Best for Business: Bag a better bank account and credit card

Our Best for Business series has, until now, focused solely on the types of insurance you need, whether you run a small 'white collar' business

18:03 24 February 2013

Our Best for Business series has, until now, focused solely on the types of insurance you need, whether you run a small 'white collar' business, work from home, are a tradesman, shop owner, pub landlord or market trader.

 

But insurance isn't the only aspect to consider if you're running a business. You will also need a bank account and, quite probably, a credit card. So in this article, we're going to take a closer look at the deals on offer. 

 

Remember you can compare all of these accounts and more via MoneySupermarket. 

Bank accounts 

 

Whether your business is just starting up or has been established for a number of years, you'll need to have a bank account. If you are a sole trader, you can use your own personal bank account, but it's often more practical to set up a separate business account. 

 

Even if you've already got a business account, you should think about whether it offers everything you require it to. If it doesn't, don't be afraid to switch to one that does. 

 

Most banks will offer accounts designed specifically for start-up businesses alongside their offerings for more established businesses. To qualify for a start-up account, your business will usually need to be in its first 12 months of trading. 

 

Although there will be similarities between the accounts, you'll often find that start-up business accounts offer free business banking for up to two years. Other business accounts, however, will charge you from the outset for every day transactions such as paying money in or withdrawing cash, paying in cheques and direct debits. These transaction fees can be quite complex with different charges for different transactions.

 

Some accounts will also charge a monthly or annual fee, so be sure to check carefully. 

 

For example, the Barclays start-up business account offers free business banking for two years. But its other business accounts charge between 21p and £40 for banking transactions. There is also a £5.50 monthly fee. 

 

Many business accounts will also offer some form of support for your business, so it's important to compare what's available.

 

All of Barclays' business bank accounts, for example, offer support from a business team and business manager at Barclays as well as free business skills training. They also offer free consultations with an accountant and solicitor and come with an overdraft facility (providing you qualify). 

 

Lloyds TSB's business accounts offer support from a relationship manager, while the start-up account also offers access to business software as well as free trials of bookkeeping and account packages. You can enjoy 18 months' free business banking with Lloyds TSB's start-up account or six months' free on its switcher account. 

 

Meanwhile, NatWest offers two years' free business banking with its start-up account as well as a £500 fee-free overdraft, no annual fee on your credit card for the first 12 months and online start-up courses. You will also have access to business planning tools and support. 

 

An alternative to high street banks 

 

If you have a poor credit history or you would prefer to avoid complex transaction fees associated with many business accounts, another option is Cashplus. 

 

Cashplus is a little different to high street bank accounts as there are no credit checks, making its Deluxe business account accessible to those with poor credit ratings, including County Court Judgments (CCJs) and Individual Voluntary Arrangements (IVAs). 

 

The only transaction fee you will pay for on this account is ATM withdrawals which cost £2. Bank transfers, direct debits and standing orders are all free, although there is an annual fee of £29.99. The account comes with a prepaid MasterCard which you load up with cash in advance. 

 

However, because it's a simpler account there is no overdraft facility and no business support. 

 

Credit cards 

 

If you're after a business credit card, you'll find they offer similar features to standard credit cards, such as cashback and interest-free purchases and balance transfers, although the 0% periods are usually far less competitive than on standard cards. You should therefore weigh up what you will need your card for before applying for one. 

 

The Capital One Aspire Business card, for example, offers 5% cashback on spending for the first three months, up to £100. If you're just starting out and making a number of large purchases, this could prove useful. But a major catch is if you don't clear your balance in full each month, you'll be hit with a high representative annual percentage rate (APR) of 16.94% - this will far outweigh any cashback rewards. The card offers a credit limit of up to £7,500. 

 

If you'd prefer a credit card with interest-free purchases, Barclaycard offers a number of different business card options, all of which offer three months' 0% on purchases. Just be sure to clear your balance in full before the 0% period ends. 

 

All of the cards also offer free travel accident cover and free cardholder misuse protection - which could prove valuable should your credit card fall into the wrong hands. There is a maximum credit limit of £10,000. 

 

In addition, Barclaycard's cashback credit card offers 3% cashback on purchases, but there is a £32 annual fee. 

 

Meanwhile, its balance transfer option also offers 22 months interest-free on balance transfers, with a 2.5% transfer fee. But you'll need to have an expected gross income of more than £10,000 over the next 12 months to qualify. 

 

If you are worried about whether your credit rating is good enough to qualify for these cards, use the MoneySupermarket Smart Search tool which will hunt out the best credit cards for you and won't leave a 'footprint' on your credit file. 

 

Many lenders also allow you to add additional card holders free of charge - handy if you want your employees to have access to the business credit card. 

 

However, if you or your employees regularly travel overseas, it may also be worth applying for a prepaid currency card. You can apply for them with foreign exchange specialists Caxton FX, Travelex and FairFX. 

 

They work differently to credit cards because you pre-load them with money before you set off, but unlike credit cards, they won't charge you for foreign transactions. 

 

Compare deals here

 

Please note: Any rates or deals mentioned in this article were available at the time of writing