Alternatives To A Business Bank Account

Although some business owners may be tempted to just make their business transactions through their existing personal current account, banks won’t let you do this if you have a limited company. If you’re a sole trader, you’re allowed to use your usual current account for business, but business and personal expenses would need to be split out – in fact, mixing personal transactions with business deposits and expenses could make for an accounting nightmare further down the line. If you have your own business, it’s very sensible to set up an account for it, but it’s also wise to check out the business bank account.

What Do I Need To Look Out For?

When opening a business account, it’s well worth thinking through the features that a business needs and how much they’ll cost. For example, a business anticipating receiving lots of cash payments should look for an account with free cash deposits. On the other hand, it’s important to check that an account doesn’t include expensive charges for features that may not be needed, such as regular access to advice from a bank manager.

Although banks typically offer a free introductory banking period, once the honeymoon’s over there’s usually a significant monthly fee plus charges for all sorts of services, from depositing cash to Direct Debits. In fact, in July last year it was estimated that small businesses in the UK pay banks over £2.3 billion per year in charges and fees.

Yet despite the amount of money that banks can make from businesses, opening a high street business account can take time and tenacity, often involving face to face meetings and lengthy account opening forms to wade through.

What Are The Alternatives?

However, there are brilliant and cost-effective alternative to the traditional high street business bank account that doesn’t require your life history and deep pockets to set up. One such solution is based on prepaid card accounts, but tailored to match the needs of small businesses.

To start with, the application process offers a 100% instant online decision,  and unlike with banks, doesn’t involve credit checks just to open an account. This new breed of business account also offers exceptional value for money. For example, there’s often no bank style monthly fee, with just a relatively low annual fee instead.

What’s more, with one or two prepaid business accounts it’s free to send and receive bank transfers and free to set up Direct Debits and Standing Orders. And keeping on top of transactions 24/7 is also free with online statements.

What Are The Benefits?

Some prepaid business accounts also offers free linked currency cards, in Euro or US Dollar denominations. These are ideal for keeping business and personal transactions separate, and save the business money as there’s no commission to pay. What’s more there’s no purchase or ATM withdrawal fees when the currency card’s used in transactions that match the card’s denomination – for example, to pay in Euros using a Euro card. The currency cards are also handy for making business purchases from abroad online.

So, anyone that recognises the need for a business account, but also wants value for money, should consider the advantages that a prepaid business card account can offer.

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