Five reasons it pays to have a business bank account as a start-up

Blogs 18 Nov 2022

New to self-employment and wondering whether you need a separate business bank account? FSB Business Banking explains why opening one is so important for managing your finances.

Get started on your business journey. This article is part of our start-up hub, which is home to even more tips and expert advice on starting your own small business.  

With developments in technology and the ability to work remotely becoming more common in recent years, many people are considering becoming self-employed and starting their own small businesses. What may have once been a pipe dream is now more accessible to everyone. In the current economic climate, people are taking a chance in creating their own businesses to support themselves and their family.

So, if you’re ready to get started on your new business, FSB Business Banking shares five reasons why it’s important to consider setting up a business bank account that can provide the support and tools needed to help your business grow.

1. Balancing your books

A great starting point in your self-employment journey is to separate your personal finances from your business finances by opening a business account. Having that clear separation can make accurate bookkeeping easier.

Bookkeeping is essential for helping you manage your cash flow, prepare balance sheets, and plan your business growth strategy. Bookkeeping involves recording and organising all your financial transactions, including every time a customer makes a payment or you pay your suppliers, staff and other expenses. You can hire an accountant to manage your bookkeeping software or do it yourself, either manually or using accounting software.

Some business owners prefer to carry out some bookkeeping tasks themselves, but then use a professional for services such as payroll or VAT. The thing to remember here is that business bank account providers will be geared up to provide the information you need, when you need it, to keep things running smoothly.

2. Controling your cash flow

Managing your cash flow is vital to the financial health of your business, as it will affect your ability to cover your costs and invest in your business plan. Separating your personal finances from your businesses will help you see your business cash flow situation more clearly. It can also help you begin building a credit rating for your business. This can be vital when your business comes to looking to secure lines of credit. A good business banking provider will provide support and tools to help you stay on track.

3. Financing your business

Without setting up a business bank account, your options for accessing finance will be very limited. This could jeopardise your access to support when you most need it or prevent you from taking the next step. There is a selection of specific business lending products that can support your cash flow needs or invest in your business' growth.

Your business bank account provider can provide support and guidance in understanding what the needs of your business are and how you can access finance options.

4. Meeting your needs

From florists and plumbers to design agencies and manufacturers, all businesses will have differing needs and objectives, so the type of business bank account you open will be a key factor. Your provider will have experience in understanding these needs and a product range to suit you.

What should you be looking for?

  • Online and mobile banking. Having easy, 24-hour access to a bank account is important when you're busy with meetings and the everyday running of your business, so check if the account comes with online and mobile banking. As well as this, it’s important to check what telephone banking options are available should you need direct support.
  • Payments. There are different types of payment methods that may suit some businesses more than others. Check what payment services are available and how these can benefit you. This is becoming increasingly important as more consumers and businesses go cashless. 
  • Fees and charges. Look at whether the account comes with free business banking for a set period, as this could help reduce your costs as there's no monthly fee or charges if you maintain the minimum required credit balance. Compare costs like monthly account charges, cash deposit fees, withdrawal fees, and charges for foreign transactions.

If you’re not sure which option is right for you, check out our handy guide to choosing a business bank account.

5. Finding support

Having a dedicated business bank account provider means you will have access to the support and tools you might need, especially if things get tough. Your provider will understand your situation and be able to put the appropriate levels of support in place to help your business in the most difficult of times. A business bank account provider can also support growth and development and help you to unlock and explore further opportunities.

Starting a new business is an exciting time, but ensuring you have the right support in place from the start will help you to stay in control and concentrate on doing what you do best.

This content was provided by 
The Co-operative Bank

Manage your money your way for less

With FSB Business Banking, you can choose a bank account that works for your small business, and get discounts and deals negotiated just for FSB members.

 Find out more