Tips to Open a Business Bank Account in the U.K. for your Limited Company
When you run a limited company, the company must be responsible for its own finances. This means that all money must be accurately recorded and made fully traceable at all time.
Although 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 without 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 purposes, you will find it very difficult to separate the company finances from your own. This will confuse you as well as delay the preparations of the annual accounts. It can also delay working out tax liabilities and reporting of 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 proof of address of the director(s).
The bank will carry out routine checks on the signatories to make sure that only the correct people can access the account.
If your credit history isnt perfect you may find that youre unable to open an account with some banks. As the first port of call, try the bank that you use for your day-to-day personal banking.
If your credit score is not too bad, then shop around to see if any banks have offers for new customers or business only perks.
Consider the following aspects when youre looking for a business account:
- Account charges and account fees
- Recommendation from your accountant or other companies in your industry
- Online banking option
- Interest rates
- Incentives on offer
Company directors must look beyond the well-known banks and compare their offerings with other available options. There 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 the wrong paperwork to an 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.
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 can come with a reasonable overdraft entitlement. For the limited companies, the business bank accounts are nothing short of a necessity and company directors are advised to shop around for the best deal. 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.
A good place to start is on our sister site QuickFile where we show a comparison for bank accounts and start the application process for you. For more information check out QuickFile Business Banking. Alternatively, you can pick from the selection that Company Wizard offers during the incorporation process.
Just be aware that some banks restrict accounts for business use, so check your terms and conditions beforehand.
Decide on the Cheque Signing Authorities
Most small business owners forget to plan for business cheque signing.
Decide whether the cheques 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.
As a limited company you need to be able to account for every penny that passes through your bank account. This means it can be easier having a separate business account for all of the companys money.
Following the above-discussed tips will help you open a business bank account and launch a successful company.