When starting a new business there is lots to consider; the best structure, marketing strategies, financial sustainability and setting up business banking. It is hard to know where to start, with some even questioning whether they need a separate business account at all. It is always a good idea to keep your personal and business transactions separate, not only for you to manage, but your Accountant will love you at tax time for making their job easier. Below are 5 tips to consider when you are starting the process of establishing business banking.
How will your customers pay you?
Knowing how you will accept payments is a great place to start and very necessary to get paid. Think about whether customers will pay you directly into your bank account. Will you be taking payments from their account? Will you need to be able to accept card payments? Once you know your customers preferred method of payment, it’ll make finding a solution with a specialist easier.
What do I need from my Bank Account?
Once you know how customers will pay you, you can work out what you need from your Bank account. Some accounts have transaction limits, some banks have limited branch access. Knowing what you need from the account and bank will allow you to compare the different options available to you better. Have a review of some of the banks basic business account packages that offer online banking, credit cards etc. These may also be cost effective. Speak to your accountant about the best structure for your business and ensure the name you use to promote your business is noted on your bank account. This will prevent issues down the line, especially if accepting cheques.
How will I need to use online banking?
Unfortunately, with online banking, we never know its limitations until we need to complete a transaction urgently and can’t get to a branch. Think about how much money you will need to transfer in a single transaction or in a day. If you need to increase your daily limits when transferring funds or require two people to authorise online payments, speak to your bank. This way it ensures they give you the correct online banking platform ahead of time.
Will I need a credit card?
Some banks currently offer a credit card as part of their ‘Business Package’ when you first set up your business. Think about how you will make payments and your cash flow requirements. Refer to your cash flow forecast and see whether there are any gaps where a credit card may be beneficial. If you are unsure, speak to an expert who can give you some guidance on how it could help the initial stages of your business.
How will I manage my GST, Tax and other obligations?
Budgeting is a key factor when managing your business cash flow. Ensuring you have met all your financial obligations is essential for your business and is important when positioning your business for lending in the future. Having a business GST/Tax Account or savings account can be very beneficial when it comes to budgeting. These accounts are generally online and have no monthly fees. Check what your bank offers and read the T&C’s, as some have withdrawal restrictions. This can sometimes be good, but limiting if you have an unexpected expense. If you are ever feeling overwhelmed or unsure of where to start, please speak to us or a trusted business advisor. They can assist on where to start or refer you to a person who can help.
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