The Best Business Bank Accounts for Selling Online
Many Brits decide to sell products online as a full-time business or to supplement other income. Running your own online selling business can provide financial freedom, but you need to make sure you get the money side of things right.
One of the first things you will need to do when you decide to sell online is to get a business bank account to manage income and expenditure. In this blog post, we will talk about how to find the best business bank account for selling online.
But first, we will explain why we recommend having a business bank account.
Do I really need a business bank account?
In some cases, having a business bank account isn’t strictly necessary. Unlike personal accounts, business accounts will usually charge you a monthly or per-transaction fee. But we strongly recommend getting one for several important reasons.
First, if you want to operate via a limited company, then you are legally obliged to have a dedicated bank account for your business. This is because your business is a separate legal entity, so you need to keep any business money separate from personal funds.
If you plan to operate as a sole trader who sells products around a full or part-time job then a business bank account isn’t always strictly necessary.
Your personal bank account provider will usually stipulate in their terms and conditions your current account cannot be used for business purposes, but they may not notice unless you have a high volume of transactions coming through.
For sole traders, the real benefit of having a separate business bank account is that you can keep your business and personal finances separate.
Additionally, it means that you can process card transactions, take out a business loan and get a business credit card. It also makes it easier to reconcile business transactions in your accounting software.
The best business bank accounts for online sellers
It’s important that your business bank account works for your type of business. Most of the best business accounts have a free period - typically between 12 and 18 months - after which you will pay a monthly fee.
Many bank accounts have a standard fee of around £7 or £8, but some are more expensive. Business bank accounts also charge different fees based on transactions.
These fees will differ based on the type of transactions. Many ‘traditional banks’ will charge high fees for cash withdrawals for example, while electronic payments and and BACS transfers are usually lower.
You will need to think about how this affects your business. If you tend to pay for things electronically, and plan to pay yourself with BACS transfers, then finding a bank account will be more straightforward.
But some online sellers may find the majority of their stock at car boot sales, where it is usually difficult to pay by card. These sellers may look to find a bank account where cash withdrawals are much lower.
Below, we have identified two business bank accounts that may be suitable for your new company. Before you sign up with a bank, make sure you read the fine print carefully as there may be some hidden charges that will affect your business.
Beyond the headline figures, it is also worth checking out the bank’s service record if you value this support.
1) Lloyds Bank
Lloyds Bank provides 18 months of free day-to-day banking for new businesses, after which you will pay £6.50 per month. They offer free electronic payments, but cash paid in or out will be subject to a charge of £1 per £100 for the first £1500 each month and £0.80 per £100 above that.
2) Starling Bank
A so called ‘challenger bank’, Starling is an app-based bank account that doesn’t have any physical premises. There are no monthly account fees, no fees for electronic payments and no fees for cash withdrawals as long as you have fewer than ten employees. But this type of bank may not suit you if you want to go in branch to meet your bank manager.
Starling also allows you to sync your bank account with accounting software like Xero and FreeAgent, meaning that you can share your transaction feed instantly.
For help getting your online selling business off the ground, speak to a member of the team today. Call: 0808 281 0303.