Should a small business open business account online?

Every merchant requires a business bank account to comply with the relevant UK regulations and manage their business finances more efficiently. However, the process of opening such an account can often be difficult and time-consuming.

Fortunately, many online banking platforms and payment service providers have emerged to provide small businesses with many options. 

Yet, amid this wide range of choices, you may question: Do you need to open a business account online? What are their benefits and drawbacks compared to traditional business banking?

This blog post answers these questions and provides insights to help you navigate the online banking industry and make an informed decision that best fits your needs and preferences.

Online business account – meaning

An online business account is a specialised banking account designed for sole traders, companies, partnerships, charities, or organisations. It operates similarly to a traditional business current account but offers the convenience of online management, accessible from anywhere in the world. 

In the UK, establishing a limited company mandates a business account. Additionally, having a business account is essential if you intend to use a card machine or an online platform to process card payments. 

The primary advantage of opening a business account online lies in its convenience. It allows businesses to securely manage their finances from any location, as long as they have an Internet connection. It also entitles merchants to a business debit card and sometimes to apply for a loan.

How does an online business account work?

Operating like a traditional business bank account, an online one provides convenience and accessibility thanks to that it is entirely managed through digital means. 

Usually, you apply for a business account online via your chosen financial institution’s website or mobile application. You’ll need to provide business details such as legal structure, tax ID, and contact information, and you will have to go through a verification procedure to confirm the information you provided. Therefore, it’s recommended to research the required documentation in advance and prepare it accordingly.

While this might seem no different to the long procedures of opening an account with a traditional financial institution, the significant difference lies in the simplified application process that doesn’t require visits to physical branches. 

Like conventional bank accounts, funds can be deposited into your online business account via various methods. It includes wire transfers, money orders, mobile check deposits, and cash deposits into an ATM that uses your dedicated payment card.

Through the business Internet banking platform, you can view balances, monitor incoming and outgoing transactions, pay bills, initiate transfers, and set up recurring payments. Many online business accounts offer additional services, such as invoicing tools, payroll services, expense tracking and integration with accounting software.

However, it’s crucial to select a reputable financial institution and familiarise yourself in advance with the account’s features, monthly fees and security protocols to maximise the benefits of your digital banking solution.

How can opening a business account online benefit a small business?

Every UK resident who starts a business is required to open a dedicated business current account, separated from their personal account. But it’s not just about necessity. 

An online business account can benefit a small business owner in many ways. In addition to the common benefits of a traditional account for your enterprise, online management makes the whole process of organising your finances a breeze. In fact, it is not just a convenience but a strategic necessity.

Here is a breakdown of the key reasons why you should open a business account online:

• Effortless application process: You can save time and enjoy convenience when you apply online with a few taps on the phone instead of visiting a physical branch.
• Enhanced financial management: Separating your personal and business finances will help with cash flow management and accurate annual turnover estimation.
• Facilitating transactions: Effortlessly conduct UK bank transfers and international payments or set up standing orders.
• Flexible transaction limits and user access: If your business has multiple directors or a larger management team, you can obtain higher transaction limits and grant varying levels of access.
• Card payment processing: You can accept credit and debit card transactions and mobile payments seamlessly through physical card machines or online platforms.
• Worldwide access: With your mobile phone, you can monitor your balances, track sales, and make payments wherever you are.
• No monthly account fees: Some payment service providers offer a free banking period, during which no account maintenance fees apply, while others may offer no monthly fees at all.
• Essential business tools: You get access to detailed statements, invoicing tools, payroll services, transaction categorisation and many other services.

Opening a business account online can greatly benefit any merchant, from time optimisation and convenience to enhanced operational efficiency and additional business management tools.

How to open a business account online – step-by-step

Starting a business account online can seem difficult when you think you must go through an application process. However, nowadays, online payment service providers make business banking easy. 

To help you see that the process is neither time-consuming nor burdensome, here’s our comprehensive step-by-step guide on how to open a business account online.

Step 1: Research and Choose the Right Account

Start by researching different business bank accounts available online. Consider factors such as monthly fee structures, transaction limits and the ability to deposit cash or apply for a business overdraft. Check for additional features like a free business credit card, reporting tools and accounting software integration. 

Step 2: Gather Necessary Documents

Before you begin the application process, ensure you have all the required documents readily available. This typically includes personal identification, proof of business address, registration documents from Companies House (if applicable) and details about your business structure.

Step 3: Begin the Application Process

Navigate to the website of your chosen financial institution that offers online business current accounts. You can conduct the application process from there, or you may need to download their business banking app to complete the process.

Step 4: Provide Personal and Business Information

Follow the steps to input your personal details, including your name, address, and contact information. Additionally, you’ll need to provide information about your business, such as its name, address, business type (e.g., sole trader, limited company) and any other relevant registration details.

Step 6: Review and Submit Your Application

Take a moment to review all the information you’ve provided for accuracy. Once satisfied, submit your application. At this stage, you may also need to agree to any applicable account fees, terms, and conditions.

Step 7: Verification and Approval

After you submit your application, the financial institution will review the provided information for verification purposes. This may require you to confirm your identity, business details, and eligibility criteria. Upon approval, you’ll receive confirmation of your new business account.

Once you’ve gained access to your account, start exploring the features available, including payment links, bookkeeping tools and options for setting up recurring payments and direct debits. You may also want to share your account details with relevant partners to begin accepting digital transactions.

Conclusion

Opening a business account may seem like a complicated procedure at first. However, the emergence of online banking platforms and payment service providers has streamlined the process, offering many options for small businesses. 

The advantages are numerous, from enhanced financial management to simplified transaction processing. By providing convenience, flexibility, and access to essential tools, online business accounts empower entrepreneurs to manage their finances efficiently and propel their businesses forward.

Frequently asked questions

Who can apply for a myPOS business account?

myPOS is committed to helping businesses of all sizes in the UK, whether they are startups, sole proprietors or larger enterprises. Naturally, specific eligibility criteria apply. To sign up for a business account with myPOS, you must be registered as self-employed, a sole trader, a limited company or an LLP.

What is a representative example of account fees?

Business account fees might include monthly maintenance costs, transaction fees and any other charges associated with your account. These fees can vary depending on the type of account and your financial institution. myPOS doesn’t burden its merchants with monthly fees. You don’t need to pay for the maintenance of your account. You will be charged only a small transaction fee upon the successful completion of a sale.

How can I open a business account online with myPOS?

To open a business account online with myPOS, simply visit our website or download our myPOS mobile app. Get your identification and business documents at hand and follow the steps to begin the application process.

Is it safe to open a business account online?

Yes, opening a business account online is safe and secure. MyPOS uses highly advanced encryption and security measures to protect your personal and financial information and your customers’ data.