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Eight steps checklist to open a business bank account in 2021

Are you planning to start your own business in the UK? The first and foremost integral step of incorporating a business in the UK is opening a business bank account. You should have a dedicated business account for your company to track the finances effectively. How open business bank account? Here is a detailed guide […]

Are you planning to start your own business in the UK? The first and foremost integral step of incorporating a business in the UK is opening a business bank account. You should have a dedicated business account for your company to track the finances effectively.

How open business bank account? Here is a detailed guide on how you can open a business bank account.

1. Choose an account that is best for your business

Different types of bank accounts have varying fee structures and provide multiple services. Find out what fits your business requirements.

Which business bank account is best?

Here is a list of the different types of bank accounts:

  • Business Bank Account with no monthly fees: This is a business bank account with no fees. If you can maintain the minimum account balance you need not pay any monthly maintenance fee. But you need to pay the other fee, such as charges on overdrafts, transactions, or wire transfers.
  • Traditional Small Business Checking Account:  With the help of this bank account, you can issue cheques, transfer funds electronically and even deposit and withdraw funds. But the bank charges fees such as transaction fees, ATM fees, maintenance fees, deposit fees, etc.
  • Online Business Checking Account: You need not pay any monthly account fees in case of this business bank account if you maintain a minimum balance every month. This bank account is very convenient for any business owner who cannot travel physically every time they make a cash transaction. These accounts don’t allow cash deposits.
  • Business Savings Accounts or business bank account capital one: These accounts are helpful when you want to earn interest by storing money in them. Often, if the monthly minimum balance is met then the bank will waive a monthly fee. This account is better suited for small business owners that are looking for saving funds for emergency.

2. Find the Right Bank

There are so many options out there while choosing a particular bank.

Here is a checklist of the criteria you can consider before opting for a particular bank:

  • Existing relationship of the bank with your business: If you find a bank that already has some connection with your business, it is the best choice. You can opt for customized services, get access to resources of small businesses and even get feedback on business products.
  • Cost of business bank account:  You should check the monthly maintenance fee of the bank, if any, with the deposit fee, ATM use fee, transaction fee.
  • Convenient location: The closer the bank to your business location, the better it is.
  • Easy bookkeeping integration: Make sure you choose a bank where it is easy to integrate the bookkeeping software with your bank account.
  • Great mobile experience: This is a digital world, and your bank must have an app that offers a seamless banking experience, including online bill payment, mobile deposits, electronic fund transfer, etc.
  • Future services:  Your bank should be able to fulfill your business’ future needs, such as offering credit cards, lines of credit, small business loans, etc.

3. Check the business checking and savings account fees

Banks usually charge fees for offering their services. You have to check the following amounts:

  • Termination fees: The fees charge to terminate the business account.
  • Transaction fee: The amount charged when you exceed the transaction limit in a month.
  • Cash deposit fee: The amount charged when the cash deposit crosses the monthly allowance.
  • ATM fee: Fee charged on every ATM transaction.
  • Monthly fee: This is the fee that you need to pay monthly to maintain your bank account. Mostly it is waived if you maintain the minimum balance requirement.
  • Wire transfer fee: Fee charged on international incoming and outgoing wire transfers

4. Verifying your ID and address

To verify your ID, you need to provide the following documents:

  • Your passport
  • Your national ID card
  • Your driving license

To verify your address, you need to provide the following documents:

  • Your bank or credit statement that has been issued in-branch (has to be a minimum of three months old)
  • Not more than 12 months old Council Tax bill
  • A payslip or a letter from your employer (in the UK)
  • Your driving license and UK mortgage statement (not less than 12 months old)

If you are not a citizen of the UK, you might need to provide additional documents. A limited company also needs to provide:

  • Certificate of incorporation
  • Companies house registration documents
  • Registration forms for directors, members, or CS.

A partnership firm needs to provide additional documents such as :

  • Co-partners’ contract
  • Formation certificate
  • Proof of partnership trading address
  • Partnership agreement

5. Verifying information about your business:

You have to get the following information verified by the bank:

  • The legal name of the business
  • Any other name or trademark registered for your business
  • Your company’s registration number
  • Date of incorporation of your business
  • Country of incorporation of your business
  • Your business address
  • Your business correspondence address
  • The registered address of your business
  • Contact details and previous banking details
  • The date of starting of business

6. Verifying the financial details of your business

You have to get the following financial information verified:

  • The main area of operation of your business
  • Number of employees

For businesses outside the UK:

  • Business investment
  • The estimated turnover of your business
  • The money you are expecting to deposit into your account
  • Tax status
  • The estimated percentages of the sources of your income

7. Verifying your personal information:

The bank will verify your ID with personal information like:

  • Legal name and preferred title
  • Place of birth and birthdate
  • Citizenship and nationality
  • Your current home address and country of residence
  • The date on which you moved to your current address

Other authorized information of the account such as:

  • Home address and name
  • Birthdate and nationality

8. Deposit Your Funds

The last step is to deposit the fund in your bank account either by issuing a check or making an electronic fund transfer. You can also go for a mobile deposit if the bank offers an online app service.

Opening a business bank account is not as inconvenient a process as it seems to most people. It is a simpler task than most business formalities. If you follow this checklist thoroughly, the entire process will be smooth and hassle-free for you.

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