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A business bank account can help you stay on top of your company finances. Some also support you with invoice management and accountancy software, making budgeting and filing your company accounts a lot easier.Ìý

But with a wide range of business accounts to choose from, how do you go about picking the right account? This guide explains what you need to know.

Key takeaways

• Be sure to compare account fees, perks, overdraft facilities, account management and financial protection

• You can have more than one business bank account for different purposes

• Switching business bank accounts is straightforward through the Current Account Switch Service

What to consider when choosing a business bank account

When comparing business bank accounts, there are several factors you need to think about. You need to consider several factors when deciding on a business bank account, including which features will benefit your operation the most and what type of business you’re running.Ìý

1. Account fees

First, it’s crucial to look at account fees and charges. Some business bank accounts charge monthly or annual fees, while others charge transaction fees. Sometimes these transaction fees kick in once you’ve reached a monthly limit, while other accounts charge these fees no matter what.

If you’re just starting, it may make sense to opt for a bank account with no monthly fee. On the other hand, if you’re a larger business that carries out a high volume of transactions each month, you may find it cheaper to opt for an account that charges a monthly fee but includes unlimited free bank transfers and payments.Ìý 

2. Benefits and features

Think about the account benefits and features that would be most useful to your business. For instance, some business bank accounts integrate with accountancy software, making it easier to keep track of your business finances and file your tax returns.Ìý

Others include invoicing tools that automatically send, chase and track invoices on your behalf. There are also accounts offering exclusive access to business savings accounts, credit cards or business loans.Ìý

Be sure to do a full comparison of the available features. If your business regularly deals with cash and cheque payments, for example, you need to find an account that lets you deposit cash and cheques.

3. Account management and customer support

You also need to consider whether you need to visit your local bank branch from time to time or if you can manage your account entirely online or via an app.Ìý

By the same token, you should check how easy it is to contact customer support. Can you speak to someone over the phone or in a branch, or is all communication handled online? And when can you speak to someone – 24/7, or only during set hours on weekdays? 

Some businesses may not need much support, but if you prefer regular face-to-face meetings, ensure this option is available. Think about what level of support suits your needs — whether it’s occasional guidance or ongoing assistance — and choose a provider that aligns with how you like to manage your business.

Read more: 

• Setting up a business bank account

• How to separate personal and business finances

4. International transactions

If your business regularly sends or receives money from overseas, you need a business bank account that lets you carry out low-cost international transactions. Some accounts also let you hold multiple currencies in the one account, and some come with a debit card that won’t charge you when spending overseas.

5. Overdraft facilities 

Some business bank accounts offer overdrafts, while others don’t. If you think you might need an overdraft, check the eligibility criteria for different accounts and how much interest the providers charge. Remember that you may need a good credit record to get an overdraft and secure the best rates.Ìý

6. Interest rates

If you don’t need an overdraft, it might be more beneficial to your business to earn interest on your account balance. Check which business bank accounts pay interest and whether there are any restrictions on when you earn that interest.

7. Financial protection

All high street banks and many online providers offer financial protection under the Financial Services Compensation Scheme (FSCS). This covers deposits of up to £85,000 per banking institution if the bank goes bust.Ìý

However, some online providers are e-money institutions and don’t offer FSCS protection. Instead, your funds are usually held in a segregated account protected by safeguarding requirements under the Electronic Money Regulations 2011. Consider whether you’re happy with this or if you’d prefer an FSCS-protected bank.Ìý

How to choose the right business bank account

When comparing business bank accounts, consider which of the factors mentioned above are most important to your business.

For example, if it’s essential to have access to bank branches, you can discount any online-only banks. Or, if you regularly transact with customers abroad, look for an account that lets you do this cheaply.

You should also check the eligibility criteria carefully. Some business bank accounts ask that you have been trading for a certain amount of time or that you meet a minimum turnover requirement. Make sure you meet these requirements before applying.