Opening a bank account for a partnerships company is a crucial step towards achieving financial success as a business. Separating your personal accounts from those of the partnership company not only helps you in organising the accounting records of the company but also enables you to cut on overspending. No law requires a partnerships or sole proprietorship business to have a business bank account. However, there are still more reasons why you need to have a joint bank account with your business partner.
Here is a guide on everything you need to know about business bank accounts, including some of the best bank accounts for your business.
Why You Should Open a Business Bank Account
Is having a business bank account mandatory? Not necessarily. Having a business bank account is only compulsory if you have your venture registered as a limited liability company. This is because according to the underlying business principles, a company is treated as a separate legal entity from the owner(s).
Here is why you need a business bank account for your partnerships even when it is not stipulated by law;
You can keep track of every financial transaction
When you separate your business account from your personal account, it is easy to know how every penny is spent in the business. Knowing how much money is in your business account will enable you to make cash flow projections, budget formulation, as well as determine your profit margins.
You can compile and file your taxes easily and efficiently
Tax deductions can only be accurate if clear financial records support them. Mixing your personal accounts with that of the business can only make it more challenging to file taxes accurately.
Your professional image will hold
You look more professional when all the financial transactions of the business are run through a business account.
You can operate with credit cards
Most customers prefer using credit cards over cash payments. You can only have a credit card acceptance system if you have an active business bank account.
How to Open a Bank Account for a Partnership Company
The process of opening a business account is more engaging than opening a personal account. Business accounts can also be more costly compared with the personal ones due to the monthly fees surcharged to every bank account. Here is what you need to open a business bank account;
Identify the Best Bank Account for Your Partnership Company
You want to open a business account with a bank that suits your needs. Some bank accounts will be free from transaction costs while some will offer you transaction limits for a specified fee. Some bank accounts are entirely online, while some are not. Here are some of the best business bank accounts for a partnership company;
Santander is one of the leading banks across the UK in providing personal and business financial services. If you have a personal account with Santander, your business will enjoy free transactions for 18 months. The free period is limited to one year for new account holders. Other benefits include cashback of up to £300 every year, in-credit interest each month, and flexible cash deposits at the Post office or Santander branches.
This is among the largest banks across the world. It is an excellent choice for partnership business dealing in international transactions. HSBC has a free business banking experience of 18 months and has an online application from where you can run your business transactions.
If you are looking for a bank that is entirely online, then Starling bank is your ideal choice. As long as your business has an annual turnover of less than £1.7 million and less than ten employees, your business account will enjoy free unlimited transactions.
Have the Right Documents
To open a business bank account, you will require the following documents;
- Proof of Identity documents. These include either a passport, paper driving license, national identity photocard, or photocard driving license.
- Proof of address documents. These include UK driving license, bank statements, council tax bill, or utility bill.
- Business details. These include business name, partnership agreement, Companies House registration number, national insurance number, and names of company partners.
- Estimated annual turnover. This enables the bank to know the size of financial transactions that your business will be handling every month.
Open the Account In-person or Online
Once you have identified the best bank account for your business, you can visit any of their branches for account opening. For banks that are entirely online, you will have to open a business account online.
Verify Bank Details
You must ensure that bank details such as names on the checks, match your legal business name. Most banks will require you to make an initial cash deposit to activate your account. You should verify that the deposit went through successfully.