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Compare Business Accounts

If you are setting up a business or going self-employed you will usually want to open a business account. We’ve put together the following guide to the factors you might want to consider when you compare business accounts.

What is a business account?

Business accounts are similar to consumer current accounts, but aimed specifically at those running businesses or working for themselves as a self-employed person. Business accounts enable you to separate your personal finances from your business finances and usually offer a variety of features and services that help you run your business.

Do I have to open a business account?

If you are launching a Limited Company then yes, you are legally obliged to open a business bank account, through which all your business finances should be processed. 

If you are simply operating as a sole trader you don’t have to open a separate business account and are permitted to use your personal bank account. However, you may find it’s easier to keep track of your business finances, from a taxation and expenses perspective, if you have a business account – but ultimately, it’s up to you.

What banking services do business accounts offer?

 When you compare business accounts, bear in mind that business accounts offer a vast range of services, including:

  • Receiving payments
  • Making payments
  • Direct debits
  • Standing orders
  • Telephone banking
  • Online banking
  • App-based banking
  • Business overdrafts
  • Withdrawals
  • Help with taxes
  • Accounting services
  • Arranging and performing transfers
  • Paying bills

Not all providers will offer all of these features and services, of course. Therefore, make sure you take time to compare business account thoroughly before opting for any particular one.

How do I find a business loan?

Whether you’re just starting out in business or have your own business set up already, you may be interested in securing a business loan to help your business grow. Business loans come in many different forms and are available through a variety of sources, such as high street banks, online specialist providers, business financiers, the government and investors. 

As well as traditional loans, businesses can also consider alternative sources of funding for their businesses, such as peer-to-peer lending, crowdfunding, asset-based lending, invoice financing, business lines of credit and merchant cash advances.

What can I use my business loan for?

Business loans can be taken out for all kinds of reasons. Some business owners need extra financing to enable them to improve cashflow, while others need to invest in new premises, machinery or staff. Depending on the source of your loan, you may need to communicate the reasons why you need the loan to your lender as part of the application process.

Do I have to go to my bank for a business loan?

Not at all. Although high street banks do still lend to businesses, they often have rather strict lending criteria and are unlikely to agree to lend to unproven businesses. Luckily, an array of new business loan providers have come onto the market to help fill the gap in funding that has emerged since the economic crisis. 

Business owners can now compare business loans from providers operating largely online who can help start-ups by matching them up with investors, for example. Alternatively, business owners who need cashflow help could consider an invoice financing provider who may be able to give them immediate access to the cash owed on unpaid invoices. Business people using card machines to take payments could borrow money in advance and repay the loan directly through their card machine. 

Whatever type of business loan you opt for, remember that there will almost always be interest to pay and other fees and charges are likely too. 

Will my personal credit history be checked when I apply for a business account?

It may be, yes. As the owner of a business, banks and other business account providers usually want to check your credit record before offering you an account. However, even if you have a poor personal credit history, you may be able to access a business account with one of the smaller online providers.

How much do business accounts cost?

This all depends on the provider and the type of account. Some accounts may offer you an initial free banking period, but business account providers do tend to charge in some shape or form. 

Some accounts will carry a monthly fee while others may charge per transaction, per transfer, per withdrawal, etc. Before deciding which account is best for you, consider how you will use the account. For example, if you make a lot of transactions, you may be better off choosing an account with a monthly fee and free transactions. If you won’t be using you account very often, a transaction-based fee model might work out cheaper for you. 

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