The world of ecommerce is booming and if you’re recently set up a business, you may be considering opening a business bank account. Let’s take a closer look at how they work and how to choose the best one.
Tide Business Bank Account (Free)
8.7 GreatYou can sign up for the free Tide business account in a matter of minutes. The account comes with a free business card that you can use for fee-free purchases in the UK and abroad (ATM withdrawal fees apply). You'll also be able to integrate your account with software such as Quickbooks, Xero and Sage. Further benefits include the ability to create and send invoices and set up scheduled payments. You can hold up to 5 business accounts and deposit cash into the accounts at any Post Office or PayPoint location.
Zempler Bank Business Extra
8.7 Great| Minimum opening balance | £0 |
|---|---|
| Account fees | £9 per month |
| Interest (AER) | 0% AER |
If you're looking for a low-cost business account, take a look at what Zempler has to offer. There are no monthly account fees and no fees for UK purchase transactions either. Signing up for the account can be completed online in a matter of minutes. Through the account, you'll be able to track expenses and block certain transactions, order up to 20 additional cards, download statements for each card in CSV format online, manage cards via a centralised management system, and integrate your account with accounting software. You'll also be able to deposit cash via bank transfer or the Post Office, use your card online and instore or to withdraw cash, pay bills and expenses online and categorise spending on the go via the app.
| Minimum opening balance | £0 |
|---|---|
| Account fees | £9 per month |
| Interest (AER) | 0% AER |
Airwallex Multi-Currency Business Account
8.3 GreatThis bank account enables businesses to collect, hold and send money in multiple currencies. There are no monthly fees and accounts can be opened in a matter of minutes. Users will be able to transfer funds in more than 34 currencies into over 130 countries at competitive exchange rates. What’s more, you’ll be able to create virtual employee and expense cards for your business which will enable you to track spending and set spend limits. You can also use your multi-currency debit card to pay for expenses online or in person in different currencies with no transaction fees, provided you have the right currencies in your account. Further benefits include the option to connect your currency accounts with platforms like eBay, Shopify and PayPal, and the ability to sync your account with Xero to ensure your Xero transaction records are up to date for your accountant or bookkeeper.
You won’t necessarily have to open a business bank account to run an ecommerce business. However, this will depend on whether you’ve set up your business as a limited company or whether you’re currently a sole trader.
If your business is a limited company in the UK and you’ve registered it with Companies House, you will be legally required to open a business bank account as your business is a separate legal entity from you as an individual.
On the other hand, if like many businesses in the UK, you are a sole trader, your business is not legally separate from you and there is no obligation to open a business bank account. However, it can still be worth opening one as you’ll be able to clearly see the divide between your own income and expenditure, and your business.
You should also note that some banks may specify that personal current accounts are used for personal reasons only. They may threaten to close your personal account if they spot a large number of business-related transactions.
When comparing business bank accounts for ecommerce purposes, you’ll come across traditional high street bank options that will allow you to carry out some of your transactions in branch, as well as online only accounts.
Choosing a business bank account that can be opened and managed online has a number of benefits. For a start, these accounts are designed to incur fewer overhead costs and those savings are often passed on to the customer. This means online accounts tend to have lower service and maintenance costs, they may pay higher rates of interest and transactions generally clear faster than they do with a high street bank.
Most online banks also offer an app, allowing you to manage your account on the go and get notified when money is paid in or out of your account. Many will also include budgeting tools and integrate with accounting software to help you keep on top of your invoices and tax returns.
If your business also trades abroad, some online accounts will offer low-fee foreign transactions and let you hold money in different currencies.
When comparing business bank accounts, you’ll need to keep the following in mind:
Some business bank accounts won’t charge a monthly maintenance fee for the first year or so, but fees will kick in after that. Having fees waived for the first year may be helpful if your business is just starting out.
If you trade internationally, it’s important to compare business bank accounts to see how much you’ll be charged each time you carry out a foreign transaction. You’ll need to consider what exchange rate you’ll be charged, as well as additional fees for sending or receiving money internationally.
Many digital only accounts will let you carry out a set number of foreign transactions per month either free of charge or for a small fee. Make sure you compare these costs carefully.
Depending on where you sell, you may also need to hold different currencies in your business account. Some digital banks will offer accounts in euros and/or dollars, while others will offer a multi-currency account that will let you transact in several currencies from the one account.
If you’re a business owner, having a separate bank account is crucial (and required for limited companies). Millions of people have set up businesses over the last few years, from online bakeries to photography courses, and whether it’s a side hustle or a full-time job, it’s a lot easier to manage your finances if you have a bank account set up specifically for your business. Keep an eye on the small print though. While the account may be free there could be charges for things like, overseas money transfers, cash deposits, or extra debit cards.”
Opening a business bank account for ecommerce purposes has a number of benefits, but primarily it can make juggling your business expenditure with your own that much easier. This will also be beneficial when you come to do your tax return.
When deciding which business bank account is best for your ecommerce business, you’ll need to consider how you plan to run the account and what you need from it. For example, if your business is a startup, your priority may be to keep costs as low as possible – in which case, you’ll need an account that offers decent transaction limits and a low monthly fee.
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