Business accounts are vital for the survival and growth of every business. It provides the business with efficient and effective money management solutions. However, opening a business account with most traditional banks is lengthy, frustrating, and bureaucratic.
The emergence of challenger banks offering business banking options was a huge relief for businesses that didn’t want to go through the draining process of opening their accounts with traditional banks. Additionally, opening your business account online means you also access a wide range of additional features and benefits online banks have introduced to challenge conventional banking, not to mention the convenience and superb accessibility banking online provides.
Although opening your business account online is much easier, it might not be as easy as you think. However, some online banks have a simpler and faster process that ensures you get the account running in a shorter time. Here’s a complete guide on the easiest business accounts to open online.
What is an Online Business Bank Account?
Business accounts are the financial home base of your business. Business accounts come in different types, each offering varying benefits and features, including current and savings business accounts. Ideally, the main business account would be where you hold your funds for everything related to your business operations. You can also use the business account for the following;
- Paying employees
- Paying suppliers and vendors
- Paying for other marketing expenses
- Receiving funds from investors
- Receiving sales revenue directly from your clients and customers. These can be in the form of pay-outs from your payment processor.
- Paying taxes
- Ordering inventory and office supplies
- Applying for business loans and grants
- Paying off the balance from business credit cards.
Is a business account the same as a merchant account?
When opening a business account, you can also open a merchant account. The two are closely related and often confused, but there are some differences between the two accounts you should consider before deciding the type of account you want to open.
The main difference between business and merchant accounts is their functionality.
A merchant account is specifically used to hold funds from customer transactions. The money from the merchant account is then deposited into the merchant’s business account.
Merchants are only used to house funds from customer card transactions immediately after they’re processed and only for a limited amount of time. Business accounts are more robust and hold funds for various essential financial tasks.
Basically, as long as you have a business, you will need a business account. The merchant account doesn’t provide the same range of features that the business account offers.
Why is it Not Easy To Open an Online Business Account?
Opening a business bank account would be a walk in the park if most banks had their way. However, because of the high volume of transactions in some businesses, the banks, including challenge banks, are subjected to additional scrutiny, which they pass down to the business. Some of the reasons why it is not easy to open a business account include;
Increased checks, compliance and AML procedures
Various financial bodies have increased their checks on compliance and anti-money laundering tools. They’ve made it hard for businesses to open business accounts. Some of the reasons for the increased measures include;
- An increase in terror events that have led to increased scrutiny of money laundering
- The financial crisis required banks to tighten regulations to mitigate the risks they were taking on.
- Adjustments to the financial system reduce the likelihood of failure for both banks and the banking system as a whole.
High requirements threshold
Business accounts are also harder to open because they require more requirements from different compliance departments with the banks and payment solutions.
The compliance department has to check that the business has fulfilled all the requirements for the application to be approved. You must provide a business license with the business name and the owner’s names, organising documents and potential partnership agreements, among others.
Financial and shareholder information
Businesses must have a comprehensive financial history to make it easy for the compliance department to determine the main source of revenue.
Lack of business information
When onboarding new businesses, the bank needs to analyse every detail of who they’re taking on to minimise risk to the bank. Because new businesses don’t have solid data on their sales and revenue, it becomes extremely hard for them to get business accounts.
Another reason why opening a business account is not a walk in the park is because the European Union has enacted new Anti-money laundering rules, which increase the checks that a bank and money transmitters need to open accounts. This rule change has decreased business account openings by 50% because many businesses cannot meet the compliance requirements.
What Do You Need to Open a Business Bank Account Online?
First, you must identify a suitable bank or online bank that offers features and benefits you believe will benefit your business. After identifying the right partner, you will get a list of requirements necessary for you to open the account, which vary from bank to bank. But generally, you’ll need the following to open a business account;
- The legal business name under which your business is registered.
- Business postal address
- Personal address and contact information
- Business articles of incorporation or articles of organisation, depending on the type of business you’re registered as
- Relevant business licenses or permits
- Business partnership agreement
Not all banks will require all these documents. Some require more, while others require less. But you’re better off gathering them ahead to make the business account application process easier.
How to Open a Business Bank Account Online
With the high number of institutions offering business accounts, the methods to open business bank accounts have changed greatly. It’s not faster and simpler to have a business bank account online, and with challenger banks, you can have the account operational in less than a few hours. Here is how you can go about it;
Decide what type of bank is right for you
You can open your business account with a challenger or conventional bank. For a long time, conventional banks were the go-to option. Still, over the past several years, most people have turned to challenger banks because of their superior customer experience and features. These banks are also not as strict with the requirements as traditional banks, allowing more businesses to open the account.
After determining the ideal bank for you, you must also determine the type of business account you want. There are business checking accounts, business saving accounts and so forth, depending on the bank you have selected.
Challenger banks might make it easier to choose the type of account because they only have one type of business account with tiered features that you can choose depending on your business’s needs.
Most challenger banks also offer you a merchant account that allows you to process credit and debit card payments from your customers, which can then be linked with your main business account.
One of the factors that will help you determine which account is ideal for your operations is the fees associated with running the account. Most merchant accounts come with monthly and card transaction fees, so you must carefully consider if you want one.
Get your documents in order
After identifying the bank you want to open your business account with, you will need to find out the documents they need for the business account opening process so that you can gather them beforehand.
By gathering the documents beforehand, you can tell if there are any missing documents and find them, so once you start filling out the online forms, you don’t leave anything hanging.
The type of documents you need heavily relies on the type of business you have;
Some online banks don’t generally require documentation from this type of business, only personal details like your Tax Identification Number, your physical address, your phone number, your email address and a copy of your ID.
If your bank choice requires additional business documents, it would usually be your business certificate.
Most other types of businesses will require the same documents highlighted above. Other online banks might also ask you to submit your Corporations Articles of Incorporation and the Company Bylaws.
Start your online application
With your documents at hand and access to your preferred bank’s online business account registration portal, you can begin the application process. With some banks, you can complete the account opening process within minutes, have the account approved within a few hours, and be ready to start operating.
Easiest Bank Account to Open Online
As you might have noticed when looking for the ideal bank to open a business account with, not all of them have the same account opening approach. Some have a smooth and amazing experience, while others can make the process long and frustrating.
When looking at the banks with the easiest business account opening process, most of them are challenger banks and for good reason. These banks are often tied down by some of the traditional banks’ processes, giving them some wiggle room to accommodate new and unique businesses better.
Some of the easiest bank accounts to open online include;
Unsurprisingly, one of the challenger banks with businesses at the core of its operations has the easiest business account opening process. With Pay iO, you can complete the account application process in a few minutes and have the account approved shortly after.
No documents are required to upload on the application page, but the bank might request you to verify your identity down the line, which is another simple, quick and painless process.
With Pay iO, you can also set up your merchant account if you have an online business that receives credit and debit card payments. It will also provide you with API to help you with the backend processes to complete the financial transactions.
Another benefit of going with Pay iO is that it also caters to businesses with bad credit. Once you successfully open your account on Pay iO, you will have access to amazing features such as;
- Mobile app and web access to account at any time
- 24/7 customer support
- Ability to process and make global payments
- Multi-currency account
- Tools to help you manage transactions and expenses right from the business account
- Competitive currency exchange rates for businesses that trade in different currency
- Affordable monthly premiums and low transaction cost
Tide has been around for quite some time but has gotten a lot of attention in the last few years for its unique business accounts. This challenger bank is dedicated to supporting small businesses and self-employed professionals such as contractors, consultants and freelancers.
With Tide, you can get your business account up and running in minutes. What is even more impressive is that the app helps you with some of the administrative work. They help you chase unpaid invoices, pay salaries, and report taxes.
Tide even allows startups and newcomers to use their address as a ‘virtual office address’ to ease the process of setting up your company in the UK. So, if you’re looking for an online bank that makes the business account opening process as easy as A, B, C, Tide should be at the top of your priorities. Their requirements are minimal, and they have a high approval rate. Everything that a business owner struggling with the account opening process wants to hear.
Tide’s business account is free and has a full UK sort code and account number. But the real value of the account is in the smart time-saving tools it offers to let you focus more on the business and less time on administration duties.
Once you have your Tide business account, you can access a business MasterCard. Tide will automatically categorise your transactions to make accounting easier and track your invoices and payments. The free account also allows you to hold up to five different business accounts within it and integrate with various tools and software like Xero and Quickbooks, saving you the headaches of banking and keeping up with your finances.
The only downside with Tide is that it doesn’t allow its clients to hold foreign currency accounts. You may be able to receive transfers from several other countries, but you will have to pay SEPA and SWIFT fees, which will add up quickly.
The main features of a Tide business account include;
- The business account is free
- You get free invoicing and credit options
- You can upgrade to a Plus or Pro account
- Upload and auto-match receipts
- Available on iOS and Android App
Revolut is another leading online bank offering exemplary business account services and features. As a leader in the financial sector, Revolut has developed a signup system that makes getting a business account easy and straightforward. With the account, you can access its low-cost multi-currency accounts, budget analytics software and other innovative features.
The Revolut business account is tailored for sole traders, small businesses and freelancers. The account allows people in these and other spaces to take advantage of everything Revolut offers and make and receive payments globally. Think of Revolut as the option that picks up the slack where Tide doesn’t do well.
Revolut is registered with the FCA to offer business bank accounts that manage company expenses and customer payments.
Opening a standard business account on Revolut is free, and you will gain access to both UK and EU bank details. The plan comes with a plastic debit card for your team capable of tracking the company’s spending, including payroll, with Revolut’s software.
With global IBANs, you can use your Revolut business account to receive payments from anywhere worldwide. The catch with Revolut is with the charges.
Regardless of your plan, Revolut charges 1% + £0.20 for each online payment you receive from customers using a UK card. All other cards attract a 2.8% + £0.20 for each online payment. Also, Revolut has a daily withdrawal limit of £3,000 and a monthly limit of £100,000, and it doesn’t have an overdraft facility, although it plans on having one in the future.
Other notable features on Revolut include;
- Low online payment acceptance fees
- Competitive exchange rates
- Advanced mobile app with many helpful features
- Integration with business software packages
Monzo is a fully regulated online bank that offers business accounts for small businesses. Monzo offers 24/7 customer support in its free plan unlike the other digital banks. But you must upgrade to its business plan for more administrative software.
The free plan should give you everything you need to conduct customer transactions. Monzo has maintained a smooth and easy business account opening process despite being a fully regulated bank.
Monzo’s free business account is perfect for small businesses with small teams that don’t require a high management level. You can get additional tools like integration with accounting software, multi-user access and saving pots on the paid option.
Besides the business account, you also get a Monzo business debit card that can be used for payments abroad, and it’s free of transaction fees.
Larger businesses can upgrade to Monzo Business Lite or Monzo Pro at affordable monthly rates and competitive transaction costs.
Opening a business account doesn’t have to be a painful and lengthy process. The above challenger banks have redefined the process of opening a business account, making it easier while ensuring you can still get excellent support and features to spur growth in your business.