All businesses need a corporate bank account in order to receive payments from customers; make payments to suppliers and track their finances. For online businesses it can be challenging to find a bank willing to take you on as a new client. Online businesses that often encounter difficulty when applying for a business account include gaming companies; online affiliate companies and ecommerce businesses in general. Although the process may be complex it is possible for online companies to find banks willing to offer them a business account. Bear in mind that requirements and policies differ from bank to bank and the process can be frustrating.
Which business account is best?
The most important features of your business model can have a strong influence on what services the bank you choose must offer. Firstly, the spread of activities makes a huge difference. If you are dealing only with people and other businesses resident inside a single country, or in the case of the EU, inside the Euro bloc, then currencies are not a concern. In simple terms, the best business account should be offering most if not all of the following features:
- Charges minimum or preferably no service fees, at least for a starting period of 12-18 months
- Allows for linkages between accounts, so that deposit accounts can automatically be used to offset short-term overdrafts without invoking penalty rates
- Does not impose limits on transaction volume
- Gives full access to all aspects of the account at branches, online through mobile and computer apps, and ATMs
What makes a good business bank account?
The things to consider when deciding what makes a good business bank account must start with the essential banking services you need to conduct every aspect of your business. This should cover the full range of transactions with customers, dealings with suppliers, payrolls, and accounting properly for all movements. Check also that the chosen bank can offer movement and accounting in all the possible currencies from international sources. If your business involves accepting credit card payments make sure you get full merchant services. As the business grows, when cash-flow management becomes an important strategy, the right bank account can help by allowing you to get paid faster, and holding onto cash longer. The right bank account can help you get more out of your business!
How many business bank accounts should I have?
The decision of how many accounts, or even whether you should have multiple accounts, requires a balance between the pros and cons. On the plus side, multiple accounts help you to keep organized, by using the different bank accounts to serve various business needs. E.G. one account can handle incoming funds from customers, another to track routine business expenses, and a third to handle business credit card payments. Separate accounts like these can give you a clear picture of where you stand in terms of day-to-day business as well as your long term goals.
Over time, you may need additional financing and having a proven track record of managing your finances responsibly can help. Most lenders require disclosure of detailed records of your finances, so a full picture of healthy account management helps to establish your creditworthiness.
If you have business credit card or debit card accounts, separating all tracking off into discrete accounts will keep them secure.
On the other hand, the disadvantages are that multiple accounts require more management effort. You or someone in management must pay close attention to them all. If supervision becomes lax, there is risk of one or more accounts slipping into overdraft, where charges can be expensive. Although not every bank will do this, some may levy individual account fees on each one, rather than a ‘universal’ fee for the whole company. This is something that should be clarified when choosing the bank.