The factors that should be taken into account to open a bank account for a startup business can differ quite significantly from what needs to be done for established companies.

Feel free to call on our experienced support team for guidance.

 

There are some essential features, and having a clear picture from the very beginning can make a great difference.

  1. How streamlined is the process of opening an account?
  2. Fees and interest charges are the most important long-term measure of a bank’s suitability. Some banks offer free introductory plans for an initial period, like 12-18 months, but then escalate
  3. the levels of fees dramatically. Make sure that the whole picture is spelled out before committing.
    Are the bank interfaces hard to use?
  4. Is the bank providing rapid ways to send/receive funds?
  5. As far as possible, your day-to-day dealing with all aspects of banking should be online – paperwork is painful, slow, and expensive.

 

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In most cases, the best business account for startups will be a regular account that can offer the most basic facilities, such as minimal fees and operating costs, direct interface with an  employee payment system using prepaid debit cards and allowing for prepaid cards for travel, accommodation and expense accounts. In the end, the closer you can get to a paper-free, low-charge banking operation, the better.

High-street banks provide the widest range of products to meet the needs of companies of all sizes and across all industries, but sometimes this comes at higher cost and with less flexible interfaces. Many of the banking products on offer may appear in the beginning to be redundant, but as business grows in size and complexity, they could be essential.

EMI business accounts are all digital, and the registration process can be quick and simple. Typically, they feature innovative solutions which can make it easy to manage business finances, including connection to your own accounting software. It’s the way towards  borderless banking, ideal for companies that need to conduct international transactions.

 

How to choose a Business Bank Account

Most important when deciding how to choose a business bank account is to discuss fully and openly with the bank how they can help you. Choose a few banks after doing some investigations, give each one a comprehensive description of what your business will be doing, what the revenue pattern will, and all of the services you plan on using. Get back from each bank an answer of what they will be offering in terms of services, and how much they will be charging. Just make sure of two things – don’t automatically go for the lowest cost bank – it may have some unknown reason for needing your business – and don’t hide from the banks that they are not your only option. Keep them competitive so that you get the best deal for yourself, not for them.

All businesses need a bank account but choosing the right bank can be difficult.

The best banks for new businesses should offer low fees; convenience; remote banking options; apps; comprehensive customer service; payment options and currency exchange.

Start-ups have special needs and require more attention that established businesses or personal accounts. It is difficult to give the finite definition of the ideal bank for a start-up as every new business has its own specific banking needs. However, there are some common features that every start-up should look for when choosing a bank.

Start up business banking comparison

Comparing the advantages offered by different banks when choosing for a start-up business will depend heavily on several factors, some of the most important of which are:

  • Expected cash-flow in the opening period
  • Need for access to additional capital
  • Nature of the revenue stream – is it a B2B or B2C business
  • The company’s dependence on foreign currency transactions
  • Expected burn rate vs start-up capital level

 

Generally, larger commercial banks are not a good fit for start-up businesses, because they are mostly offering one-size-fits-all services, have more rigid rules and charges, and offer less personal support. There are many banks and financial institutions that specialize in funding and servicing start-up enterprises, and there is increasingly an even more granular level where banks have specialized in sectors of the market, such as healthcare, hi-tech, biotech and so on.

You should take the trouble of fully researching the available banks to find the best fit for your own needs, and share with them the full range of services you require, and your expectation of the associated costs so that there are no surprises down the road.

Open startup business bank account

To open startup business bank account you will require special documentation covering the legal position of the company such as Certificate of Incorporation, details of all directors and major shareholders, details of all executives with bank signing authority, and much more. Once you have finalized on your choice of bank, get a complete list from them of all documentation they are expecting so that the account can be opened smoothly and quickly.

Best startup business bank account

With the help of the bank, set up the best startup business account structure, with special emphasis on minimizing fees and operating costs. For example, establishing an employee payment system using prepaid debit cards can save you considerable back-office time and expense and minimize possible costs of insurance and security by reducing dependence on paper money. Same goes for prepaid cards for travel, accommodation and expense accounts. In the end, the closer you can get to a paper-free banking operation, the better.

New business bank account for startups

Opening new business bank account for startups can require a few different steps compared to opening an account for a business that’s been operating for some time. Since your business has no banking history, no credit rating and no previous trading record, the banks may be looking for more detailed information about the main people involved both in ownership of the business and in operations. You should have all the necessary information ready so that the process of opening the account goes smoothly.

Why is it So Important for Start-Ups to Choose the Right Bank?

Working with the right bank from the very beginning is invaluable – it will save you a lot of time, money and sleepless nights. Regulations across the globe limit the services and products a bank can offer so it is essential to find the right bank for your company to avoid having to change banks later. Banks can be limited in the kind of businesses they take on as customers; the size of the business; the jurisdictions they can accept payments from; the currencies they can deal with; the number of co-signees to an account and many other factors which make choosing the right bank for your specific business a complex and vital step in the establishment of any start-up.

Should Start-Ups Use a Large or Small Bank?

There are advantages and disadvantages to using a large bank for your start-up’s corporate account. Big banks can afford technically advanced banking features (P2P, mobile banking apps etc.). With larger banks you have access to more ATMs and brick-and-mortar bank branches. Laws and reforms made following the financial crash of 2008 insure that larger banks are less vulnerable to the risk of economic crisis – yet there are no guarantees. Another advantage of using a large bank for your start-up is the comprehensive customer support. However larger banks rarely provide the personal attention and care that start-ups need. Bigger banks tend to have a one-size-fits-all attitude to most issues including having inflexible fee schedules whereas smaller banks can give you that personal touch and even take your specific situation into account when determining your banking fees. Larger banks may have the money to implement new technology but often don’t have the innovation or will to change from “old school” methods.

Factors to Take into Account when Choosing a Bank for your Start-Up:

  • Your Company’s Banking Needs – This may seem obvious but you really should take a good look at the specific banking needs of your start-up, today and in the future. Your chosen bank needs to be aware of your bank’s activities and understand your field, the kind of financial transactions you expect, your clientele and where your suppliers are from. Without really understanding your start-up the bank will not be able to meet your financial needs.
  • The Payment Options your Start-up Will Need – Different businesses need different payment and transfer options. If you are an international company or an online start-up you will need to be able to transfer funds in different currencies to and from your corporate account. It is vital that you choose a bank that can handle transactions in foreign currencies as some banks are restricted to specific currencies. For example, some online European banks can block USD payments.
  • The Financial Regulations your Company Will Need to Abide by – Depending on your start-up’s legal structure and where it was incorporated you will have to abide by certain regulations. For example, the anti-money laundering regulations set in that jurisdiction. In some jurisdictions laws prohibit offshore companies from holding European business bank accounts; yet there are some banks in Europe willing to open accounts for offshore start-ups. Make sure your chosen bank welcome’s start-ups registered in the jurisdiction where you have incorporated your company.

Must-Have Financial Products and Services Every Start-up Should Look for in a Bank:

  • Full-service payroll solutions
  • Mass payments
  • Fast and low-cost SEPA payments
  • Dedicated IBAN for your company’s USD and EU payments
  • Rechargeable prepaid and debit cards
  • Cards with multi-currency options
  • Innovative payment technology to keep up with your customers’ changing needs.
  • Online banking for managing your start-up’s finances, preferably with a mobile app (both Apple and Android) and online access to your account from your desktop, tablet, laptop or phone.

What is the best bank for startup business?

The answer to what is the best bank for startup business depends a lot on what kind of business transactions your business will be doing. One example would be if your revenue stream comes early in the startup cycle, such as an internet-based service provider that will need to collect small amounts from many individual one-off transactions. In this case, you need a bank that has strong support for multi-currencies, online transactions, easy reporting etc. By comparison, if your business has a long product development cycle where there will be little income in the beginning, you may need a bank that provides good lending and credit support. So, choose the bank according to your own needs.

About the Author: Gilad Oren

Founder & CEO of GBO International Financial Services, with 25+ years in finance and online marketing. Former private banker turned entrepreneur, specializing in global corporate services for gaming and crypto sectors. Expert in integrating traditional finance with innovative fintech solutions. Let's connect in LinkedIn: https://www.linkedin.com/in/gilad-oren-326231220/

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