Ben Todd | Jun 2, 2017 | 1
How to Open a Business Bank Account
One of the easiest ways to open a business account is to make an appointment at your local branch and speak to an advisor. Explain that you wish to open a business account and explain your business or your business idea. Your adviser will be able to let you know which the best accounts may be for you, plus he or she may allow you a business overdraft or a commercial credit card to help you get started.
The Process Will Vary
How easy or difficult opening a business bank account is will depend on the company, bank or institution you choose to host your business account. They will have their own procedures, rates, processes and qualifiers. Some are happy to accept startup companies, whereas others will want proof that your business can survive and has prospered over a number of weeks or years.
A Brief Overview
You need to do your research into the account you are about to take up. The company, bank or institution that offers your account will have very different rules that apply to your bank. Here are a few things you should research when you are comparing different business accounts.
+ What are the maintenance fees>
+ What are their deposit fees?
+ Are there withdrawal and deposit limits?
+ Will they allow a certain number of transactions for free?
+ Is there a minimum balance?
+ Are wire transfers and online transfers free?
+ Do they expect a certain amount of cash flow?
+ What do they define as a transaction?
+ Is the size of your company applicable to the account they are offering?
+ Will the account help or hinder your credit rating?
+ How easy is it to link accounts to your business account?
+ Is the account for smaller, medium or larger businesses?
+ Can you set up permissions to allow others to use the account?
+ Are you able to control how much your staff may do with your account?
+ Does the account feature plausible and affordable upgrades?
+ Will you be able to earn or apply for credit?
+ Are their credit fees as attractive as their banking fees?
These are just a few things you need to consider, and as you research into different accounts, you will generate your own questions that you should ask each and every company, bank or institution you apply to.
What Details Will You Need?
As stated earlier, each company, bank or institution has its own policies and procedures, but as a rough guide, here are a few of the details you will probably need when you apply to open your business account.
- Your business contact details
- Your business name and its address
- The nature of your business
- The legal status and tax status of your business
- The start date of your business (if applicable)
- How much you intend and/or expect to turnover
- Your funding requirements
- Incorporation details (if a Limited Company)
- Your personal name and home address
- The date you moved into your home address
- Any previous address details for up to five years
- Any existing bank account details
- Your country and city of birth
- Your date of birth
- Your current of nationality and residence
When you apply online or in person, they are going to want proof of your identification and proof of your home address. If you claim to have offices or business locations, then they may want proof of those too. Proving your ID is easy because you can do it with photo ID such as your driver’s license or passport. Proof of your address may come in the form of recent utility bills and bank statements. Many banks do not accept things such as mobile phone bills or statements.
You can give them e-statements for your bank or utilities bills if you wish, and there are a few other options if you cannot produce either of those, such as insurance statements, tax statements and so forth. Some companies, banks or institutions will also ask for headed paper showing the details of your new business, but this is a dying trend.
What Happens After You Apply?
There is always a chance your account may be turned down or declined. It is up to you to find out the reason why your account was denied and you may be able to appeal the decision. There is also a chance you will be asked for further information, which is especially true if you made claims that your business was a very successful one and they are having trouble finding evidence of such. You may have been turned down for credit and/or an overdraft, but they may make a counter offer with just the business account.
After applying, the bank will inform you when your account is ready to use. They will also send out your new checkbook (if applicable) and your new ATM card. If you have a business account with another company, bank or institution and you have transferred your account, then find out if they liaise with your old bank.
Find out if they liaise with your old bank to help switch over your standing orders, direct debits and linked account permissions (if applicable and if you agree). Find out if your new bank will transfer your old balance across and apply its credit or debit to your new account. If they do not liaise in this way, then it is up to you to do all the hard work for yourself.
Your Maintenance Fee
It is difficult to find a business bank account that doesn’t charge a fee of some sort. All of them seem to find a way of routinely drawing money from you. It is in your interest to have the account with the lowest fees, though it is not a big issue at the moment because most maintenance fees are very competitive.
Choosing The Right Account For Your Business Online
There are many tools out there that will help you decide which account is the best for your business. They judge you on things such as your expected turnover, if you starting or switching, and if you import or export. There are also numerous banks that have tools similar to those on their websites.
Do not believe all the tools you see on the Internet, especially those that offer a comparison because such comparison sites will often promote the accounts that pay them the highest affiliate fees. It genuinely pays to shop around because many websites will restrict your view of the market to make one business account appear more favorable than it is.
Choose Your Perks Wisely
There are lots of companies, banks and/or institutions that offer very attractive perks that are not really all that applicable to your business. For example, there are some that offer email alerts, but if you have a keen hold on your accounts and your budget, then why do you need email alerts? Is mobile banking all that important if you only check and manage your accounts on Sundays when you do your accounts on your PC?
Is the support of their business team really worth all the money they are charging? Is it worth choosing their service over another just because they offer a short period of rate-free banking? What do other people say about their service? If you are reading the opinions of other people on a website, how can you be sure the reviews were not planted or paid for by the banks themselves?
If there are perks that come with your new account, double check that they are free or are part of the service. There are many accounts that seemingly have free tools and perks that are then charged for at a later date.
Should You Do It Online Or In A Branch?
The best option is always to apply in a branch, especially if you get a sympathetic staff member that helps you get an overdraft or offers credit options. However, there are many companies, banks and institutions that only have online services, and sometimes they have very good rates and offers.
Before You Open Your Account
No matter which method you choose, you should be aware that they will ask permission to run a series of tests. They may check your tax details, and will definitely look into the history of your business if it exists. They will check with your other bank if you are switching accounts, and they will ask to carry out a credit check. They may also ask for things such as permission to check your criminal record.
Unless you run a medium to large sized company, and/or you are transferring a lot of money, credit or debt onto your new account, you are probably not going to need a lawyer or financial advisor when you make your switch. However, you will need to go over the details very thoroughly and even take the time to read the small print. It is understandable if you take your time reading it. It is imperative you do this because there are numerous things that a company, bank or institution does not have to tell you, such as if their free tools remain free, so you have to take your time.
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This doesn’t mean you should read every word of your agreement when you are in a branch signing the forms. There are periods of time in which you may opt out of the contract and withdraw from opening your account. Between the time you apply and the expiration time for withdrawing, you should read the small print and all terms and conditions. If you are unsure about something, then make inquiries and ask that they email you the answer so you have proof of what they said in reply. If there is something questionable about your account and you are not getting satisfactory answers, then cancel and withdraw from opening the account, go back, get your answers, and apply again.