do you have a seperate bank account for business?

what do look for in a business bank account?

[LBmtb]

How many of you have a separate bank account for your web design business?

I'm thinking of doing that before I "officially" start the business, although I don't necessarily have to because it'll be a sole proprietorship for at least the first year.

What should I look for in a business account? Features? Service? Fees?

Any recommendations on which bank to go with? (if this is against the rules, please sticky me)

Thanks,

[Matt Probert]

Here in the UK I certainly use a business account for the business - it's a legal reqirement in the UK, even for a sole trader.

As for what to look for, be careful! Consider your turnover carefully, how many transactions the business will be making and ask the prospective bank what the charges are - here in the UK business banking is very expensive, I get charged 66 pence just for making a single deposit!

Some banks offer consultancy services, but also charge for the priviledge, so make sure you explain what you do and do not want, then get a quote.

Matt

[PanUK]

it's a legal reqirement in the UK

It is, no one has ever told me that!

Just did a quick search, the first site I came across says.

There is no legal requirement to have a business bank account if you are a sole trader or partnership. It is only necessary for a limited company.

[gpilling]

I would have a seperate account - I actually have two. One is for holding the money, the other for paying bills. When I pay bills, I transfer the appropriate amount from the holding account to the billpaying account. This reduces the possibility of check fraud and makes reconcilling cashed checks much easier.

I set this up with a small local bank (2 branches), they were very accomodating and only charge me the fees for one account. I have had business accounts at the larger banks in the past, but they just treat you like a number. I would heavily recommend a smaller bank.

[iamlost]

Business requirements, including banking, differ greatly by jurisdiction.

I strongly advocate treating your business as a business and create a proper business plan which among many other things will determine your various requirements, including banking. Banks are like any other service - go shopping for the one that best meets your needs. Once you know them.

That said it is a very good idea to have a separate bank account:
* Which looks more businesslike: JB Web Services business cheque or invoice or Joe Blow personal cheque or invoice?
* For accounting and tax reasons separating business makes life much easier.
* As gpilling mentioned multiple accounts can be useful. I have four: one for receiving payments, one for making payments, a main holding account, and a term deposit account for tax payments.

Deciding on and discussing current and future requirements with a lawyer and an accountant is an important part of building a business plan. The time and costs up front are much less than the future costs of blissful ignorance.

[shigamoto]

When I tried to select a bank I focused on getting a personal contact with the persons working there. It's very important if you need support or if something happens that you didn't expect.

Four years later I still use the same bank and now I even have a person that I know pretty well. Although that person is very interested in selling services to me I know that I can trust that person when it comes down to it.

[vincevincevince]

If I had only a personal bank account, then it would be impossible to keep a working business balance for expenses and overheads. How could I distinguish between money in my account which I have paid income tax on and is now mine to spend personally, and money which is from the profits of my business, and which I haven't yet paid tax on, and can only be used either for business expenses / overheads or to pay myself (into the same account!) and pay the tax in doing so.

When it came to the end of the year, instead of having a healthy balance in a business account as an asset and security for paying business bills and wages, I'd just have a big tax liability. Ouch.

Here in the UK there are a wide range of fee-structures. The first bank I tried charged for every transaction. The one I'm with now hasn't charged me a penny yet, as it has a healthy allowance of free transactions per month in each category.

[phantombookman]

There is no obligation, in the UK, to have a business account. Even the Inland Revenue only go as far as suggesting a normal, but separate account, if you are a smaller business. That said it looks better to them if done properly.

There are high street banks now offering business accounts with no fees, so, depending on your requirements, this could be the answer.

One other point, only theoretical, your bank would not allow the use of a personal account for business, though in reality what they would do about it is another matter

[aspdaddy]

In the UK you get offered free business banking for one year and then charge you for everything, including charging you for telling you about the charges. And they regularly call you up from overseas seeling you business banking insurance and the like.

IMO The personal accounts are much better and as long as you have regular deposits (at least a grand a month) they wont close them down.

Lyolds is my favourite as they send weekly statements to your phone and you can rename the accounts to your business/project names online.

[vincevincevince]

In the UK you get offered free business banking for one year and then charge you for everything

There is at least one UK bank which provides business accounts which offer 'free banking for life'. Have been with them for some time and have no complaints at all.

[le_gber]

vincevincevince,

I'm with you on this one. I just switched to this bank because my other high street bank started chargine me huge amounts after the typical 18 months free banking.

there is a limit of how many cashier transaction you can do for free, obviously, but for a web business if you group your deposits and go there once a week, you should be ok.