These accounts are similar to ordinary current accounts, but give you the opportunity to keep your business transactions separate from your personal finances.
At their simplest, business accounts simply offer a chequebook and a paying-in book. However, business accounts can come with a wide variety of different features including free business banking, interest on in-credit balances, overdrafts, and fee-free transactions.
What are the benefits of having a business current account?
By keeping your business banking separate from your personal banking, this can make it far easier for you to manage cashflow, and also to work out your tax liability at the end of the year.
Pick the right business account, and you can benefit from decent rates of interest
Pick the right business account, and you can benefit from decent rates of interest on balances in the black. Some also offer free or low-cost electronic transactions. Many accounts offer introductory deals which mean you get free banking for the first 12 or 18 months – but check the rates charged once that initial period finishes to avoid nasty surprises.
Another useful benefit offered by some banks is branch-based advisers, as well as advice over the phone or online. This could prove useful if you want face-to-face contact.
Who can apply for a business current account?
If you have set up as a limited company or partnership, you are required to have a business bank account.
As a sole trader, you have the option of using your own personal account or opening a separate business bank account. Many choose the latter, as it can make your financial affairs simpler to run.
Other organisations which may decide to open a business current account include charities, clubs and pension funds.
Note, however, that if you have a poor credit record, you may find it hard to open a business account in the current uncertain climate.
Applying for an account
If you’re thinking about applying for a business current account, it’s important to carry out a little research as there are many different types of account to choose from, each with different features. Crucially, don’t automatically open a business account with your existing bank, as there may more competitive offerings available elsewhere.
The easiest way to compare all of the offerings in one place is by using a price comparison site such as MoneySupermarket.
By taking a look at our free and independent comparison table, we can help you to find the best business current accounts in a matter of minutes.