Business account, card, invoicing & payments – all in one!
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Parpera Business Account
Business account, card, invoicing & payments – all in one!
Paytron Global Business Account
Real-time payments, deposits and withdrawals in Australia
* Swoop’s service features a selection of providers from whom we receive commission.
A business account is an account to manage your company’s finances. It can be used to monitor cash balances, make payments, and receive cash. It is the beating heart of your company’s finances. If your cash inflows exceed your cash outflows over the long term, your company’s financial heart is healthy and in good shape. Given a business account’s central role in your company’s financial management, it is important to choose an account that fits your needs.
The functioning of a personal account and a business account is almost the same. Both accounts are used to receive money, settle invoices, and store cash balances. The key difference is that a personal account is solely intended for personal usage, while a business account is designed to handle your professional or company’s transactions.
We at Swoop strongly advise you to keep your personal and business transactions strictly separated. When you manage your professional finances through your personal account, things become messy quickly. For example, are your telecommunication and internet expenses a personal expense or a business expense? The absence of a strict separation between your personal and your company’s finances can cause misunderstandings. By keeping the two strictly separated, you can avoid unpleasant, time-consuming conversations with your accountant or the tax authorities.
A business bank account is the most basic financial product you need for your company. Despite its basic nature, it is vital for your company’s long-term success. A business bank account has many benefits, such as:
There are several good reasons you should consider opening an additional business account or switch banks altogether.
There are many aspects to consider when choosing the right business account, such as the type of account, the number of transactions, online banking capabilities, proximity to a branch, customer service, and banking fees.
Each company has different needs and banking requirements, so it’s difficult to recommend just one account for everyone. There is no one size fits all. You should consider the following factors when choosing a business account:
A good starting point when you are looking to open a new business account is our summary table. It gives you an overview of the features of the business account of our partners. That way you’ll be able to see which account fits your requirements best.
There should be no cost for switching business accounts or opening a second account. However, when you want to close your existing business account, you will have to pay off your outstanding debts (such as overdraft and credit card debts) before you can close it.
In case of opening an additional business account, you need to ensure that you have no commitment towards your current bank to route your finances through them. Especially if your current bank is financing something for you, they might have requested you to provide them with an assignment of proceeds. By sending your sales proceeds to another bank, you would be in breach of your loan agreement.
The most common bank account fees are monthly or annual fees, transaction fees, international transfer charges, interest expenses related to the utilization of the overdraft, and currency conversion fees. Fortunately, bank charges are deductible as an expense for tax purposes. While some banks will open a business account for free, others might charge you a one-off business account activation fee. Below we explained some fees that you might come across.
Monthly or annual account fee: A fixed fee that some banks charge for simply having an account with them. Some banks will waive this fee for the first year. You must understand what is included in your package.
Electronic transactions (in or out): Some business bank accounts include unlimited transactions, while other business accounts set an allowance per month and charge you for each additional transaction.
Cash or cheque payments (in or out): To deposit or withdraw money and cheques in a bank’s branch office, you might be charged a flat fee or a percentage fee. More expensive business accounts might include this service in their package.
International transactions: Sending money to another country or receiving funds from abroad is expensive. These transactions are usually processed through the SWIFT network. It is quite common to see a hefty international transaction fee on your bank statement.
International ATM fees: If you make use of your debit card while traveling, you can expect international ATM fees and currency conversion fees. Some digital banks allow you to withdraw money abroad up to a certain limit without having to pay an ATM withdrawal fee.
Overdraft facility: An overdraft is a very effective way to cover temporary cash shortfalls. Just like your credit card, it cost money to utilize an overdraft. Some banks might charge you an activation fee and they will charge you interest for utilizing the facility.
In the digital age, the opening of a business account can be done within a few minutes to a few days. If you act as a sole trader, it can almost be done instantly. If your business is a separate legal entity, the bank will not only require your personal identification details but also the details of your directors and shareholders.
While these requests for information are often perceived as annoying from a customer perspective, banks are strictly regulated and need to comply with anti-money laundry, counter-terrorism financing, and international sanctions regulation.
It is important to make sure that you notify your new bank about all your standing orders, including staff payments and rental fees. Standing orders are payments of a fixed amount you make regularly.
Direct debits are quite similar to standing orders, but the amounts fluctuate, such as a telephone bill or a utility bill. You must give your new bank a mandate to get all the information about the outstanding direct debits from your old bank. Your new bank will contact them on your behalf to ensure a smooth transition of all the outstanding direct debits.
It is also advisable to notify your regular customers and suppliers of your new business account details.
Rest assured this wouldn’t happen. Your previous bank would redirect any payments linked to your current account to your new bank account. This ensures you don’t miss any payments.
The answer to this question is quite nuanced. Some banks might be reluctant to open a business account when your credit history is not good. This is especially true when you are dealing with established, high-street banks that can cherry-pick their customers. However, a business account only poses a minor risk to a bank. Don’t let your bad credit history discourage you from trying to find a better deal. It is almost a certainty that some banks are interested in your business. Some banks are more friendly towards startups and entrepreneurs with less than perfect credit history.
The only real drawback is that with a bad credit history, you will be unlikely to get access to an overdraft facility. This type of facility involves actual cash and poses a risk to the bank.
If you are switching from one bank to another, you won’t need to go through a credit check to apply for a business account. This is because a bank doesn’t provide you with any facility when providing you with an account.
However, if you want to access overdraft and trade finance facilities, your company’s credit history will play a role.