When choosing a bank account as a contractor, there are many factors to consider to ensure that you receive the best services from your bank to suit your individual line of work. If you run your contractor business through a limited company, then you will need to set up a business bank account for your business as required by company law to receive payment form clients and agencies.
As a contractor working under an umbrella company, you are still regarded as an employee and hence are not required to open a business bank account. Instead, you can continue to use your personal bank account for financial transactions made by the umbrella company to you.
The best Business Account for Contractors
Business accounts have many differences to personal accounts, the most obvious being the charges that you have to pay on a business account. It is advisable to compare various bank accounts and not simply use the same bank where your personal account is held. There are many high street banks and newer banks that offer various competitive business bank accounts.
The most suitable Business Account for Contractors
Choosing which bank is most suitable will depend on whether they provide the specific services geared to your contractor needs. Always choose a bank that is well known for its customer service and will accommodate your contracting needs. The following features should be considered.
Business banking charges
Free business banking for a specific time period for 1 to 2 years is often used to attract contractors. At the onset of your business this is an attractive benefit. Note that you should establish when this free banking period ends and what business charges will be incurred after this date. Charges may be higher than other banks that do not offer this benefit, so it is advisable to compare different banks before making a decision.
Contractor work may take you to remote areas or towns where a local branch of your bank may not be available so online and mobile banking is a necessary alternative. This option may be essential for your day-to-day running of your contractor business and would be the deciding factor in choosing a suitable bank.
Company credit and debit cards
Business bank accounts that offer company debit or credit cards and cheque books allow contractors to pay for expenses from their business bank account. No personal money would have to be used and claimed back from the business at a later date keeping accounting issues simple.
Opening a contractor business account quickly
If your contracting job commences at short notice and you need to open a business account quickly, there are some banks that will accommodate you. Note that applying for a bank account often takes a long time due to anti-money laundering and credit checks that banks are legally required to carry out. However, some banks will be able to perform this checks quickly and open a business bank account in the required time needed.
Connecting your online accountancy software to your business bank account
Specialist Accounting software allows accountants to connect your business account to your accounting software. This allows for efficiency and simplicity ensuring that all your accountants are accessible online by your accountant for year-end accounts. Your accountant will be able to inform you which banks offer this service allowing you to easily transfer your financial information.
Banking services that benefit contractors
As a contractor you will only have a few banking transactions per month typically performed electronically. Hence, the many value added services that some banks offer will not be especially beneficial or even necessary for your business bank account. Contractors can use this to leverage the best deal from a bank as you need only a simple bank account with the right services that benefit your specific needs.
Accounting for Contractors
Fusion Accountants are Specialist Accountants for Contractors and can help you in the application and the setup of a Business Bank Account in a professional and proficient way.
View our dedicated section on Accountants for Contractors. As a client of ours we can help you choose the correct bank account and even help set it up for you.