Opening your business account
One of the first actions you will need to take once your limited company formation has been completed is to establish a limited company bank account. There are numerous high street banks keen to offer you a business bank account and the choice is yours.
What is a business bank account for?
A business bank account will usually be used for a range of services, including incoming payments from clients, which could come in the form of cheques, BACS or bank transfers depending on the client.
It will also be used to pay out salaries to the directors, paying dividends to the shareholders and business related spending such as mobile phone bills, stationery and accountancy fees.
The account will also be used to make payments to HMRC, including National Insurance, personal tax, corporation tax and VAT payments for those who are registered.
What to look out for
Banks will always try and sell their own services, so it can be helpful to use independent comparison services or personal recommendations to help make an informed decision.
Before signing up for any financial product it’s vital to make sure you’ve taken all the terms and conditions into account and a business bank account is no exception. Important terms can include
Monthly charges for the running of the account,
Overdraft fees and rates
Limits on how much cash can be deposited without incurring additional costs.
Some transactions also attract charges with certain accounts, such as ATM withdrawals, transfers, paying in or issuing cheques, CHAPS payments and foreign currency transactions.
Some accounts pay interest on in-credit balances.
Some are online only accounts with no counter service.
Some or all of these charges may be waived for an introductory period for new account holders, but it is important to factor in the likelihood of actually switching banks when the promotional period is up.
Most banks also offer a number of ways for their customers to use their services: most offer online banking, some have mobile phone apps which can allow users to bank on the go and telephone banking to ensure that customers can speak to someone whenever they need to. Having easy access to banking records can be vital when it comes to completing tax returns, providing information for VAT purposes and keeping track of expenses.
If you have previously held a business bank account with a particular bank you might like to approach them again or indeed your personal bank.
Alternatively, Orange Genie Accountancy has an established relationship with Mettle by Natwest who can assist. If you’d like to open your business bank account with Mettle, please click here>>
We would advise all companies to open both a current and deposit account in the company name. The company’s deposit account represents a great opportunity to plan effectively for future tax liabilities. §
