Cheat sheet: Picking the right bank for your business
When starting a small business, one of the first major decisions you'll need to make is deciding who to bank with. Having a bank that can provide the right services and features is crucial to getting your business off to a flying start. In this cheat sheet, we'll go over some of the most important features and services that small businesses need from their bank so you can make the very best decision for your needs. They say you are more likely to get divorced than switch banks, so it's an important decision to get right.
When commencing your search, it's essential to start by researching different banking options to find the best fit for your business. Many small businesses may think that all banks are the same, and on the surface, that may be true. However, there are many different aspects for you to consider. Besides the products they offer, each bank has different fees, support hours, and lending services. Some banks have a more business-focused strategy and therefore invest in features and services better suited to small businesses. Then there are additional products that some banks provide, including merchant terminals, dedicated business branches, foreign exchange, and industry-specific services.
When opening a business bank account, small business owners should set up separate bank accounts for business and personal use. Having different accounts helps maintain clarity and accuracy in financial record-keeping. This separation of finances makes it easier to track business expenses, manage budgets, and keep track of your income for tax purposes. When you have everything in one account, it can be challenging for business owners to control their finances, monitor their cash flow, and make informed financial decisions.
Now that you know what's involved in finding a bank to use, let’s run through a cheat sheet of things to consider:
Having a business account is essential for any small business. Business accounts allow you to separate your personal and business finances, making it easier to manage your money and keep track of expenses. Look for an account that is easy to open online, so you don't have to visit a branch, and read the fine print to ensure there are no hidden fees or charges. When opening an account, you'll typically need two forms of ID for each business owner, partner or director.
Credit card facilities can be helpful for small businesses, particularly for purchasing inventory and managing cash flow. Look for a bank that offers a range of credit card facilities, including corporate credit cards, purchase cards, and travel cards. Be sure to check their credit rules, as some do not offer credit to businesses within their first two years of operating.
Small businesses often need access to credit to fund their operations and growth. Look for a bank that offers a range of business loans, including equipment finance, working capital loans, and business line of credit. Look at the typical terms the bank requires, and double-check their lending requirements. Some banks only lend to businesses that have been established for at least two years, so see if you can find one with the systems to lend to you earlier.
Online & Mobile banking
Being able to bank on the go can make it easier to manage your business finances, regardless of your location. Look for a bank that offers online banking services, including online bill payments, account management, and online statements. To help you make the right choice, go to the App Store and check out each banking app's reviews that pique your interest.
Merchant terminals are point-of-sale (POS) devices that allow businesses to accept card payments in person. If your business needs to accept card payments, you should review which bank has the best service, pricing and business insights. Most banks charge a monthly or one-off terminal fee and a per-transaction charge. Look for competitive prices as if you are taking a lot of card payments, it can quickly add up. In addition, the terminals can provide valuable data and insights into customer spending habits, so learn more about the data your terminal can provide.
Foreign exchange services
Foreign exchange services can be very important if your business deals with international transactions. Look for a bank that offers foreign exchange services, including international money transfers and foreign currency accounts.
As a small business owner, you'll often have many questions and need support from your bank. Look for a bank that offers customer support, including phone and live chat, and good opening hours so you can get in touch when you need to.
A small business needs to pick the right bank because it can play a significant role in the success and growth of a new venture. Choosing the right bank can significantly impact a business's finances, including the cost of banking services, the availability of credit, and the security of funds. A good bank can offer various services and tools to help manage your business. We hope you found this cheat sheet valuable and that it enables you to shop around and compare different banks to find one to meet your business needs.