How to open and manage a business savings account

A business savings account is a type of account that companies use to store and keep track of their money.

They’re similar to normal savings accounts, but they’re specially tailored towards businesses and their needs. Typically, these accounts earn interest to help companies make returns while keeping their cash in a safe place.

The amount you should pay into your business savings account will depend on the type of account you’ve signed up for. For example, with an instant access account, you can make deposits freely. However, fixed term savings accounts may require you to make a lump sum payment upfront.

Whatever you choose, you should avoid overstretching yourself by saving too much each month. For example, you might find it beneficial to build regular saving into your monthly budget, rather than taking things too quickly.

Many providers offer savings accounts that are free from any fees. However, there may be some charges for specific transactions and procedures.

For example, you could be charged for:

• CHAPS electronic payments
• duplicate tax statements
• audit requests on your account.
  

Your provider should notify you of any charges before a transaction is completed. Make sure to check the terms and conditions of your account so you’re aware of how and why charges are applied.

You won’t pay tax on your business savings themselves, but you may need to pay it on the interest you earn. Interest is paid gross, so you’ll need to work out any tax you owe and pay for it via Self Assessment.

For those that own a business separate from their personal income, you’ll need to declare any income from savings to HM Revenue and Customs. You’ll also need to pay any required corporation tax

Always consider the eligibility requirements before you apply. This can make the process easier and help to ensure that you choose an account best suited to your needs.

Once you’ve been approved, you can begin to work on boosting your business’ savings. Whether you’re saving to launch a new product, hire new staff or simply want to build a rainy day fund, a savings account could benefit your company in many ways.