If you’re starting your own business this year, you’re probably thinking about how to manage your banking. Whether you’re a sole trader, a limited company or an SME, a digital bank might be the solution you’re looking for.
Why opt for a digital bank?
Digital banks are a perfect option for startups; the application processes are often a lot simpler than you can expect at a bricks and mortar bank, and the monthly costs tend to be minimal. Unlike some bricks and mortar banking apps, digital banks usually incorporate a lot of different features, and boast responsive and intuitive designs. With a digital bank, you’re also far less likely to pay tariffs (fees for transactions and payments in and out).
However, digital banks aren’t without their drawbacks. When you don’t have high street offices, paying in cash and cheques is slightly trickier; often digital banks will require you to post or scan cheques, there can be limits on cash payments, and charges for both. And whilst many of these banks offer 24/7 customer support, choosing a digital bank means that you can’t walk into an office and speak to someone face to face.
If you think a digital bank could be a good fit for your business, we’ve found a couple of different accounts that are ideal for startups. These banks are fully regulated, and your money is covered up to £85,000 by the Financial Services Compensation Scheme.
Monzo Business Lite & Business Pro, Free & £5 per month
Monzo has a couple of options suitable for startups. Their free offering, Monzo Business Lite, is ideal if you need a simple and easy solution to your business banking needs, and don’t need a lot of frills. Monzo’s Business Lite allows you to get paid easily, with requests and payment links. UK customers can also move money for free with instant bank transfers. The app is incredibly user-friendly, and with Monzo’s Pots you can separate your money to make things even easier.
Monzo Business Pro is still affordable at £5 a month, and you get a lot of features for your money. You can create invoices for your customers from the app, you can sync your banking to your accounting software (Xero, Freeagent or Quickbooks), or export it all to Google. You can even create a Tax Pot, so every payment you receive Monzo sets aside a percentage for tax.
Starling’s Business Current Account is another great option for startups. Like Monzo Lite, it’s completely free and Starling has no UK payment charges. Like Monzo’s Pots, Starling has Saving Spaces; which separates your money into different jars. Starling also offers users their Business Toolkit from £7 a month, which you can try for free for thirty days. With the Business Toolkit, you can connect your online banking to your email and send invoices directly from your desktop. The application also shows you which of these invoices have been sent and paid.
Another great feature from Starling’s Business Toolkit is Automated Expenses. When you pay for something using your business card, Starling categorises the transaction and predicts whether the payment is tax deductible, and how much of the payment you can record as expenses. Starling can also predict how much money you’ll need to set aside for Income Tax, and National Insurance; you can even upload your bills to Starling, and the app will keep track and schedule payments