Categorized | business banking

Contractors, here’s how to open your business bank account

Contractors, here’s how to open your business bank account

If you are setting up your own company, it is an absolute necessity to have a bank account for it. This ensures that company and personal money are kept entirely separately.

More importantly, banks are not willing to let you use personal accounts for business purposes; the two are bound by differing laws on disclosure, for example and no bank will willingly put themselves in breach of those regulations.

So which bank to choose? It is tempting to use the same one as you currently bank with, but they may not necessarily be the best choice. Consider the following factors:

  • Bank charges and interest rates – these are wildly different to personal accounts
  • Easy access savings accounts – you will accumulate “dead” money for VAT, CT and the like, which may as well earn money for you
  • Bank debit or credit cards – useful for purely business purchasing
  • Internet access – almost a given if you’re working away from home
  • Free offers – many banks offer free banking for new business.
  • Other services – not an immediate need, perhaps, but look at things like overdraft and loan facilities, which may become necessary.

Once you have chosen the bank, opening the business bank account itself is fairly straightforward. You will probably need to meet their small business account manager and you will need the be able to provide the following as a minimum:

  • Company Certificate of Incorporation, to prove the company exists
  • Some form of personal ID, such as a passport, to prove who you are
  • A utility bill, to prove your address
  • Possibly a signed contract or other proof that you genuinely intend to operate as a trading business.

These accounts can take a while to set up; one working week is a fairly typical minimum. If you are working through an agency, they will need the bank details as soon as possible so they can pay you, but don’t be tempted to park any monies in your personal account. Chase your account manager if the delay is causing problems. Once it is up and running, keep it clear in your mind that this is the company account and manage it accordingly.

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Image: Sausparebøsse I by Yngvar

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