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Business Bank Accounts: How Much Do They Cost?

Whether you're an aspiring entrepreneur or an experienced one, a business bank account can be beneficial for your business.

What is a Business Bank Account?

Business bank accounts enable you to separate your personal and business expenses; creating a convenient way to organise your tax and bookkeeping. This makes paying taxes easier and means your files are clear and easy to understand.

 

There are several advantages to having a business bank account. For a deeper dive into what a business account can offer you and your business, read on.

 

In this article, we outline the costs associated with opening and maintaining a business bank account and explain what you need to get started. 

How Much Does A Business Account Cost?

Each bank has its own set of criteria for opening a business bank account. It's important to evaluate and compare the available options to find the best business checking account that suits the needs of your business.

 

If you already have a personal account with a particular bank, there might be special offers or benefits available to you if you choose to open a business bank account with the same one.

 

Some banks require an initial deposit or a minimum balance, while others impose varying fees for different types of transactions, such as monthly service fees, excess transaction fees, or cash handling fees.

Business Bank Account Fees
  • Monthly Maintenance Fee

    Typically, when opening a business bank account, banks require an initial deposit. Some accounts have no initial deposit requirement but may charge a monthly maintenance fee. This fee covers additional benefits such as overdraft coverage, cashback rewards, and no charges for using ATMs outside the bank's network.

     

    To avoid monthly maintenance fees, many banks expect you to maintain a minimum daily balance. Most business bank accounts have monthly fees, although there are options available without these.

  • Excess Transaction Fees

    When your business processes customer payments, transaction fees may be imposed. Certain banks charge a fee for transactions exceeding a specified limit, for example, providing the first 25 transactions free and then charging 40p per transaction thereafter.

  • Cash Handling Fee

    Banks may apply cash handling fees when processing deposits of bills and coins beyond a particular threshold. There are limits on the amount of cash you can deposit, and any excess amount will be subject to a processing fee.

  • Early Termination Fees

    In some cases, banks have contracts with payment processors that include provisions for early termination fees. If either party cancels the agreement prematurely, fees may be incurred. These agreements may involve multi-year contracts that set up a merchant services account for your business.

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  • Barclays Bank PLC
  • CommercialExperts.com
  • Fiserv (Europe) Limited
  • Handepay Limited
  • ResQ Limited
  • SumUp Payments Limited
  • Take Payments Limited
  • Teya Services Limited
  • The Redwood Group and Associates Limited
  • Tide Platform Limited
  • WorldPay (UK) Limited
  • Yotta Digital Ltd
Our Products
  • Business Accountancy
  • Business Epos Systems
  • Business Telephone Systems
  • Commercial Waste Collection
  • Digital Marketing
  • Fleet Tracking
  • Invoice Finance
  • Merchant Accounts
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FAQs: Your Questions Answered

Business bank accounts usually have a monthly or yearly fee. In return, the bank you choose will often allow you access to a variety of features and advantages. 

 

These could include increased transaction limits, enhanced cash management tools, and individualised assistance from a designated account manager.

Sole traders are not legally required to have a separate business bank account in the UK. It is, however, widely considered to be the best practice to have one as it makes running your business easier. 

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The Best Card Machines For Small Businesses 2024

If your business still operates a cash-only policy when it takes payments, or you're looking to upgrade the cash machines you've already got, choosing the right card reader for your business can be a trickier job than it sounds.While card machines aren't the most glamorous thing to spend your money on, they are an essential part of your business. Recent years have seen them grow in popularity and now many people use their cards to pay for the vast majority of their goods and services. You, then, need a reliable, useable, and cost-effective card machine to ensure your business is not only able to take payments by card but also take them quickly and easily with a device you understand.  The Best Card Machines for Small BusinessesDifferent machines offer your business different benefits, and knowing which is the best choice isn't always clear. That's why we've done most of the research for you, and compiled this list of some of the best card machines on the UK market. We've compared them, so you don't have to. As you're probably aware, card machines come in a variety of shapes and sizes. Some are portable and pocket-sized, while others are large and fixed to your business's countertop. We've covered all bases in this list, so you'll find a mix of different types of card machines. 

Direct Debit Explained

A direct debit payment is a payment taken automatically from a customer's bank account periodically. It's often offered as a payment method by businesses that provide subscription services or other services that require an ongoing commitment from a customer. The main benefit of direct debit payments, for businesses and consumers, is their simplicity. Neither your business nor the customer has to worry about remembering the payment, so payments aren't missed and the relationship between you and your customers is more easily managed. How to Take Direct Debit PaymentsThe way direct debits work is fairly simple. Your customer's payment is taken from their account automatically, usually on a predetermined date, and your business then continues to provide the customer with your service. You need an agreement from your customers to take payments automatically, so make sure it's clear what they are opting in for. You don't want your customers to be confused about what it is they've committed to.  You also need to be eligible to take direct debit payments, which means you need to get a Service User Number (SUN) - a six-digit number businesses use to get paid via direct debit. You can get a SUN directly from your bank, provided you meet its criteria.  Once your bank and your customers have given you the green light to take payments automatically, you just need to set up the frequency and size of your payment. The most important thing to remember about this part is that your customers must be given 10 days' notice before each payment is taken. The notice needs to detail when the payment will be taken and how much it will be. Benefits of Taking Direct Debit PaymentsAs mentioned above, the most obvious benefit of accepting direct debit payments is the simplicity it brings to the hassle of keeping on top of recurring payments. That's not where the benefits of direct debit payments though. Other benefits include having greater predictability, greater retention, and better relationships with your customers. Having a better idea of exactly how much revenue you've got coming in from your customers and knowing exactly when you'll be receiving it can make your business's general finances more predictable and therefore more manageable. You can also use this information to inform future decisions about your business growth.  Having customers committed to your business on an ongoing basis also means they're more likely to stick around as they already know they like what you provide, making the job of your CRM that much easier.  With customers already engaged heavily with your business and your brand, they're right where you want them to be to develop your relationship with them. You can use their pre-existing interest to market more of your services, offer special discounts or offers, or reward their loyalty with a giveaway. These things will help keep their engagement with your brand nice and high.

How to Open a Merchant Account

Getting Started with a Merchant AccountOpening a merchant account allows your business to accept credit and debit card payments from customers. They are, by their nature, helpful for many businesses as they allow them to modernise the way they take payments and interact with their customers.  But how do you get a merchant account? It's a process many businesses do every year but, if you're unfamiliar with the process, it can be confusing and even daunting. That's why we've created a breakdown of the process. Before you Apply for a Merchant AccountIf you want a merchant account, there are a couple of things you need to already have in place before you can apply for one.  First, you need to ensure your business is legally registered. If you're already trading you don't need to worry about this stage but if you're starting from scratch you need to ensure you're registered. There's a lot of information on how to do this on the Government's website but, usually, you'll register as a sole trader, limited company or partnership. When you apply to set up your merchant account, you could be asked to provide a variety of documents to prove your validity, so it's best to have these things ready. Documents you could be asked to provide include: Proof of identity for your business's ownerProof of address for your business's ownerFinancial documentsYour business planStep One: Choose Your Merchant Account TypeThough merchant accounts all work in similar ways, different types of merchant accounts will suit one business more than they will suit another. Retail merchant accounts, for example, are more suited for physical shops where you and your staff will conduct sales face-to-face. These sales will happen with a physical card machine, or perhaps a full EPOS system, which is directly linked to your merchant account.  Internet merchant accounts, meanwhile, do what they say on the tin. They're designed for and suited to businesses that operate online. The payments you make here won't be done face-to-face but via a website. With this type of merchant account, there is no need for a card machine or EPOS system.  Mobile merchant accounts land somewhere in between the two types above. They're ideal for businesses that operate on the go, like pop-up stalls, fitness training providers, or food vans. This type of merchant account allows you to process transactions from anywhere via a mobile device. Only you know the best type of merchant account for your business, so you'll have to take the time to decide which type of account best suits you. Once you've done this, you can move on to the next step. Step Two: Research ProvidersThis is probably the most time-consuming part of the process, but also the most important. You need to research and compare merchant account providers. While all merchant accounts do the same thing and work in broadly the same way, it's still important to not go for the first one you see.  There are plenty of things to consider, not least the transaction fees and admin costs that a merchant account may come with, and the risk level of your industry. To make this step as easy for you as possible, we've created the following list of considerations.