J ust in the last week I’ve come out the other side of a 2 month long process; opening a business bank account. You would think that in this day and age it’d be pretty simple – you’d be wrong. Opening my business bank account for trading has been a rather laborious task and is certainly not one I’d happily revisit.
How It All Started
When I started using my accounting company they recommended me a specific bank account. The bank is one which they’re “partnered” with and is a private sector of Abbey National (if I remember right). The benefits are that the first 30 transactions that you make every month are totally free of all the standard business banking charges which usually apply. Sounds great doesn’t it? I though so too, so I held on to all my cheques from clients and gave the new bank my application.
Two weeks (weeks) later, they’d managed to open my account, and sent me my welcome pack and paying in book. A few days later I realised that I still had no debit card – so I gave them a quick call. Apparently I wasn’t allowed to have a debit card on my account, you’re only allowed a debit card if you’ve been established as a business for 6 months and have over £15,000 in your account.
Now if you just mentally said “wtf” as I did at the time, then wait, it gets better. I asked them, vey politely, if this wasn’t a problem they had frequently? (apparently it was not) Surely I couldn’t be the only start-up opening an account who needed a debit card? They insisted that it wasn’t a common problem and that most people were happy to make payments by cheque.
Can I just ask briefly – when was the last time you paid for anything with a cheque? Let me know in the comments.
Finding A Solution
So after 3 full weeks and exactly nothing achieved, I went back to my personal bank (HSBC) who I already held a sole trader account with for when I was both working full time and freelancing. They would be more than happy to open an account for my Limited company they said, but I would have to close my sole trader account as the two can’t be in any way migrated or merged. Luckily for me I’d barely used the sole trader account, but it could’ve been a big pain if I’d waited to become Ltd.
On the plus side, HSBC were able to set up my business bank account in 20 minutes rather than 2 weeks, and I had my new Visa debit card 2 days later. My first 30 transactions every month aren’t free, but I do have 18 months of totally free business banking – which is a start!
Lesson Learned
Do your research, find out what’s included before messing around with business bank accounts. In the end I was forced to cash client cheques to my personal account and then my accountant had to backdate a whole load of stuff to ensure that the money was marked as going through my business account and subject to the correct amount of tax. Nightmare.
Have you had any business banking nightmares? I’d love to hear your stories – drop me a line in the comments!
If you’d went direct to Abbey, you would have got a Debit Card without any problem.
I think it’s a case of you get what you pay for though – Abbey is free, but can be slow where as other banks you pay for are quicker.
Hey! Timely post! I’m currently in the process of getting my business banking all sorted. Did a bit of online research, and a “phone interview” for each bank (I called them and rated them on their customer service). A week later, I opened a business account, and have received my first client payment into it a week after that!
It’s been fairly painless so far… which is good, and also bad cause I’m bracing myself for it!
Also to answer your question? I have never ever in my whole life paid for ANYTHING with a cheque.
My business is with Abbey. Free banking, telephone only support and you can’t hand business deposits over the counter at Abbey branches – they do offer to post it for you though. (in the normal post!).
Overall, no problems with them, pityful interest rates at the moment – as everywhere else I suppose..
You post interesting stuff about business and freelancing. I find the information you provide valuable. But I wouldn’t mind if you posted about the actual process you used to set up as a freelancer (the business side of things such as registering your business, the rules you have to follow, getting a business loan, accountants, etc) all in one article.
I’ve paid for things with a cheque before but not often. I use a debit card usually.
Signed up with Lloyds. One call, one meeting, job done, debit card, cheque book, free for 18months. Pretty darned simple.