Starting a small business can be an extremely daunting task; there are so any factors to consider that it can often be a question of where to start? First of all you must remember not to overreach yourself because this can be fatal for any business in its infancy.
Choosing the right banking options is also a vital process that must be carefully considered in order for your small business to succeed. Advice can come from all sources, here I hope to collate these sources and offer banking advice to those in the early days of trading.
The primary goal is to choose a bank, even before looking at the wide array of accounts. The easiest step is to carry on with the bank that holds your personal account. This is understandable as you often know the way the bank works and if you have a proven track record with them they are more likely to be supportive to your needs.
It is clearly a good idea however, to compare what the market has to offer; banking charges differ greatly as do services provided. For some, a worthy point of consideration is a bank’s ethical standpoint on investment; some may wish their small business to be built upon foundations of human rights and fair trading.
Considerations must include how the charges are processed, and what you will be charged for, hidden additional banking charges for instance, can often charge for tasks such as written correspondence which in many businesses is an unaffordable expense. As well as charging information, primary concerns should include whether a bank has a dedicated small business team and if there is a local branch, especially important if your business needs to carry out many cash transactions.
Once a bank has been selected the next task is to select a small business account, this can often cause more headaches as the options seem infinite. In many cases you will need more than one kind of account for your business. Predominantly you will need a current account for your day to day transactions, trying to find a current account that pays interest when in credit is an option but not always possible.
Added to the current account, long term accounting options can offer better rewards although instant access to funds is usually limited, whereas instant access accounts can offer funds as soon as deposits are made. A chief concern if trading abroad is to open a foreign currency account, especially if transactions are to be either made to, or received from overseas contacts.
Along with loan accounts for financial support during leaner times and merchant accounts to allow credit and debit card transactions, the choice when deciding what banking package your small business should utilise is complicated. If your bank does not possess all of the services your business needs, try using other banks for different uses. It must be remembered however, that many banks will offer incentives to house all of your financial requirements so dividing your accounts may not always be the best idea.
If you feel up to the torture it is worth reviewing all of your account details annually and comparing them to other bank’s offers. Despite the hassle of changing accounts, some banks will offer enticements for transferring to their services, making your small business evermore profitable.
After all, shopping around will give the best chances of your business taking off, choosing the right account for that purpose is only a small part of this. There are many facets to commerce but having a good relationship with those who do your banking is a prerequisite for success, by setting firm foundations the likelihood of profitability for your business is increased.
Shaun Parker is a businessman who understands small business banking options thoroughly. To find out more please visit lloydstsbbusiness.com/