Let’s look at why you need a business bank account, tips for choosing one and how to know if your bank account is working for you.
Why do you need a business bank account?
Whether you’re just starting out in business or have been in business for a few years, there’s no denying best-practices in business and they are there for a reason. Opening a business bank account is one of the “must-do” things when you start out your business and here’s why…
✅ To keep personal finances separate from the business finances – this is because you and your business are separate legal entities and tax payers
✅ Separate accounts help with better management of business cash flows – if only business transactions are flowing through the business account, then it would be easier to forecast and manage cash flows
✅ Having a separate business account shows your customers, suppliers and other stakeholders that you run a professional business and operation
✅ A business account enables transparency and traceability when it comes to dealing with funders and regulatory bodies
✅ Transacting from a business account helps build a credit profile and obtain a business line of credit.
Tips for choosing a business bank account
Not all banks are the same and neither are the products they offer. Here are some tips for choosing the bank at which you want to open your business account.
🏦 Service delivery – do you prefer the personal touch or is remote banking what you want. Depending on your answer, you will have to look for things like how many branches does the bank have in proximity to your business premises or personal residence. Opening hours is another factor to be considered.
🏦 Fees – banks charge a number of different fees for different services. Some offer pay-as-you-go fees and some offer fixed monthly fees. Do your homework and compare these fees carefully so that you don’t pay more than you need to.
🏦 Introductory offers – if you’re in the market for a business bank account, look out for introductory offers from the banks. Some offer fixed bank fees for a certain period, some offer a credit facility (depending on your credit profile) along with the checking account. Some offer other value added services and products which are normally not available outside that offer.
🏦 Account features – These are important to ensure ease of banking. Consider if the bank has a mobile app and how much of your banking can be done via the app? Does the account come with a basic line of credit?
🏦 Integrations – In the new age of technology, lenders are looking to connect (with your consent) to your accounting software to make their lending decisions about your business. Having this connection will allow your accountant to keep your books up to date and give you valuable advice on your business finances as well as help you plan for the future through forecasts.
How do you know if your business bank account is working for you?
Your business is unique and so the business bank account you choose must compliment your business and not the other way around. Here are the warning signs ⛔️
⛔️ You can’t do all your banking online – trips to the branch and the ATM are so old school. How easy does your current bank account make it for you to conduct business? If you dread using your bank account because you have to visit the branch every other time, then it’s time to re-assess the account you have.
⛔️ Your bank account does not connect to your accounting software – we covered this under integrations above. This is an absolutely essential feature your bank needs to have. Research which banks have them and speak to your accountant (hopefully they are an online accountant) 😉
⛔️ The bank account fees you pay are high and you are stuck paying for services you don’t use
⛔️ Your business is not considered for a loan or even a basic line of credit. Firstly, you need to enquire the reason as to why and if they cannot give you one, it would be time to move on.
⛔️ You don’t have an account manager and if there is one, you either don’t know who that person is or have never had a face-to-face meeting with them about your business.
Click here for a comparison of the top business banks for 2023
Contact us if you need help with your bookkeeping and taxes and we’ll also be able to guide you on choosing the bank account that suits your business needs.