Most businessmen will profess the advantages of possessing a business account. The reason for this is mainly because a business account makes a brilliant financial tool, perfect for those wishing to run a small business. There are so many banks out there offering differing types of business account that the choice can be laborious.
It is important to get the choice right although with so much market competition many of the account on offer are similar, if not the same. For the sake of your business however it is important to find one that suits your needs and allows you relax a little about your financial situation.
A business account will usually come in the form of a transaction account, these are generally akin to the personal accounts many of us already have. Although the levels of transactions may be increased they are fundamentally the same as personal finances.
Such transactions include ATM, online, phone and cheque and are vital in the smooth running of your business. An online business account can possess generous interest schemes, some as much as five percent and over. In comparison to personal accounts this level of interest is rarely apparent, making a business account even more appealing.
The reason banks have taken this route is due to the fact that business customers need wholly different services than personal banking clients. The response has been the creation of a situation where business account options now saturate the market.
Most businesses use their business transaction account as a means of handling receipts and understanding the extent of expenses. When companies are producing a good turnover it can often be hard to keep a note of where the money is going, a business finances package can help you co-ordinate where your funds are going and at what rate.
Opening an account with a bank is slightly more complicated than when starting personal finances, firstly it is only a business owner who can open the account. There is also a great deal of documentation that must be produced, for instance if opening as a limited company you will need a certificate to prove this.
Also the bank will want to see some form of business plan to ensure that their faith in you is not unfounded. Making sure the bank sees your business as a money earner is vital as there willingness to help and even loan you money can be extremely useful; this all depends on what your business intends to do and what plans you have in placer to achieve growth.
There are of course downsides to having a business account. There are usually fees imposed by the bank that pay for the services you receive. These however are usually wavered during the interim period so it is important to read the small print when signing up to see how much these fees will cost once the grace period is over. Fees are usually worthwhile though, the services banks provide their business account customers are usually extensive. Many banks will provide either an in-branch advice team or a telephone helpline you can ring for assistance; both are an asset that your business will need during its start up period.
Put simply your business will need a business account. It may seem wise to try and avoid the fees and carry out your transactions through your personal finances but this is rarely advisable. The reason mixing your finances is so ill advised is down to a couple of reasons; firstly transparency is key, especially when it comes to the tax man, secondly for the sake of your business not getting confused over spending and transactions is vital to smooth running. Ultimately for success, a business account is one asset you cannot live without.
Financial expert Thomas Pretty looks into the importance of having a business account for the success of your business.