Business Accounts

Category: Business
Date: 9/15/2008

If you're in business you'll know that you need to have the best banking facilities available to make your business as efficient as possible and to maximise your interest return. There are a range of business bank accounts which may be suitable for you.

The type of accounts businesses need is pretty similar to personal accounts, such as:

• Business Current Account
• Business Deposit Account
• Commercial Mortgage

Other non-personal accountholders need current accounts, such as clubs, societies or charities.

The main difference between business banking and personal banking is that business banking usually costs more with a range of charges for different transactions. There may also be restrictions on who can open an account, eg based on amount of turnover in the business, type of customer, or amount held in the account.

How do business bank account providers make their money?

• Interest - banks use the money that businesses and individuals deposit with them to lend on to other customers in the form of loans and mortgages. They earn interest on this lending, but don't pass this on to bank account customers, particularly not businesses. Some business current accounts now offer interest but this tends to be at quite a low rate.
• Fees and interest charges account for a large proportion of the income from these accounts. These are for things like going overdrawn without authorisation, exceeding overdraft limits or where cheques bounce. Business accounts include transaction charges for things like paying in cheques, standing orders, withdrawals from other branches and the like. These charges do vary so its well worth comparing business accounts for the best deal.

Choosing the right bank account

Bank accounts aren't as complex as some other financial products but there are a few things to watch out for when choosing a business bank account and some key factors to consider in your decision about which account is right for you.

Moneyfacts.co.uk has put together guides on business current accounts and business deposit accounts. Once you've got the feel for these, then compare business accounts at Moneyfacts.co.uk.