Business Banking Costs

How Much Does a Business Bank Account Cost?

Business bank accounts can often be a benefit to your finances, but you should be aware of the different costs, also known as charges, that can apply. Depending on the bank, these may be not always clear when you sign up.

Read on to learn all about business bank account costs and fees to help you avoid paying more than you need to and find the best deal.

What is a business bank account charge?

A business bank account charge is a fee or an extra cost that business owners will be charged with when setting up or operating a business bank account. It can be difficult to compare these charges across all different banks as the fees can vary between the providers and even depend on what type of business you operate.

Charges that you need to be aware of

• Annual fees: These is a fee that you will have to pay on a yearly basis.
• Monthly fees: These usually range between £5-£10 per month. Although some are even higher, many banks offer banking with no monthly fee.
• Transaction fees: Paying per transaction can add up quickly. You should get an idea of the number of transactions your business carries out each month on average and calculate this fee.
• ATM withdrawals & deposits: Some banks charge extra for each cash withdrawals, or set limits apply, and also for depositing money using certain services.
• Incidental fees: Includes stopping a payment, insufficient funds, and overdrafts.
• Online / mobile banking fees: Tends to be free, but you should check their terms and conditions.
• Other fees: Wiring money, international transfers and add-ons, such as accounting software integrations may incur additional costs.

It is also important to remember that some banks require a deposit, which can range from £5-£1,000, and you may find that you will have to pay a small fee to receive additional debit cards.

What if your bank charges increase?

Sometimes as a business grows it can happen that banks start to require a fee or interest on an overdraft. If this happens you can:

• Under HMRC rules, you can claim back bank charges, which means you can claim tax relief on bank, overdraft and credit charges, and interest on business loans and bank loans. For this to be approved your bank account needs to be in the name of your business.
• You could also switch to a different bank. This is not always as easy as switching your personal current account, as you will have to inform clients of the changes and update your invoices for new customers. However, the Current Account Switch Service will automatically transfer your balance and any standing orders and direct debits before the account is closed. This may not apply to e-money accounts.

Please be aware that although some banks offer a free banking period, this does not mean that there are no fees once that period is over or if you exceed certain limits during that duration.