Whether you’re a first-time entrepreneur launching a digital business or a seasoned e-commerce specialist expanding your online empire, opening the right bank account may be a game-changer.
There are a lot of different paths you may take financially, each one highlighting its own set of characteristics and benefits.
This article will help you choose the best bank account for online business by exploring the landscape of today’s commercial banking
Quick look
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A business bank account in a nutshell
A business account serves as a dedicated channel to maintain a clear demarcation between your own personal accounts and business finances.
This line is pivotal for facilitating seamless and accurate monitoring of various financial aspects, including cash balances, expenses, payroll, outstanding receivables, and obligations to creditors.
How do business bank accounts work?
A business bank account is established in your company’s name, exclusively earmarked for managing your business-related transactions.
By allowing you to do things like pay bills, purchase online, and save money all from the same place, this individualized account streamlines your financial management.
Accepting credit card payments and handling payroll are only two examples of its many potential applications.
Employees can also have access to the account and a debit card provided by the firm if they are designated as secondary account holders.
What makes business bank accounts special?
Business bank and business current accounts are distinct due to their tailored features and functions designed specifically to meet the financial needs of businesses. Here are some factors that make business bank accounts special:
Separation of finances
One of the primary features setting business bank accounts apart is their ability to separate business finances from personal finances. It helps business owners maintain accurate records and simplifies financial management.
Business-focused services
Business bank accounts offer services and tools customized for business needs. Invoicing, taking payments, handling payroll, and communicating with financial programs are all examples of the best business bank accounts.
Professionalism
Having a dedicated business bank account adds a level of professionalism to your operations. It provides a clear identity and helps establish credibility with customers, clients, and partners.
Transaction tracking
It is much simpler to keep tabs on cash flow, costs, and earnings with the help of the features offered by most business checking accounts. Financial reporting and analysis are made less complicated by this kind of tracking.
Business loans and credit
Many business bank accounts are linked to business credit offerings and loans. Maintaining a business bank account can improve your eligibility and streamline the approval process for loans and credit lines.
Online business bank account – is it worth it?
Many top-tier online business bank accounts offer seamless integration with accounting tools, and for businesses with international dealings, transitioning to online banking can yield substantial savings in terms of fees and exchange rates.
While the features of an online business bank account largely mirror those of a traditional counterpart, the key distinction lies in the absence of physical branch access. It means that transactions and support cannot be sought through in-person visits.
However, the user-friendly nature of online-only providers’ apps often makes up for this limitation. Moreover, these digital-only accounts frequently come without any monthly fee. It is a permanent advantage, unlike many traditional offerings.
It’s worth noting that the convenience of online banking may vary in terms of cash and cheque deposits, contingent on the digital-only provider.
Some online business accounts may also operate as e-money accounts rather than fully licensed banks, leading to deposit protection differences.
While deposits may not be safeguarded by the Financial Services Compensation Scheme (FSCS), e-money providers are mandated by the Financial Conduct Authority (FCA) to protect funds through measures like keeping them separate or utilizing insurance policies.
Best online business bank accounts
Starling Bank
Starling Bank is an acclaimed and fully licensed UK bank. The Starling Business Account stands out for its attractive features.
This account boasts zero monthly fees, processes weekend transfers, and offers a debit card and money management features.
The bank offers up to £85,000 of coverage through the Financial Services Compensation Scheme (FSCS).
Eligibility for the Starling Bank business account extends to self-employed individuals, limited company owners, and participants in multi-owner limited companies.
Moreover, you have the choice to include a euro business account for £2 per month. Cash deposits are feasible at Post Office branches nationwide, incurring a fee of 0.7% (£3 minimum) per deposit.
Related: Simplifying Banking: Which Banks Can You Pay Into at the Post Office?
Monzo
Monzo is a digital challenger bank that provides online business accounts. It is particularly suitable for businesses with compact teams that require minimal management.
While features like accounting software integration and saving pots are part of the paid plan, the free option includes a fee-free Monzo business debit card, loans and overdrafts, FSCS protection on eligible deposits, and an international payment option.
Unfortunately, not every company can access multi-user features. While not available for certain business types currently, this may change in the future.
Moreover, to prevent financial crime, Monzo’s cash deposits range from £5-£300 per transaction and up to £1,000 every six months.
Note that personal bank accounts are a prerequisite for applying for business accounts.
Cashplus Bank
Cashplus operates as a full-fledged UK Bank, enabling them to extend various financial services, including business cash advances. The bank offers two account plans: Go (free) and Extra (£9 /month)
This business account is particularly beneficial if you have multiple staff members on your payroll. You can attach up to 20 additional business expense cards for your employees, managing these cards and travel cards centrally through an online system.
However, Cashplus Bank incurs a 0.5% fee for cash deposits for everyone and has quite high foreign exchange fee of 2.99% (Go plan).
📚Related: Understanding Expense Cards for Contract Employees
📚Related: Finding the Best Business Bank Account
Alternative business account providers
swissmoney
swissmoney is a Swiss-based finance service provider offering business accounts fully compatible with crypto. Their business account offers a fast, hassle-free approval process and is inclusive, serving various business types.
With a swissmoney business account, you get:
- Smooth daily operations and high limits.
- Dedicated IBAN accounts.
- Security measures like KYC, 2FA, and biometric ID protect your assets.
- Access to assets worldwide.
- Instant SEPA transfers.
- Multi-currency payments.
- Competitive fees.
The platform is designed to support limitless operations, allowing business owners to manage their ventures from anywhere in the world. It emphasizes multi-currency transactions and e-commerce solutions, reflecting the global nature of modern trade.
While swissmoney offers financial services, it’s not a bank. Nevertheless, the Swiss Financial Market Supervisory Authority (FINMA) has approved it as a legitimate financial services provider.
Tide
Tide is a business financial platform. It offers bank accounts, loans and tools for better business finance management. This bank is orientated to small and medium banks
Tide streamlines the account opening process, requiring no credit checks or paperwork, and allows both mobile and desktop banking. Moreover, you receive a business Mastercard for free purchases domestically and internationally.
Tide offers four account plans. While paid upgrades are available, the free version encompasses valuable features, offering a complete UK sort code and account number despite not being a regulated business account.
However, while it’s free, you will still need to pay a £5 monthly fee for expense cards for your team.
Wise
Wise, a top-ranking UK-based money transfer operator, also offers the Wise Business account and card, making it a comprehensive financial solution.
Renowned for being the largest money transfer service in the UK, Wise handles over $6 billion in monthly foreign exchange transactions, saving users $3 million daily by eliminating hidden fees.
Wise enables international bank transfers to 70+ countries, and in some cases, international payments are even instant.
Wise’s Business account empowers you to manage funds in 9 currencies and provides local bank details for transactions in 8 currencies.
Note:
Small business and online business bank account – a perfect match?
Small businesses in today’s digital landscape might benefit greatly from opening online business bank accounts.
It is a bank account used to manage the cash flows connected with running a small business, such as receiving payments, paying bills, and filing taxes.
Moreover, because of decreased costs and streamlined procedures, online business bank accounts
are an appealing choice.
Integration with accounting software, 24-hour availability, and strong security standards all help entrepreneurs manage their finances and make informed decisions.
Moreover, if a small business requires approval for any loans or credit cards, the process will go much more quickly when you have a separate business bank account.
Choosing the best online business bank account
There is no one answer to which online business account is the best. It always goes down to personal matters. Therefore, here are a few aspects you may want to consider.
Fees
While many online business bank accounts start with free basic services, some banks charge a monthly fee ($8 to $30). However, it’s often waived if you meet balance requirements or spend enough with your debit or credit card.
Online banks often offer different paid tiers, some of which may waive an additional monthly fee. Check your account usage and choose an account that matches your needs and maximizes financial efficiency.
📚Related: Best Online Banks UK
Accessibility
Considering your potential need to handle cash and cheques, it’s essential to assess the associated convenience factor.
Unlike traditional banks, online banks lack physical branches. However, some online banks offer alternatives such as depositing at Post Offices or using paying-in services. Certain banks, like Starling, even enable cheque deposits via your phone camera.
Keep in mind that if cash or cheque deposits are crucial for you, digital-only banking might not be the most convenient choice.
Features
It’s important to think about the features and tools that can come in handy when opening a business bank account.
The app’s features, such as separate savings accounts for taxes and smart classification of receipts, make it easier to keep track of money.
Moreover, expense tracking, invoice generation, and tight interaction with accounting software are just a few of the many specialized financial tools available through corporate bank accounts.
Features like cash flow forecasting, tax deduction allotment, and electronic receipt storage may also be included.
Certain accounts allow many users to log in and access shared files, information, and real-time notifications regarding transactions, credit, and loans.
Overdraft facility
If you’re considering overdraft facilities, make sure whether your chosen business account provider offers this option.
Additionally, while most online business bank account providers might not extend business loans, exceptions like Starling, which typically offers one (currently suspended), exist.
Cashplus, on the other hand, provides a loan option worth considering if loan availability is a priority for your business.
An overdraft can prove helpful for those who occasionally require modest amounts of debt. However, not all banks provide this service and those that do often charge overdraft fees.
FAQ
What’s the best bank account for an online business?
The best online business bank account depends on your specific needs, but options like Starling, Tide, Monzo, and swissmoney are great for their tailored features and user-friendly online platforms.
Is Monzo good for a business account?
Monzo offers business accounts tailored to small businesses, sole traders, and directors of limited companies. It provides convenient features like accounting software integration, multi-user access, and digital payment support.
However, the suitability of Monzo for your business depends on your specific requirements and preferences.
It’s recommended to review their offerings and compare them with your business needs before making a decision.
Can you use a personal bank account for an online business?
While it might seem inconvenient, relying on a personal bank account for your business finances isn’t advisable due to potential legal implications.
It’s crucial to separate business and personal finances to ensure accurate record-keeping, financial clarity, and adherence to legal standards.
Opening a dedicated business bank account alongside a personal account should be an initial step when establishing a business.
This practice aids in efficiently tracking business transactions, account fees, expenses, and income while boosting professionalism and credibility with customers, partners, and financial institutions.
