How to Choose the Best Bank Account for your Start-up Business
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.
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.