This article will provide an overview of what makes business accounts useful and what features you should look for when finding the best business account for your startup. We’ll discuss various topics, including:

  • What should I look for in a startup business account?
  • Why are business accounts useful to startups?
  • How can I open a startup business account easily?

What should I look for in a startup business account?

MTD-compatible

MTD stands for Making Tax Digital, a government initiative to make HMRC a more digital-friendly institution. For small businesses, this will mean some big changes in the next few years.

One of the biggest changes is that businesses will need to file their tax forms digitally. While the changeover might sound inconvenient, the time-saving features that certain compatible accounting softwares offer means that MTD can make doing taxes easier for business owners in the long run.

The other notable change is that there will no longer be an annual tax return. Instead, self-employed individuals will need to send information to HMRC four times a year. This doesn’t mean doing four tax returns, though. It just means sending financial data to HMRC on a more regular basis.

The rolling out of these changes will take place over a few years. In April 2022, VAT-registered businesses with a taxable turnover of less than £85,000 will need to submit their VAT return per MTD guidelines. Then in 2024, self-employed individuals and landlords making over £10,000 from businesses or properties will need to follow MTD rules when filing their income tax self-assessment.

MTD rules mean you’ll need to use MTD-compatible software when filing tax forms to HMRC. Since Countingup is MTD compatible, it’s fine to use it for any of the tax-related tasks we’ve listed above. Eventually, all businesses will need to follow MTD rules, so it’s smart to download and use the right software before you get left behind.

Invoicing on the go

The best business account should also offer a way of making invoicing easy. Invoicing clients is the primary method for receiving payment for many startups, so having an easy way to create and send invoices is vital.

With the Countingup app, you can create an unlimited number of invoices for free. In addition, you can customise them according to your needs — for instance, you can change the due date for payment — and even add your company logo for a more professional-looking document.

The Countingup app is a great way to avoid common invoice mistakes, as you can duplicate invoices that you know are accurate. Since a mistake can mean your business loses out on money, having a way of ensuring accurate invoices is essential.

Receiving payments is easier with Countingup, too. You’ll receive a notification when a customer pays their invoice, and payments are automatically matched to invoices too, saving you time on bookkeeping admin.

Cash flow insights 

A wise startup owner will keep a close eye on their cash flow. Cash flow refers to the money moving in and out of your business (i.e. both your income and your expenses from your cash flow). Analysing cash flow is especially important for startups because money might be in short supply before the business gets off the ground.

The key to easy cash flow analysis is having all of your financial transactions in a single, easily accessed place. You can achieve this quickly by signing up for a business account. As the account will record all of your purchases and earnings automatically, you’ll be able to get a good overview of your cash flow with a glance instead of having to consult different documents in different locations.

A good business account can further help track cash flow if it has additional features that help with bookkeeping. For instance, Countingup offers real-time profit and loss reporting. 

The Countingup app shows a real-time view of your startup’s profits and losses, updating as you make transactions on the business account. On top of that, the report gives you a net profit figure by deducting your expenses from your income. Having all this information available about your cash flow can help immensely with decision-making, as you’ll know exactly how much money you have to invest in the different departments of your startup.

Why are business accounts useful to startups?

Keep your personal finances separate

Some startup owners resort to using their personal bank account for business transactions, as it can seem like a simpler option. While it might save a little time, the downsides aren’t worth it: if you don’t keep your business and personal money separate, your financial records will become very disorganised very quickly

If your records are disorganised, you’ll not fully understand the amount of money your business is making or spending. This lack of understanding could lead to overspending, which in turn can lead to serious cash shortages and even bankruptcy. This makes separating your personal and business finances one of the most important bookkeeping practices a small business could adopt. .

There are a few drawbacks to setting up a business account: it’s usually a very quick and easy process. Since your transaction history and financial information will be much easier to see and analyse, it can also help you make better financial decisions, which is enormously helpful if you’re a startup owner with little experience in enterprise. 

Tax 

The amount of taxes you pay and the system you’ll use depends on how you register your startup — that is, whether it’s a sole trader or a limited company. Paying the correct amount of tax is hugely important, as the government can charge you with tax evasion for intentionally paying less tax than you should.

If you don’t have a lot of accounting experience, paying taxes can be very complex. This is especially true of claiming back business expenses. Put simply: you pay money to HMRC for any profit you make, but you can reduce your tax bill by claiming purchases as business expenses. This means you only pay tax on the profit you made and not on the cost of purchases necessary to run the business. 

A business account helps simplify this process, as you can view and record your expenses easily when they’re all in one place. Countingup’s business account allows you to do all this on its easy-to-use app.

A particularly handy feature of the Countingup app is its automatic expense tracking. This feature further helps with paying taxes by organising your expenses into categories that align with the ones on HMRC tax forms – so that you won’t have to spend hours categorising your transactions when it comes to your tax returns.  

How can I open a startup business account easily?

When you’re running a startup, you’ll need to make the most out of every hour of your working day. You can save hours of painful admin time with Countingup. 

Signing up for a Countingup account is simple. All you have to do is download the Countingup app to your device and follow a few simple steps. It only takes a few minutes — in sharp contrast to the lengthy processes involved with applying for a business account with a high street banks.

The Countingup app helps thousands of startups keep on top of their financial management. Since it automates the most time-consuming aspects of startup accounting, you can focus on building your business and doing what you love by using Countingup.

Click here to download the Countingup app today.