Choosing the right business bank account might seem like a simple choice but choosing the best place for that hard-earned cash depends on what the business needs. Many business owners simply pick the same bank they’ve been using for personal accounts for years, but there is a huge amount of choice out there. And believe it or not, it really matters. We look at who needs a business bank account, things to look out for when selecting the right account for a business, and what’s available.
What are the rules on business bank accounts?
Does anyone really need a business bank account? Well, the rules are slightly different depending on whether someone is a sole trader or operating as a limited company.
The short answer is that business owners must have a business bank account if they’re operating as a limited company. That said, it’s generally recommended that all business owners have a bank account for their business, separate from their personal account.
As a sole trader, it’s not ideal to have personal finances and business finances all in one place. It’s enough to drive anyone crazy when it comes to doing bookkeeping and recording profits.
Another essential point to consider is that some banks do not allow for their current accounts to be used business purposes. Make sure to check the small print!
How do I choose a business bank account?
This choice depends on what the business needs, so take time to consider the work taking place, and how the business operates. Lots of overseas trade might mean that low fees on foreign income is appealing.
The challenger banks such as Starling, Monzo and Revolut offer more features for business owners who need them but not everyone likes the online-only model for banking.
For those who handle a lot of cash which needs to be deposited, these types of banks aren’t the most convenient option. For those who work solely online or who are digital-nomads, they could be ideal, or even the only feasible option.
The important first step to choosing a bank account is to list all your priorities and what you want in a bank account. This will help to narrow down the choice a lot. After this, it’s time to go looking for reviews and conduct some thorough research.
Choosing an account compatible with accounting software
One of the many great things about cloud accounting software is the ability to connect it to a bank account and have transactions entered automatically, saving a huge amount of data entry time during bookkeeping processes. Crucially, though, not every bank account will be compatible. There’s a danger of having to wait some time before bank and software become compatible.
That’s another reason why your choice of bank account is important. No one wants to spend all day manually inputting transactions into software. That’s a typo waiting to happen and typos are dangerous when it comes to financial data.
Pandle’s Bank Feeds feature automatically pulls over transaction data, including amount, date, income and expenses, through into Pandle. All that’s left is to categorise and approve them – making bookkeeping a breeze. Keep it in mind when researching the best business bank account to meet your needs.
Create a free account to get your business started with the time-saving benefits of Pandle, or learn more about introducing Pandle to your accounting clients as a Pandle Partner, or our white label solution.