Business accounts are as simple to manage as
regular current accounts but come with a few extras - some good and
some not so good. We have teamed up with leading financial website
www.debts.org, to
take a look under the bonnet of business accounts. Unsure about
business accounts? We explain what they are, why they charge and
what they are good for business.
Why should I have a Business
Account?
If you are self-employed and own your own enterprise you
may want to consider opening a business bank account. Corporate
banking is serious business and many of the high street banks now
offer business accounts tailored to suit your needs.
Many business accounts offer software packages designed to
kick-start your start-up. Using corporate computer packages can
help you structure your business in line with short and long term
strategies. Then there is of course Internet and telephone-banking
facilities. Banking over the phone or online allows you to pay
bills and make transfers at a time which suits you. After all,
standing in a bank queues is what we did in the 1990s.
Perhaps the biggest bonus to be gained from having a
business account is your very own account manager. An account
manager can be of enormous value to your business. A good account
manager can offer years of experience in dealing with business
finance and can suggest ways to get your business booming. Any
business account manager worth their salt will also double as a
business consultant whenever you need an expert opinion. For more
information on business accounts visit www.debts.org/business_accounts
Are there any charges?
Business accounts incur many of the same charges as
regular current accounts. You may already be familiar with charges
for unpaid direct debits, bounced cheques or exceeding an overdraft
limit. Business accounts will penalise you for any of these plus a
few more.
Business accounts will charge you for paying in cheques
for example or making money transfers.
How will I be charged?
How you will be charged will depend on where you have a
business account. You may pay for charges on a one-by-one basis or
alternatively over a monthly or quarterly term. Some banks will
only enforce a charge when a specified amount of transactions has
been exceeded.
How can I avoid charges?
The best way to avoid unnecessary charges is to understand
the rules. You should agree with your bank at the outset how, why
and when you will be charged. Based on that knowledge you can
implement banking practices that will avoid most or at least the
worst kind of charges.
Some tips:
1) Consider Internet banking
as a way to avoid charges on transactions and money
transfers.
2) Use direct debits and
standing orders wherever possible - automated transactions incur
very few labour costs.
3) Avoid using
cheques.
For more tips on avoiding bank charges visit www.debts.org/business_accounts
How do I open a business
account?
Once you have compared business accounts and have found
the right one for your business, you are ready to open an account.
To open a business account you will need:
·
Certificate of Incorporation (Limited Companies)
·
ID
·
List of people authorised to co-sign cheques
If you are a start-up business you may be asked to
bring a business plan. Opening a business account should not be
difficult.
How can I borrow for my
business?
If your business needs a little buoyancy it may be time
for a cash injection. Your account manager should be able to advise
you which credit option best suits your requirements. When you need
to find extra cash for your company, you could consider one of the
following:
An overdraft - a business overdraft allows you to
repay money borrowed at a time that suits you and can give you
financial flexibility when you need it most.
Overdrafts, however, can be recalled at any time so it is
never advisable to completely drain it of funds.
Business loans - you may consider a loan if you already
have an overdraft or you need to borrow more than an overdraft
would allow. Loans are agreed over a repayment term so the bank
cannot recall the amount at a moment's notice. A business loan will
in all likelihood be secured against your home of business
premises. It is therefore important to get independent financial
advice or visit www.debts.org for
further assistance before you apply for a business loan.
Government grants - are especially suited to start-ups or
businesses without security. Visit www.debts.org/business_accounts
for details of how to apply for a Small Firms Loan Guarantee
Scheme.
