6 Top Tips for Choosing a Business Bank

By 123 Reg - March 21, 2023

This article is for general guidance only and doesn’t constitute financial advice. Be sure to seek financial advice from a qualified expert if you need it. Information contained in it is correct at time of publication.

Finding the right business bank account can feel like a challenge. With so many competing banks offering accounts, it can be hard to decide which is the right one for you.

Plus, if you’re choosing your first business account you may not fully understand the features on offer.

In this guide, we’ll look at what you need to consider when you’re choosing a bank account for your business.

1. Cost and fees

It’s important to understand how much you’ll be paying for your business account. Although some banks provide free introductory offers, it’s a good idea to look beyond this and calculate how much you’ll be paying in the long run.

Look at the fees charged by the banks you’re considering and use your cashflow forecast to work out how you’ll use your account and what it will cost you. Things to consider include how much cash you’ll deposit, how many bank transfers you’ll need to make and how often you’ll need to withdraw cash.

Fees can vary drastically and so can make a real difference to the overall cost of your business account. For example, some high street banks can charge as much as 1.5% on cash deposits, whereas online banks charge as little as 0.5%.

2. Protection

Make sure you understand if money deposited in your business account will be protected under the Financial Services Compensation Scheme (FSCS). If an account is protected by FSCS, then you’ll typically be able to find the logo on the provider’s website. If you’re not sure, ask.

You can learn about FSCS protection for small businesses and limited companies here.

3. Features

A business bank account is more than just a place to keep your money, so make sure you take into account any additional features which could help you manage your finances.

Features to keep an eye out for include:

A mobile app so you can manage your money 24/7
The ability to categorise your spend and transactions, and create spend reports
The ability to attach receipts and add note to transactions
Integration with the accounting platform you use
The ability to order additional expense cards for staff

Also make sure you understand how and where you’ll be able to pay in cash if required. For banks that don’t have branches, this will usually be via the Post Office.

4. Service and reputation

If you need to speak with your bank, how easily will you be able to get in touch with them? Online chat can be useful, but you may want to make sure that you can phone your bank up if you need to.

Prefer to speak face-to-face? You’ll likely have to opt for a traditional bank with a branch in your area, which could limit your options.

You should also take the time to check out reviews of any bank you’re considering using. Online review sites such as Smart Money People or Trustpilot are a good place to start. You can also ask for recommendations from other small business owners.

You’ll also find that many business-focused publications, such as Forbes, produce reviews of business banks accounts, which will usually include feature comparisons and overall ratings.

5. Overdraft facility

If you think you might need an overdraft facility, make sure you pick a bank that offers this. The same goes for a business credit card. Both these options could help in months when cashflow is tight, but remember you’ll need to be approved for credit.

6. Additional extras

Does the account offer any additional extras to sweeten the deal? This could include discounts on business software, business insurance or a cashback offer.

Additional extras like these could help you make the final choice between two otherwise similar accounts.

Summing up

There’s plenty to consider when choosing a business bank account. You’ll probably want to start by asking for recommendations from people you know and checking online reviews and guides. You can then use this information to draw up a shortlist before comparing things like pricing, features and additional extras to work out which account best meets your needs.

123 Reg customer offer: The Business Account with 1% cashback

If you want to get something back when buying stock, materials, or when just paying any other bills and expenses, we can help.

Leading Business Bank Cashplus have teamed up with 123 Reg to give 123 Reg customers 1% cashback on their card purchases.

Simply open a Business Bank Account with Cashplus and earn cashback whenever you spend on the card. Learn more about this offer.

Terms and Conditions apply, including applicants being resident in the UK & aged 18+ and, if relevant, businesses being based in the UK. For full website terms including information on Cashplus, Mastercard and use of Trademarks, please see their full legal disclosures at https://www.cashplus.com/legal/. Advanced Payment Solutions Limited (APS) provides credit facilities subject to approval and affordability, and where accounts continue to meet APS credit criteria. APS is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. Our Firm Reference Number (FRN) is 671140.