What to Consider When Choosing a Business Bank

Whether you are setting up a business bank account for the first time as a new business, or switching to a new banking facility, there is a lot to consider when making your choice of business bank. Here we look at what you should think about when weighing up your options.

Interest Rates

For your savings accounts, it is obviously desirable to have the best possible rates of interest so that you earn as much as possible. But don’t place all your focus on this element, because there are other factors that may provide you with benefits that turn out to be more significant. If you don’t hold too much of a balance in your savings accounts as a rule then don’t make this your main basis for choice.

Financial Products

Some banks offer a more preferential range of business credit cards and loan facilities. If products like these are important to your business, for example if there is a credit card on offer that has no fees, gives you a higher credit limit and a competitive balance transfer rate then that could be a deciding factor for you. Just be sure to prioritise your requirements, because these features could come at a cost in terms of reduced benefits in other areas.

Also consider that the products you need during the early days of your business are likely to be different to those required as your business becomes more established. At the outset for example, you may benefit from an overdraft facility whilst you find your feet with cashflow. You may even need a start-up loan. Later on, these features may not be so important and you may be more inclined to appreciate things like business development funding.

Bank Charges

When it comes to bank charges, there is little you can do to avoid them on a business account. Some banks will offer free banking for the first one or two years, but you’ll need to weigh this up with the charges you’ll face once the free period is over.

When looking at bank charges, think about how you bank. If you mostly use online banking and electronic transfers, work out what sort of charges you’ll be looking at for those types of transaction. If however you make more use of counter services, perhaps because you get paid in cash or cheques rather than bank transfer, consider an account that doesn’t levy too high a charge for those. If you need to take card payments, look at the costs involved in processing those.

Branch Services

If you value a face to face service and personalised advice, and / or you are going to need to use counter services on a regular basis, make sure you choose a bank with a good choice of local branches for easy access. Bear in mind that some banks are more geared towards online services, and that others are closing branches in certain areas of the country on a fairly regular basis.

Some branches offer specialist services, such as access to small business advisers. These can be very valuable, especially to the fledgling business. Check out what is on offer in this respect during your research.

Other Considerations

Other factors to consider when choosing a business bank are payment processing times for your inbound and outbound payments; international banking facilities – vital if you do business with overseas clients; access to discounts and offers, and ease of switching account should you wish to move to another bank.

If you are uncertain as to what should matter most to you when choosing a business bank, why not ask your local bookkeepers for advice?

The importance of having a privacy notice and data protection policy in light of GDPR

The General Data Protection Regulation (GDPR) comes into force on the 25^th of this month.

Under the Regulation, businesses have a duty to keep individuals informed about the use of their personal data and about their legal rights concerning that data.

Your Privacy Policy

If you have a privacy policy on your website and you have not yet updated it in line with GDPR, you will need to move quickly. Changes will need to be made to the policy in respect of making it clear how personal data is being collected through your website and how cookies are being used to track behaviour whilst they navigate your pages.

In addition, if you are doing business offline, which most businesses do in addition to online trading, you will need to be aware that GDPR and its information requirements apply in just the same way.

The right to be informed is one of the key parts of GDPR. This means that if you deal with consumers, you will need to inform them of the following:

• What personal data you hold about them
• What you use the data for
• The grounds for using the data
• How long you will hold the data
• Whether you intend to share the data, and with whom

You will also need to provide people with information about people’s rights, including the right of access and the right to withdraw consent, if that applies.

If you collect personal data directly from consumers, you should be informing them of all this at the time of collecting the data. If you collect the data through a third party, then you must inform the data subjects either when you first communicate with them; within a month or when you disclose the data to someone else, whichever occurs first.

You will need a privacy notice ready to provide to consumers. This notice will need to set out the required information in an easy to follow, user-friendly way. It will need to be designed specifically for use in situations where data is being collected offline rather than online through a website. This might be for example point of sale.

Your Data Protection Policy

If you already have a data protection policy then you will need to update it in line with GDPR. If you don’t already have one, now is the time to get one drafted.

It is vital that your entire organisation is aware of the rules involved in GDPR and how they should be handling personal data now that things have changed. Without a data protection policy, you have no proof that you have made any attempt to install procedures within your business for protecting personal data in line with the new Regulation.

Remember, we have discussed this before: fines for breaches of this Regulation are substantial to the point where they could devastate a business.

Time to Take Advice?

If you have not yet brought your business up to speed in readiness for GDPR, you really do need to get moving. Getting your policies in order is absolutely crucial if you are going to remain compliant, so either consult a lawyer or look online for good quality policy templates that you can adapt to your specific business needs.

A Guide to Choosing the Best Business Structure for Your New Enterprise

When you start a new business, one of the biggest considerations is how to structure it. Some businesses start out small as a sole trader or partnership then, as they grow, they decide to incorporate so that their personal liability is limited.

Here we take a look at the main options available to you for structuring your business, and what is involved in each one. Before we do however, just a note that it is always highly advisable to discuss your business structure options with a financial professional. They will be able to advise you on the most tax efficient method to use in your particular situation.

Sole Trader

As a sole trader, the business is run in your own name. This is the most straightforward structure when it comes to administration. There is no need to register with Companies House, although you will need to register with HMRC.

The disadvantage to being a sole trader is that you are faced with unlimited liability. This means that if your business gets into debt, then people to whom you owe money are within their rights to claim on your personal assets, because you and the business are considered a single entity.

Partnership

If you set up a business in partnership with one or more others, this is known as a partnership and that is what you will be considered even if you don’t formalise it. A partnership is the same as operating as a sole trader, but with more than one person.

As with sole trader status, you won’t need to register the business with Companies House and debtors of the partnership can claim against the personal assets of any of the partners.

There is also the additional risk of exposure to liability for the actions or omissions of fellow partners. This means that you could be punished for mistakes made by a partner in the business, even if you personally are not at fault.

Any business operating as a partnership must have a formal partnership agreement. Without one, disputes are likely to arise, and these will often prove very expensive. A partnership agreement should be legally drafted. It sets out the individual responsibilities of the respective partners, and how the profits and losses will be shared amongst them. The agreement will also cover things such as what would happen in the event of the exit of one of the partners.

Limited Liability Partnership (LLP)

An LLP is a popular choice for partnership-based businesses that want to limit the personal liability of the partners.

With an LLP, all partners are protected from the risks associated with being a sole trader or partnership.

All LLPs must be registered at Companies House and are required to submit financial accounts and a confirmation statement every year. There is no shared capital, just interests, and the governing principles are defined via a partnership agreement. An LLP is a separate entity from the partners. This means all the partners are personally protected from any legal or debtor action.

Concerning tax, each LLP member is taxed through Self-Assessment as a self-employed individual.

Private Limited Company

A limited company tends to be the most popular structure for most companies. Unlike an LLP, a limited company has shareholders. This means that if the company makes a profit, the shareholders are able to take advantage of dividends. This can prove beneficial when it comes to tax and National Insurance contributions.

There are further tax incentives available to limited companies that other types of business cannot take advantage of. These include schemes to raise external investment.

With a limited company, the everyday running is the responsibility of the board of directors which may be made up of a single director or more than one. The Articles of  sets out this structure and is put in place at the time of forming the company prior to being filed with Companies House.

As a limited company you will need to make annual returns to Companies House. You will be taxed under Corporation Tax and may also be subject to Dividend Tax. You will also need to make returns under Self-Assessment to cover the personal tax aspect of your earnings.

If you are unsure as to the best structure for your business, your bookkeepers will be able to provide outline advice in the first instance. For tax-specific advice, consult your accountant, and for legal advice be sure to seek guidance from a specialist commercial lawyer.