If you are in business, you must have business bank accounts to manage money coming in from customers and money paid out to staff and suppliers.

Many businesses also have a deposit account to earn interest on money set aside for VAT or tax.
For small businesses, like sole traders or partnerships, business bank accounts are vital to separate business cash from your personal money.

This is especially important if the taxman investigates your business finances, otherwise he can ask questions about money you might have received personally, like birthday or Christmas gifts, if he thinks they are really business income.

Business accounts are much like personal current and savings accounts. The main difference is many personal accounts are free, but businesses pay charges on transactions, like writing a cheque.
High street banks are the traditional first port of call for a business account as most building societies only deal with personal customers, but some are now opening their doors to business people.

Business current accounts
Besides the normal services expected with any current account, like cheques books, cash cards and overdrafts.

Business accounts also have some added extras like:

· A night safe for depositing business takings when the bank is shut
· Extra debit cards for employees to help track spending on petrol and consumables
· Short-term borrowing to aid cash flow, like invoice factoring
· Commercial loans and asset finance for investing in business property or machinery and vehicles

Deposit accounts
Deposit accounts are the business version of savings accounts. Many businesses keep a reserve for paying VAT and tax bills earning interest in a deposit account.
Interest is paid gross on business deposit accounts – that’s without tax deducted – so make sure this is dealt with correctly in business accounts, as tax must be paid on any interest received.

Foreign currency accounts
Business bank accounts are available in different currencies, like Euros and US dollars, to help businesses that trade overseas with currency fluctuations.
Again these accounts are current or deposit accounts.

The trick is to keep the funds in a foreign currency account until the exchange rate favours UK Sterling and then transfer the money to your main business current or deposit account.

PayPal
PayPal is worth considering running alongside a business bank account for many small traders operating on the internet.

For instance, eBay traders or freelances can receive payments in any currency for modest fees via PayPal and then transfer the money in UK Sterling to a personal or business account.
Larger businesses will find PayPal too restrictive for their needs.

Online banking
Most banks provide extensive online services for businesses to send and receive money over the internet, download statements and for tracking income and expenditure without having to wait for paper statements.
This data is available for download to import directly in to accounting software like Sage and QuickBooks

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Tags: Banking, Business, Business Bank Accounts, Deposit accounts, Foreign currency accounts, Online banking, Paypal, UK Bank Accounts