Business Banking
As a freelancer, the banking services you will require will be dependent upon your trading method and associated tax legislation (see IFA Index of Fact Sheets) and other specific operational and personal issues such as whether or not you will require finance to run your business, for car loans, business and/or personal mortgages. These all play a part in this decision-making process. Fundamental to this however is that as a freelancer, your banking provider must fully understand and have a history of providing banking services to freelancers. They need to be able to demonstrate experience in dealing with the occasional pitfalls encountered when dealing with your 'self-employed status', availability of audited account, size, frequency and internationalisation of income and payments and the inevitable bank charging structure that all require clarification.
Being in business for yourself will inevitably, if not immediately, necessitate an overdraft or some other form of financing. Should this require a personal mortgage there will be a need to support this application with relevant documentation (contracts, invoice history, audit accounts etc). This is still for some banks, a step too far; the promises made during the account opening process often end up in delays and in extreme circumstances preclude the bank from delivering the full range of services you need to run your business.
It is advisable at the onset to ask the following key questions prior to starting the account opening process. If you have not addressed these points with your bank already you need to do so now:-
- Do they have a history of freelancer banking?
- Do they provide credit to freelancers and in what form does this take (i.e. overdraft, invoice discounting)?
- What documentation do they need to support credit facilities?
- Do they have specific packages for small business?
- Do they appoint a specific individual for 'my personal banking needs'?
- Do they provide online and/or telephone business banking?
- Do they provide to the self-employed (limited company or not) current, deposit and high interest accounts?
- Do they provide cheque books and debit cards?
- Do they provide credit cards (i.e. VISA)?
- Do they operate free business banking? And if not why should I bank with them?
- What is their charging structure tariff?
- What would my expected annual fees be for a set number of transactions?
- Do they have a 'no hidden charges' policy?
- What is their security policy on lost cards etc?
With the advent of new money laundering legislation which has been applied world wide, opening up a Freelancer Bank Account (self-employed, Ltd, LLP etc) is a rigorous process both with the banking documentation you need to complete and the requirements for the banks to authenticate this as part of their 'know your client' process. The following is the type of documentation which would normally satisfy most banks but this will be individualised (in a corporate identity way) to their own internal processes:-
- Face to face introductory meeting to authenticate support documentation such as Identity Check: - Copy of your passport, photo inserted driving licence (take original with you).
- Address Check: - Copy of a utility bill, community charge statement (take original with you).
- Credit Check:- Copy of previous three months bank statements (take originals with you).
For the seasoned freelancer, we recommend that on an annual basis you do a banking review to assess both the level of service you have received and confirm that all charges levied are correct, if not then a refund must be sought. Alternatively this can be done by professional firms who are experts in this field and will do a bank records assessment on a "no win no fee" basis going back up to 12 years.
Your provider of accountancy and/or financial services will normally be able to signpost you to banks with a history of freelance services.
Recommended IFA Freelancer Business Banking Providers
Recommended IFA Freelancer Bank Record Assessors