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Finding the Best Savings Account for Your Small Business

If you are currently looking for the best possible savings account for your small business, it is important to go through some of your options before deciding on anything in particular. There are some accounts that pay more than others, so you will need to know what you have to choose from. The savings account that you choose for your business will be very important to your overall financial well-being.

Opening Your Account

If you don’t already have one, you will need to open a business current account before you can open a business savings account. You will be asked to submit the name, address and company registration number before you can proceed. This process usually doesn’t take very long, and it is necessary.

Types of Savings Accounts

There are numerous types of savings accounts that you will have to choose from. Some of these options include regular saver, fixed term, notice and easy access accounts. Because each type of account is completely unique, you will need to learn as much as possible about each of them.

Before you make a final decision, you need to determine if you require instant access to your cash, because not all businesses do. A fixed-term account will not allow you to take out any of your money early. If you have a notice account, you will have to give advance notice before you are allowed to get access to cash.

Both notice and easy access accounts have variable rates, so you will benefit if interest rates go up. This also means that your money could earn less if rates go down, so you should keep that in mind as well. These accounts offer lower rates to begin with, but they can go up over time.

A bonus account is another option that you should look into. This will let you make withdrawals, but you receive a bonus if you choose not to take any money out. Make sure that you think about how you would like to manage your account. The best rates typically come with online access accounts, though you may want to have physical branches that you can visit.

Savings Accounts vs. Current Accounts

If you decide to go with a traditional business savings account, you will likely end up paying a higher rate than with a current account. Sole traders that plan on maintaining a small account balance will want to think about opening a personal in-credit current account.

Protecting Your Money

The Financial Services Compensation Scheme ensures protection of funds up to £85,000 in savings accounts. Small businesses have the same protection as everyone else, so you won’t need to worry about that. It is important to keep in mind that this limit is per banking license and can be spread out over multiple brands.

If you are planning to keep a lot of cash in your savings account, you should consider putting it in numerous banks. By doing this you will be able to get the protection you need for your money. Those who keep amounts that exceed the protected FSCS limit are running the risk of losing some if their bank goes under at any point.

This protection limit is applied to accounts jointly for sole traders. This means that the limit will cover the total of all the balances that get deposited.

Sole Traders

Sole traders can transfer their money between their business and a personal account, as both are in the same name. You will find that a lot of banks offer great rates on personal savings. If you are a sole trader, you should consider going with this option.

An offset mortgage can be a very good idea if you are self-employed. This will let you keep your entire savings pot in an account that is tied to your mortgage. Your bank won’t charge you interest on the same amount you owe on your home loan when you do this.

Sometimes the difference between traditional interest rates and offset mortgage rates can be nominal, but this is not always the case. If you are going with this option, it is important to proceed carefully so you don’t end up losing more than you have to.

Final Thoughts

All small business owners should make a point of reviewing their savings account options before selecting one in particular. The right savings account can go a long way towards helping you earn as much as possible on the money you deposit. This choice will also determine how much risk you are taking, so you shouldn’t rush into a final decision. If you want to get the best deal on a savings account, you need to do the necessary research first. Take the time you need to compare different savings accounts at various financial institutions.

A Simple Guide to Protecting Your Savings

Everyone should know how to effectively keep their savings secure at all times. Those whose money is in a traditional UK bank will have protection under the Financial Services Compensation Scheme. A total of £75,000 is guaranteed for protection for each individual person per bank or credit union. While this appears to be very straightforward, there are still some things that you will need to know.

Regulations to Protect Your Money

In the UK there are regulations to protect your money, as long as it is in an established financial institution. Money that is put into joint accounts get double the protection or £150,000. The FSCS covers money in banks and credit unions, but only up to a certain amount. Those who think that they are reducing their risk by spreading their money out over numerous savings accounts might be mistaken. You may also have the standard £75,000 covered, so check with your bank before taking this action.

How it Works

The FSCS is a fun that is regulated for the government and exists for the sole purpose of providing people who have their money in banks, with payday lenders such as Emu.co.uk and credit unions with a safety net. This means that if your bank goes under for whatever reason, most if not all of your money will be safe. You might not have access to cash for a while, but you will be compensated eventually. Even children’s accounts are protected in this way, and it should give you some peace of mind.

Protecting Your Savings in Foreign Banks

You will find that many banks in the UK that are owned by overseas companies get the same protection that all others do (maximum of £75,000). There are some European banks that do not offer this protection. This is due to the fact that certain banks are protected by the scheme in their home country. If the bank goes under, you will need to go through the overseas country’s compensation scheme to get your money back.

What are the Chances of My Bank Going Under?

A lot has changed since the financial crisis, and mostly for the better. There is always the chance of something happening to your bank, but the FSCS will ensure that you get your money back. As unlikely as this situation may be at the present time, it is still important to be prepared. You will need to make sure that your heard-earned cash is in an official UK financial institution.

Spreading Your Money Around

It is a good idea to limit your savings to £73,000 per financial institution. Those who have less than £75,000 won’t have to worry about spreading their money around, as it will be safe. The problem comes when your savings exceed the maximum FSCS coverage amount.

Those who put more than £75,000 in a single financial institution are putting themselves at risk. If your bank goes under, you could lose the difference. By spreading your savings out across multiple institutions, you won’t have to worry about losing any of it if something happens.
If you happen to have a joint bank account, you will be covered up to £150,000. If you have more than this amount in savings with your spouse, you should spread it around. Those who have less than that can keep it all in one place.

Sometimes going over the limit can be the practical way to go, but you will need to spend some time thinking about it first. You might want to consult with a professional so you know you are making the right choice.

What if I don’t want to Spread my Savings?

There is another option available to those who don’t want to spread their money across numerous pots. You can use a government-backed NS&I, which will guarantee all of the money that you put into it. The only situation in which your money wouldn’t be protected is if there is a government-wide collapse, but this is highly unlikely. This is one of the best solutions for those who have a very large amount of money that they want to store in one place.

Check Your Accounts Every Day

It is important that you check all of your accounts on a daily basis to ensure that everything is okay. Pretty much every single financial institution will allow you to do this online, which is very convenient. It only takes a few seconds to do this, and it is well worth the time. If you notice any sort of problem or anomaly with your account, you need to get it resolved right away. The longer you neglect the problem, the bigger it is going to get. Also, make sure that you only put your money into reputable financial institutions that you can rely on for the long term.