What is the best bank account for a contractor?
One of the many questions that will pop up in your mind when you decide to become a contractor of a limited company will be to open up a business bank account. If you are opening your own limited company this is a must as well.
In accordance with law your limited company is a legal entity in its own right which means, you cannot use your personal bank account for business purposes. If you are under the employ of an umbrella company then as a contractor you do not need to open a separate bank account.
Luckily for you almost every contractor company works in a similar manner when it comes to payment, as they will be on the PAYE system. This plays out in the certain way of you receive monthly or even weekly transactions from the client or agency you are working for in the form of a salary. Your expenses and dividends will be added to this as well as pensions scheme etc.
Fortunately, most contractors are not required to have a high transaction business bank account. If you do however, the main goal of this to pay as little as possible when it comes to business banking and online banking.
With everyone you need to go through the best deal for you before you go through your account opening process. Choosing the best financial institution for you can become daunting, as there might be a subject to change after a month or an eligibility criteria in some cases and terms.
How can you compare between banks? We’ve done it for you below:
Comparing banks for contractors as of March 2019
Fortunately for you, most of the high street banks offer free business banking to any new company. This can last up to about twenty four months in some cases. It is incredibly important that you take into account the costs of when the initial banking period expires.
Here are the following details for correct baking periods for contractors as of March 2019.
Depending on your type of business account the free banking period can last from 12 to 18 months. Of course, if you have a personal account then it is 18 months. This account allocates around 0.1% gross interest on credit balances, all standard transaction fees apply as well as £7.50 included when you first sign up for a business bank account.
The free period for banking with Barclays lasts 12 months, after this you have two banking plans after this period. Mixed payments which are £6 + transactional frees and e-payments which are £6.50 with electronic payments included and cash payments being chargeable.
The free banking period with Lloyds lasts 18 months. After this there is a £6.50 a month charge, electronic transactions are free however there is a 65p charge per cheque.
Similar to the banking period of Lloyds, HSBC’s free banking period ends within 18 months. After that you have %5.50 transactional fees after this period.
These are the usual traditional types of banking, however, there are two others we would like to inform you about which aren’t really going to fit in the traditional category.
Luckily for you Cashplus provides free banking all of the time, the only thing you have to think about is the £69 annual renewal fee. A Cashplus business account has many advantages to it. These of course being that you don’t have to contact your client/agency quickly if you need your bank details as a matter of urgency. You will receive your sort code and account number within a few seconds of signing up and you can do it online. No credit checks or meeting an adviser. It’s one of the most efficient ways of banking to date.
Yet another alternative way of traditional banking is Tide. Zero monthly or annual fees and you can open an account within 5 minutes. You will receive your sort code and bank account number, online banking as well as a free contactless Mastercard.
So, there we have it.
In the traditional sense you are going to need a few documents to prove you really are who you say you are. Let’s get that in order as well.
What do you need to open a bank account for your own company in 2019?
All of the information below is needed to open a business bank account in the traditional way for a contractor, or any body who wants to open a business bank account in this case. So, here are the things that you are a required to have if you need or want to open a business banking account.
- Your date of birth, nationality and if you are an immigrant or not.
- Any previous names you might have had and addresses you might have lived at in the last three years.
- Full details of your personal current account (sort code/account number)
- The name of all the company directors as well as their addresses.
- If you are a contractor that has made his own limited company then you will need to provide the information here. This will be a registered number and registered address.
- Photographical identification, this can be a driving licence or passport.
- All of the company paper work. HMRC letters etc.
Here is everything you need to know about being one of the many business account holders. Now that you know you need to figure out what is best for you.