Selecting the right bank for your business is an important decision that can significantly impact your company’s financial health and growth. When looking for a bank, it is vital to pick one that can provide the features and services you need to succeed. In this guide, we cover the top 5 mistakes small businesses make when selecting a business bank account so that you can avoid these common pitfalls.
When you start a business, one of the first major decisions you’ll need to make is who to open a bank account with. Whilst the perception is that ‘all the big banks are the same’, a business needs to do its due diligence and carefully evaluate all options before selecting a bank. Each bank has different strengths and weaknesses that you need to consider before you sign up, and selecting the wrong bank can create enormous headaches for your business.
Common mistakes businesses make when selecting a bank include:
- Not looking around for the best deal.
- Not fully understanding the fees and terms of the account.
- Picking a bank because of their personal banking relationship; and
- Not considering online and mobile banking capabilities.
For example, when it comes to fees, if you have a lot of suppliers offshore and need to transfer money globally, then making sure your bank offers great FX rates is essential. If your bank has high FX fees, this could cost hundreds or thousands of dollars each year.
To help you pick the right back, we have compiled a list of the top 4 mistakes to avoid when choosing a small business bank account:
Mistake 1: Not listing out your non-negotiables
To start with, you’ll want to create a list of non-negotiables or things you can’t live without. Make sure that the bank offers the services that your business needs, such as business savings accounts, loans, credit lines, and online banking. Some common topics to consider are:
- Is a great mobile banking app important?
- Is the location of your nearest branch or ATM critical?
- Do you need to be able to call for help after business hours?
- Does the bank offer branch and teller services?
Mistake 2: Not checking for hidden fees
Different banks charge fees for various services, such as transactions, account maintenance, and ATM usage. Be sure to compare charges among different banks and account types. Compare fees for different services and read the fine print. Some banks may also charge monthly fees or penalties for not maintaining a minimum balance.
Mistake 3: Not ensuring data can easily be exported
Your bank account will become the source of truth for the income and expenses your business generates. When it comes to tax time, you’ll want to ensure your bank makes it easy to export this data. For bonus marks, check if the bank integrates with other software or platforms that your business uses, such as accounting software or eCommerce platforms.
Mistake 4: Not checking online reviews and feedback
Many people assume that all banks offer similar levels of service. This may have been the case a decade ago, but some banks have invested heavily in customer experience and improving customer care services. Research the bank’s customer service reputation, read reviews and consider if their customer service aligns with your business needs. App store reviews are also a great way to get a feel of whether the bank is the right fit for you.
When assessing your options, it’s also good to look out for new products in the market. One example is Thriday, a new bank, or ‘neobank’, that is a good choice for small businesses. Designed for small businesses and solopreneurs such as tradies, retailers, creatives and consultants, the Thriday platform automates banking, accounting and tax using artificial intelligence. Founded in Melbourne, the company’s mission is to eliminate the time business owners waste on financial admin.
With a user-friendly interface, robust security features and an Australian-based customer call centre, Thriday comes with a Visa Debit card and allows businesses to create sub-accounts, track receipts, invoice clients, and lodge BAS to the ATO. Thriday is the first banking service to integrate bookkeeping, accounting and tax into one platform, meaning your data is all in one place and easy to access. We recommend checking it by signing up for a free trial today.
Now that you have made your choice, it’s time to open an account. To apply for a business bank account, you will typically need to provide the following:
- Have a valid ABN or ACN
- Business details, including a registered address and industry type
- Details of other Directors and Beneficial Owners
- Two forms of ID, such as a Driver Licence, Passport or Medicare card
- Contact details
It’s important to note that different banks may have additional registration requirements, so it’s always a good idea to check with your chosen bank to see the specific documentation they require. Additionally, some banks may require additional documentation depending on the type of business you are running or the size of your business. Some banks, like Thriday, also support immediate online registration so you don’t have to visit a branch to get started. If you are transferring an existing business bank account to a new bank, you will need to provide your current bank account details.
When considering a bank for your business, it’s important to research and compare different options to find the one that best meets your business needs. Now that you know what to avoid doing, we wish you the best of luck in picking a bank that is just right for you.
