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Do Startups Need A Business Bank Account?

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Having a business bank account isn’t a prerequisite for starting a business. It’s not a blanket legal requirement, other than in a few specific cases, and generally, deciding for or against a business bank account comes down to a few specific factors that each ought to be considered according to their own merit.

In the most basic sense, business bank accounts are specifically designed for use by businesses. They provide account holders with features that are particularly useful for business owners, including things like higher spending limits and options for professional bank loans, among other things.

So, there are many reasons why business bank accounts may be ideal for business owners who can take advantage of the added features and benefits that they offer.

However, some businesses may not be able to benefit from these accounts in the same way. In fact, there are situations in which opting for a business bank account over an ordinary personal account for professional purposes may be disadvantageous. It all depends on the business in question.

Business bank accounts to consider include:

  1. Anna 
  2. Counting Up
  3. Tide

 

What Are the Differences Between Personal and Business Bank Accounts? 

 

The important thing to realise is that startups, and even more mature businesses, don’t necessarily need to use business bank accounts. However, you do need to be a registered business in order to use a business bank account.

So, what’s the difference?

 

 

 

 

 

This should give you a good general idea of how business bank accounts differ from personal bank accounts. Essentially, the former offers a plethora of services that can be super helpful for organisations in managing finances and ensuring that everything is above board.

However, if your business is small and these features aren’t a necessity for you, then a personal account may be perfectly adequate.

Of course, for many startups still navigating the early days of their professional journeys, this may very well be the case. They may be small businesses with only a few staff and limited operational capacity.

Indeed, this is often what sets startups apart from other more established businesses, making it perfectly reasonable to question whether or not they need business bank accounts.

The term “startup”, however, can refer to businesses of varying sizes at different stages of development, so it’s not possible to assert that startups either do or don’t need business bank accounts in a general sense.

As always, startups need to be considered on a case-by-case basis.

 

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Things for Startups to Consider When Opening a Business Bank Account 

 

Startups differ dramatically in terms of how older they are, their relative success and so much more. Indeed, there really isn’t a set benchmark for when a company is no longer considered a startup.

The point is, calling a company a startup doesn’t necessarily indicate that they’re small, have a limited staff and aren’t very well established.

So, in questioning whether or not startups need business bank accounts, this is another indicator as to why we can’t generalise and make blanket statements across the board.

Instead, it’s essential that you take into account all the relevant individual considerations for each case.

 

Here are some of the top factors to consider when deciding whether your startup would be best served by a personal or a business bank account.

 

 

 

 

 

 

 

If all these factors are taken into consideration, you should be able to make a sound call as to whether or not your specific startup would benefit from having a business bank account.

 

 

Do Startups Really Need Business Bank Accounts?

 

The simple answer is no, startups don’t necessarily need business bank accounts per se (unless they’re limited companies).

However, depending on the size of the startup, the industry in question, the number of staff, the scale of financial transactions and more, it may very well be beneficial for startups to operate by means of a business bank account rather than a personal bank account.

Business bank accounts can be very helpful in terms of organising finances, ensuring regulatory compliance, providing bookkeeping services, offering business loans and so much more. Thus, if the startup in question is growing and scalability is a consideration, then switching to a business bank account may very well be the way to go.

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