Tips to Open a Business Bank Account in the U.K. for your Limited Company
Limited companies are legal entities responsible for their own finance and thus, all business-related finance needs to be accurately recorded as well as made fully traceable at all points of time.
Though there is no legal need to open business bank accounts for the limited companies, in practice, it may prove to be very difficult to trade in the absence of one.
Separate business bank accounts for the limited companies allow to record as well as trace business income as well as expenditure. If you are using a personal account for business purpose, you will find it very difficult to separate the company finances of your own. This will confuse you as well as delay the proceedings while you prepare annual accounts, work out tax liabilities and report business activities to Companies House or HMRC.How to Open a Business Bank Account?
It is relatively easy to open business bank accounts for the companies that have U.K. resident directors as well as shareholders. Most banks offer a wide range of accounts suitable for varied needs. You will need to provide the bank with the incorporation documents, personal ID as well as address proof of the directors.
The bank will carry out routine checks on the signatories to ensure that they are the right candidates for accessing as well as managing business funds.
Remember that if the credit history is not perfect, you will not be able to open an account with a majority of banks. The first port of call will certainly be the bank with whom you are holding the current account but remember that it is really worthy to shop around for the best deal.
You need to consider a few aspects while looking for suitable banking facilities.
Account charges as well as fees
Recommendation from the accountant or other companies
Online banking option
Incentives on offer
The entrepreneurs must look beyond the well-known banks or compare their offerings with other available options. Here are a few things to remember while creating a business bank account.Do not Enter Incorrect Information
Most small businesses and entrepreneurs make the mistake of bringing in wrong paperwork to account opening appointment. Since the requirement of the banks tends to vary, while booking an appointment, make sure to ask the banking officer of the things you will need to bring at the very first meeting.Shop Around
Most sole traders use personal accounts for business and in most cases, this is the best option for them. The personal accounts are often free; it is also at times, cheaper than the business accounts and come with reasonable overdraft entitlement. For the limited companies, the business bank accounts are nothing short of a necessity and the entrepreneurs are requested to shop around for them. There are several websites that offer price comparison just as the way you have seen price comparison for the insurance policies. You can check out on these websites to find out which bank is offering better deals and open an account with that bank.Decide on the Check Signing Authorities
Most small business owners forget to plan for business check signing.
Decide whether the checks are to be signed by one or two individuals, and who the authorised signatories will be.
Make the decisions well before you are about to open a business bank account; this will help with avoiding the changes later.Two Banks are Better than One
There are several businesses determined to make the banks work for them. According to the Managing Director of a manufacturing business, businesses need to think of their banks just as they think of their suppliers. He pointed out, Banks are suppliers of services and not your partners. Once you understand that, you should treat them as you would any other provider in your supply chain. He recommends using more than one bank and creating competition between them. If you want to mitigate business risk, always have more than one supplier for a critical product and ensure the suppliers know about each other. Make them compete and they will offer you an improved service. That works with banks, too.
Following the above-discussed tips will help you open a business bank account and launch a successful campaign.