership agreement, co-partner contract, and formation certificate.
Your bank may ask for even more information to meet certain laws or regulations, or if you need other products and services, such as an overdraft. It needs all these details to identify you; carry out credit and other checks; meet tax and financial crime regulations and open your account safely and accurately.
Providing the information does not guarantee acceptance - each bank has its own eligibility criteria. But if one bank rejects you, another may accept you, so be persistent.
Before opening a business bank account, use us to compare them on factors such as monthly account fee, other charges, duration of any free banking offers, and overdraft availability.