How To Switch Business Account in the UK

In recent days, some businesses have decided to change business accounts either due to transactional reasons or personal reasons. For both, these businesses have to be exposed to the appropriate and complete information about how to switch business accounts in the UK and some relevant information about switching these accounts that business owners are supposed to know.

In this article, we'll explain the various steps involved in switching a business account in the UK.

What is a Business Account?

A business account is a bank account specifically for a business entity and not a privately owned business account. Even if the business is owned privately by a single individual, the individual can still choose to create a business account that will contain only transactions regarding the business and not other earnings of the business owner that don't have any relation with the business.

When incorporating a new company, a company account must be created for the transactions of the company. This is the same for a Limited Liability Partnership and Partnership business but can vary in Sole Traders because there is no limited liability so sole traders can use their bank account for their business and also pay the business taxes together with their income and file an annual tax return as one of the reasons or for convenience, these businesses would want another business bank thereby switching their business account to an entirely different bank or organisation.

Why Do Businesses Switch Accounts?

Managing businesses is very tasking and business owners would not want to add any stress to the business stress. If there is an issue or difficulty regarding transactions, the business owner would want to get it done as fast as possible or probably go for a better option since they do not want to waste more effort on business transactions other than managing the business.

Below are some of the reasons businesses switch their business accounts.

1. Poor Customer Service

For a bank or financial organisation, customer service is very important and poor customer service can lead to a poor business. When customers complain about a service offered by your bank or financial organisation, it is very important to attend to it as soon as possible rather than keep the customer waiting.

When banks have poor customer service, their customers eventually become dissatisfied with their services and this can cause a great loss of customers for the organisation. Customers who feel their needs are not met by the organisation will want to look for other alternatives.

Businesses cannot cope with delayed transactions or even delayed customer service for transactional issues, this can lead to a great loss for the businesses and after such disappointment, the business will not want to keep their account with the financial organisation. This has a significant effect on businesses and business owners.

Some businesses might choose to cope with the organisation because of some favourable services they offer while others might choose to switch their business accounts. This all depends on the seriousness of the issue that demands customer service. Banks or financial organisations should ensure good customer service for their customers, especially businesses.

2. Hidden Fees

Most banks and financial organisations attach fees to every transaction carried out by their customers. Although these transactions are what keep the organisation running, they become a problem when there are extra hidden charges attached to transactions. This can be a very discouraging factor to bank with a particular organisation.

Most businesses would want to choose banks that attach little charges to their transactions or better still banks that do not have any transactional fees or costs. These charges sometimes might be without transactions and can be a way for businesses to lose accountability for their income and the outcome of the account.

3. Card Options

Since there is a wide diversity of businesses and products, some businesses will prefer a bank that offers multiple card options to enable an efficient transaction between the business and its customers. Having a business account with just one single account option can be a limitation to a lot of business opportunities.

It is better to go for an account with multiple card options when creating your business account to avoid delays and limitations to some business deals and opportunities you might encounter after the incorporation of your business.

4. Currency Option

Due to the wide range and local diversity of the market now, there is a high chance of customers paying for your products in a different currency from that which you use. Now the problem arises when your business account does not receive multi-currency payments or does not receive payment in that particular currency.

This is capable of leading the business to a loss. When creating a business account, it is very important to go for banks that receive multiple currency payment methods to ensure a smooth and efficient transaction between you and your customers.

Businesses with international currency options have a higher chance of maintaining business with people than businesses that do not allow other currencies. It is important to choose your business account wisely.

Steps in Switching Your Business Account

If you have discovered the services of your account are not favourable for your business, you can choose to opt-out and go for a better bank account. We will take you through the process of switching your business bank account to the most favourable for you.

1. Consider a New Bank Account

Before thinking about creating a new business account, you must take into consideration the services that will be favourable to your business. Before creating a new business account, you have to take the following into consideration

1. Customer Service: you have to research and know the rating for the customer service and confirm it's good and favourable for your business.
2. Fees: you should also know the charges of the bank and other transactional fees that will affect your business. Any bank with a huge transactional charge isn't suitable for businesses, especially small businesses that are starting in the industry and need time to get stable in the market.
3. Physical branches: branches with physical branches tend to be more favourable for very large businesses since they can go in any day and make huge amounts of withdrawals or transactions. With the rapid movement of technology in this age, this is not more of an issue for businesses, especially small businesses.
4. Bank app: bank apps are an efficient way for transactions for businesses es[especially in this technological age. Almost every bank now has a bank app to give their customers a better transaction and to save the time of visiting an actual bank or any of its branches.
5. Accounting software: does this bank connect to accounting software, if they do, that is a great way to work as a business accountant.
6. Bank portal: do they have a favourable online portal for your business? For example, some banks 9ffer multiple transfers at the same time, this is a great way for companies and businesses to pay their employee's salaries without having to do it multiple times.

Requirements for Creating a New Business Account

You have to also consider the requirements needed for creating a new business account for your business. This, however, solely depends on the structure of the business.

In the case of a limited company

• Articles of Association, which is the constitutional document for this type of business.
• Agreement and signatures of all directors of the company.
• Business License
• Certificate of incorporation

For Limited Liability Partnership

• Partners signatures
• Partnership agreement, which is the constitutional document for this business structure
• Certificate of formation or incorporation
• Business License

For partnership

• Partnership agreement which is also the constitutional document
• Partnership signatures
• Business License

For sole traders, a business account is not necessary as the business owner can choose to use their account for the business.

Application for a New Account

After determining the account you want to create and you've got your requirements ready, you can then proceed to apply for a new account.

Depending on the availability of a physical company branch or an online app, you can choose to apply online or at a bank. Most large companies prefer creating a business account at a physical bank to ensure the flow of trust and the nature of huge transactions by these companies.

Application online will have to do with you uploading the needed company documents depending on the particular requirement as mentioned above. Apart from the requirements of the company, the requirements needed from the person going for the account creation might include:

1. Proof of identification which may include a picture, a password or a driving license.
2. Proof of address, for example, a bill
3. Accompanied by the requirements of the company

If you're going for a physical bank account creation, you might be able to ask questions regarding your industry.

Update Your Public Account Details

After you've successfully created your account and have been given access to your business account, you can then proceed to update all your public account details and start receiving payments from your new bank account.

After you update the account, you have to monitor it for any errors or learn how to properly navigate if it is an online app. You can connect it to your account software if it can help you do your work with less stress. You also have to make sure your customers are paying into the account without any difficulties. You can report to customer service if you find any difficulties during your first time using the business account.

Update Your Subscription

You have to update all your credit cards to make sure all your subscriptions are kept running. Your monthly bills as a business are very important so you must ensure to update all your subscriptions before the month's end so as not to cause a pause in your subscriptions.

1. Move Your Funds

This is a very important part of switching business accounts. After creating a new account, you didn't just move all your funds, some funds are left in case a subscription has not been connected to the new account and you did not want to stop those services from running.

You move your funds away from the account when you're sure no other subscriptions or any business transactions are tied to the account.

2. Close Account

When you are sure no transaction is connected to that particular account, and you have moved all your money away from the account, you can then go ahead to close down the account. If you keep the account without using it, taxes will accumulate so it is better to close them down when you are done using it.

You should always make sure you move all your funds before going ahead to close the account as a request to return funds mightn't be considered after the account has been closed down already.

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Conclusion

Businesses switch business accounts because of services they find uncomfortable and risky to their business or for personal reasons. When switching your business account, always make sure to go for the banks with better services to ensure a smooth transaction for your business.

After you create your new business account, you can then move your funds from the previous one, update your public account details and then close down the account to avoid accumulation of any tax. Customer service, which is one of the most important parts, must be of high ratings in the bank where you are creating an account. This is to make sure you are working with a capable and reliable financial organisation for your business.

Bank apps are also very important as it make transactions smooth and less stressful. As long as you have an internet connection, you can access your funds and make transactions with your bank apps in the comfort of your home or office.

After you start using your new account, make sure you have successfully transferred all available funds in the old account to the new one as there is no refund after closing down an account. If you have any questions on how to switch business account in the UK, kindly contact us here, and we’ll do everything we can to help.