How (not?) to choose a business bank
I have finally applied for my business bank account. They tend to need a lot of paperwork. It varies, but the particular bank I’m going with required:
- Two forms of ID for director, company secretary (this is standard due to the money laundering regulations).
- Copies of the company incorporation certificate and register of directors
- A business plan
- Details of the share allocation
The tricky bit is that any copies must be certified copies: for example signed by a doctor or other professional with a note to say that they have seen the original. Hence this paperwork took several weeks to get together.
So I’m quite relieved to have sent it off. Of course, they’ll probably take weeks to look at it then come back with lots of questions or bothers. Business banking seems to be some way behind the consumer sector in its customer-friendliness… the banks charge for transactions, pay little or no interest, and many of them expect you to have an interview with their small business advisor to persuade them that you really deserve a bank account.
How did I choose the bank account? (The useful bit for anyone who really is reading this blog thinking about starting their own company!) First I trundled round the high street and popped into NatWest and Barclays. NatWest were worse than useless; I had to queue for ages and eventually some bloke took my details and said he’d get back to me (he didn’t). Barclays were much better – I walked in off the street and (to my surprise) was able to see their small business advisor there and then. She was very helpful and it was appealing to have a real person to talk to; for example if I ever needed an overdraft.
However I also did some Googling – the bank with the most AdWords hits was Alliance & Leicester so I considered them. I also considered the Co-operative bank, because they run Smile, with whom I’ve got my current account.
In the end I looked up the cost of a few example transactions, and the credit interest rates, and what introductory charge-free period they gave.
| Bank | Direct Debit | Interest | Free banking |
|---|---|---|---|
| Barclays | 54p | 0% | 1 year |
| Alliance & Leicester | 0p | 0.5% | 2 years |
| Co-op | 25p | 1% | 18 months |
This whole decision making process might look arbitrary – and it is – but I probably spent about 12 hours looking into banks, and the opportunity costs through lost earnings are likely to make up for cost savings of having spent much longer thinking about it. I suppose that depends on whether I make any money!!
In the end I decided to go for the Co-op as a compromise between the traditional high-street banks and the online Alliance & Leicester-type camp.
Meanwhile, all the company purchases (staples, paper, mobile phone bills, insurance, train fares) have come out of my own account, so at some point I’m going to have to put in an expense claim against myself. It’s nice being schizophrenic.