Is your business banking too expensive?
Business banking costs can quickly rack up, just when entrepreneurs should be keeping their costs down. Cris Sholto Heaton takes a look at the alternatives.
Keeping costs down is standard advice for every start-up, but new entrepreneurs are often shocked by how many unexpected expenses they'll encounter. Take the company bank account. Most of us are used to our current accounts being free of fees, so long as we don't go overdrawn. But the same isn't true for business bank accounts, where account maintenance fees, transaction fees, statement fees and many other charges are routine.
For businesses that do a very high volume of transactions or have specialised requirements, some of these charges may be understandable. However, small service-based businesses, such as consultancies and contractors, will do virtually all their banking online and their accounts may be no more active than a personal current account. In this situation, business banking fees which run at around £5 per month, plus about 0.2p-0.3p per electronic transaction can feel like a rip-off.
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There is also a dwindling number of accounts that can be fee-free if operated in the right way. Cater Allen, which is part of Santander, carries no monthly fee and allows up to 30 free transactions per month on its Reserve Account, as long as your balance remains above £5,000.
And Metro Bankalso waives the monthly fee and allows up to 50 free transactions on its Business Bank Account, subject to the same condition. Cater Allen accounts are opened by post, while Metro Bank requires a visit to one of its branches, which are currently all located around London.
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