Discover our top rated business saving accounts. These accounts are suitable for all business types including sole traders, limited companies and partnerships.
Whether you are working from home or running your own company with a large workforce, if you want to make your earnings work to your advantage you will need a business savings account. It is better to have your account working for you in this way than to have it lying dormant in a business current account, where it won’t earn as much, if at all, and it might even be costing you money. The best sort of savings account is known as a business deposit account, and allows you to put your money straight into this account, and keep it there for as long as you need it. Before you decide which type of deposit account you need, you will have to calculate how much you are likely to earn, whether you will need instant access to the money or not, and how much you would like to get out of your earnings before they are taxed.
If you need to put your money into a savings account, then you must be careful how you handle your money. If you are a sole trader, then you have a much freer rein with your money than limited companies, and you can put your savings into a private account (see below for details). Limited companies and other forms of trader, however, have to be very careful how they treat their money. Technically, the company owns the money, and not you as the owner of the company. Trying to move money into savings accounts in your own name can cause a mighty tax bill to fall upon you. You will have to create the savings account in your own name. Try to look for saving accounts that offer you a reasonable rate of interest, while still allowing easy movement of your cash.
One of the best companies for this type of business savings account is Aldermore. They offer 1% APR on investments of over £1000, and 0.5% on smaller amounts. You can withdraw as much as you want from the investment, up to £1 million. You can also open, manage and access the account online.
If you want to earn more from your money than this, then you will have to accept a notice-only account. This means that you have to notify the bank when you are planning to take out money, and can delay withdrawal times. You will get 1.9% APR on £1,000 and more, up to a limit of £2 million.
if you are running your business as a small trader, you can take money from the business whenever you want, and can move it easily into any private savings account. If you want to do this, then you can’t do better than investing in high-interest rate instant access savings account. This way, you get to withdraw as much money as you need, whenever you need it, but you also get to keep the money earning as much as possible. Only sole traders can do this, so be certain that you are eligible for this before you move your money.
When you invest as a private individual, your money is protected by the FCA. However, if you are acting as a business, the lines are drawn in a more complex way. Sole traders, as usual, are treated as individuals, and this means that there is the standard £85k protection on your savings. Limited companies must not have a larger turnover than £6.5 million, and have a balance sheet worth less than £3 million, and employ less than 50 people. The FCA thinks these companies are ‘likely’ to be covered.
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