Four of the best business bank accounts for startups » SMEInsider

Four of the best business bank accounts for startups

When you first set up your business, you’re greeted with a plethora of banking options, many of which have generous-sounding introductory deals, fee-waives and perks. But changing your account details can be a real pain for your clients, so it helps to choose a great one from the outset.

Here are four of the best accounts in the UK for a brand new business.

Santander’s Start Up Business Account

Best for: high turnover, fast growing businesses

This (sadly) doesn’t apply to all new businesses, but if you’re realistically expecting to have a lot of cash sitting in your account each month, the Santander option, which pays 0.25% in interest on in-credit balances, is a good one to consider. For the first year, you can also make unlimited transactions for free – or for 18 months if you are a Santander customer.

This account is only open to businesses that are less than a years old, with a turnover of less than £250,000 per year. Once the free period runs out, you will be charged £7.50 per month.

Be warned, though, that this is not the best account to have if you’re likely to fall out of credit. Overdrafts cost £100 per year, and Santander does not allow for “unarranged overdrafts” (i.e. going over your limit), so if you don’t have enough money in your account to pay for outgoing items, they will generally be returned, along with a £15, or at the least will incur 25.5% interest. Racking up any overdraft charges will cancel out the interest you’ve earned, so this really is an account that only works if you’re in credit.
NatWest Start-up Account

Best for: the perks

This is a great option if you’d like a little support as you find your feet. Provided you’ve started trading within the past 12 months and are turning over less than £1m, the £500 overdraft is fee-free for a year, you can make as many transactions as you like for the first two years without paying a thing, fees for the business credit card are waived for the first year, you get two months’ free business insurance and the account even comes with a free employment law and health and safety support tool worth £360. Plus, you gain access to the Federation of Small Businesses, the industry network Bizcrowd, and 12 months’ Gold membership to Regus Businessworld, with free access to 1,200 business lounges worldwide.

With all this generosity, it’s easy to get complacent. Don’t. Run low on funds and unpaid item fees will be charged at £35 per item up to £140 per day – or, if they are allowed to go through, you pay £30 plus 29.9% interest. After the first year, your £500 overdraft will cost you £50 per year and, after two years, your account switches to a standard tariff, with costs upwards of 40p per direct debit. At this point, you might decide it’s time to shop around for a new account.


The Co-op FSB Business Banking Deal

Best for: long term money savings

This account is only available to members of the Federation of Small Businesses (FSB). However, if you are not yet part of the organisation, it is well worth considering the yearly membership fee (£150 for the first year and £120 thereafter), which gives access to pension and health schemes, as well as widespread support and insurance in areas ranging from tax investigation protection through to employment law.

The thing that sets this account apart from its competitors is that the free, unlimited day-to-day banking doesn’t end after a time period. The only exception is a fee of 40p per £100 if depositing cash of over £4000 per month, but this is easily circumvented if you put the money into a different account first and then transfer it over.

Free overdrafts can also be arranged, tailored to the needs of the business, and you get a business charge card for keeping track of expenses, which doesn’t come with any fees. There’s a £25 loyalty bonus every year and you even get interest on your in-credit balance, although admittedly it only ranges from 0.1% on £999 to 0.22% on £250,000. Customers can also get access to preferential borrowing rates, should they need them.

Once again, though, going over your agreed limit is a major no-no. An unplanned overdraft will cost you £20 per month and returned items cost £30, or £20 plus 25.59% interest if they do go through and push you over your limit.


The Cashplus Business Account

Best for: bad credit ratings

A poor credit history can be a headache when you start hunting for a business account and if you’d rather leave out the lengthy questioning and just get on with it, this totally no-frills, no-cheque-clearing, no-overdraft and no-branches option may be right for you.

It costs just £49 per year for the Cashplus Business Account, plus £2 each time you withdraw money from an ATM. Beyond this, if you’re careful and have no problems or queries, it’s free. You can transfer money, pay by card or put cash into the account at the post office and partner stores. The account is run entirely through your online account, although registering your card and setting up each new payee can take several days to a week, so make sure you’re not in a hurry.

Cost-wise, the only downside is that any issues that arise need to be dealt with on the ‘phone and call charges are high, especially from mobiles. Beyond that, this is business banking at its simplest and least glamorous, but it does the job.