When you start a business, one of the first things you need to do is open a business bank account. Initially you’ll need a standard business current account but as your venture grows and evolves, a business savings account with higher rates of interest will be required.
Fortunately banks can provide small business savings accounts without the need to move your current account. It’s quick, simple and can be opened online in 15 minutes. So here’s where you should start.
First starting out
If you’ve been going a while, choosing your first business bank account may seem a long way off but it’s still an important point to consider for those whose businesses still in the embryonic stages. If your business is incorporated as a limited company or LLP, you must have a separate business bank account. For sole traders and even partnerships, it’s optional. Despite being optional, it would be prudent to open a separate business account in order to keep your personal and business finances separate.
Making your money work for you
Once you’ve been up and running for a while and are starting to make significant funds, it’s important to change tact and understand how your money can really work for you. For example when you first start out, access to funds is essential to grow and develop. Once you start to accrue more and more funds however, you don’t necessarily need them for the day to day running of your business; you need them to make money for you.
This is where a business savings account becomes essential. Moving funds from your standard business account to a business savings account allows for a higher rate of interest enabling you to build on your funds. But which one is right for you?
If you are happy to tie away your funds for a defined period of time, you can really benefit from the best rates of interest as fixed rate savings accounts or business bonds offer high rates for your business. This is ideal if you’ve been accruing significant funds in your current account and can afford to lock a lump sum away, whilst still having enough to cover your day to day running costs.
Preparing for the unexpected
Owning a small business, you’ll know that you can’t always take anything for granted with business variables often being subject to change. This could result in you requiring your money at short notice. Opting for a fixed rate business savings account with access from a provider still offers a great rate of interest, but with access to around 25% off your funds. Knowing that you have access to a quarter of your savings, whilst benefiting from a great rate of return, is ideal in preparing for unexpected changes.