When you start out as a contractor, you will be required to open a business bank account. Your limited company will need to be separate from your personal account.
Setting up a business account is quite simple. The main thing you should take into consideration is that there are a number of choices which may affect your decision as to the bank you ultimately decide to go with.
Every bank will offer different deals. You will need to consider different factors which each bank may be offering such as, interest rates, facilities and the level of service that you want from your bank.
- Receiving payments from end clients
- Paying out your salary
- Paying dividends to shareholders and to yourself
- Paying PAYE tax and National Insurance for all employees
- Paying your annual corporation tax bills
- Claiming for your personal expenses
- Paying for business expenses
- VAT payments on a quarterly basis
- Charges and fees – many banks will offer great introductory rates which may seem too good to be true, but after these expire, fees can soon increase. It’s best to choose a bank who provide free business banking which suits new businesses until they need to upgrade or take advantage of any additional features.
- Try to reach out – who do other clients use? Asking for advice from those who have tried and tested an account can help in making a decision.
- Online banking – most banks offer customers an online service. Opting for online banking saves the hassle of writing and posting cheques, or using telephone banking. There are several advantages to online banking such as real time statements which can be beneficial for things such as quarterly VAT returns. As beneficial as online banking might be, you may need to be careful for any hidden fees when using online banking.
- Interest – it’s important to consider whether you will earn interest on in-credit balances. It’s worth knowing so that you can move your money around and make it work harder for you.
Depending on which bank you choose you may need to consider any charges made by the bank. Some banks don’t charge fees for every day banking so you may not need to worry about any charges. However, many banks do charge for things like debit card use, issuing or paying cheques, transferring money and withdrawing cash.
With money laundering regulations in this country, there are minimum requirements for proving your identity and history when you open a bank account. With this in mind, you will be subject to some checks when you apply to open your business bank account. There will be several documents that you need to prepare such as your certificate of incorporation, copies of your memorandum and articles as well as details of any shareholders you have. The bank will also require proof of identity such as your passport.
Depending on the checks carried out prior to confirm your identity and the identities of others involved with your limited company, it can take between one and four weeks to open a new business bank account.
How can Gorilla help?
If you have any questions about setting up your business bank account please get in touch and we will be happy to talk through your options.
Here at Gorilla Accounting we have partnered with Mettle. It is the free business account by NatWest that helps small businesses start, run and grow. It’s built for small businesses, startups, limited companies and sole traders. Customers can apply for an account in minutes and connect to accounting software to help keep track of their books. The account comes with a UK account number and sort code and an in-app chat feature so that customers can speak to real people when they need help. Mettle has partnered with FreeAgent which means customers can seamlessly sync all their business transactions. FreeAgent is an industry-leading accounting software which is available for FREE for all Gorilla customers.
Click on the button below for more information and to apply.
Please note, Mettle is an e-money account provided by Prepay Solutions (PPS), a trading name of Prepay Technologies Ltd which is an electronic money institution authorised by the Financial Conduct Authority (FCA) under the Electronic Money Regulations 2011 (FRN 900010) for the issuing of electronic money. Prepay Technologies Ltd is not a Bank but any deposits with the Mettle account are protected in line with FCA regulations including the requirement to “ring fence” such deposits. Please contact Mettle for more information.
The exact business account solution that you will require will vary based on your own individual circumstances. Whilst Gorilla have partnered with Mettle, such partnership should not be deemed as either confirmation or a recommendation that Mettle is the best option for you. You are recommended to carry out your own research before opening any account including the risks associated. Please note that Gorilla may receive a referral fee should you decide to open a Mettle account.