Business owners urged to take six steps to limit coronavirus risk to their operations

AMID all the uncertainty caused by the coronavirus outbreak business owners may feel their fate isn’t in their own hands – but in fact there’s lots that they can do to help them take control.

Business owners urged to take six steps to limit coronavirus
David Tew

“These are uncertain times. No-one knows exactly how this is going to play out. But there are certain things you can do to protect your business,” said David Tew, a dispute resolution specialist with Cartmell Shepherd Solicitors.

“A bit like the advice across society about taking sensible steps such as washing your hands, there are steps you can take as a business to protect yourself,” said David.

Here David shares half a dozen simple steps aimed at helping you and your business to be prepared and to focus on what you can control.

1. Check your ongoing contracts

“Check your contracts. What are your obligations and your rights? 

“Will coronavirus allow a contracting party to pull out of its obligations on an existing contract? It depends very much on what is the exact wording in the contract.

“In particular you should be checking is there a force majeure clause in your contracts which allows a party to suspend or terminate the performance of its obligations when certain circumstances beyond their control arise.

“If there is not a force majeure clause then it is possible to look at the legal doctrine of ‘frustration’ where it is impossible to complete a contract because of a change of circumstances outside your control. But this is open to different interpretations and may be difficult to rely on, highlighting the importance of ensuring that your contracts are fit for purpose.”

2. Check your insurance policies

“Have a close look at your business insurance policy to see if you have any business interruption coverage and check exactly what those terms are.”

3. Carry out a risk assessment

“Carry out a general risk assessment on all parts of your business to identify exactly what is at risk, and then focus on controlling those areas which are within your control.” 

4. Take practical steps

“So far much of the focus has been on the international aspect of coronavirus. But that is set to move to a more domestic level and it is important as a business owner that you do everything you can now to make sure you, your employees, your supply chain and your clients are as prepared as possible.

“If we are moving towards a situation where the advice will be for more people to self-isolate, or if there are restrictions of movement, then there are practical steps that you can take now to mitigate those risks.

“If you want to move to more remote working, then check the practical issues that will involve. Do the business processes and procedures work remotely? Check employee policies – do they cover working from home? Is it practical for all employees to work from home? Do they have a safe environment to work in?

“Review your supply chain. Have a discussion with those in your supply chain and discuss action plans with them.”

5. Keep communicating

“It is really important to keep communication channels open between you, your employees, your clients and your supply chain. Keep talking and discussing how you can support each other. Follow any guidance online https://www.gov.uk/guidance/coronavirus-covid-19-information-for-the-public

“Identify ways you can work together. There will be cases where because of the way a contract has been worded, it is within your legal right to ensure that those obligations are met. But that might not be the best approach when it comes to long-term business relationships.

“You are likely to want those relationships to be positive in the long term. And while the temptation might be to jump on the specific wording in a contract, remember that your clients and customers will still be here long after this situation has come and gone. How you act now, is likely to affect those business relationships in the future. 

“By showing flexibility and understanding and being willing to restructure that arrangement in the short term, is likely to be of benefit in the long term.”

6. Ensure you have good legal advice

“A good solicitor will help you with your concerns and give you the advice on how you can best protect your business. We have a six-strong team in dispute resolution at Cartmell Shepherd led by director Mark Aspin. If you are unsure about anything it is always best to ask.”

Chancellor Must Use Budget to Give Family Businesses Confidence to Invest in the Future – Starting with Maintaining BPR

The Institute for Family Business (IFB) is calling on the Chancellor to use his Budget on Wednesday to create an environment that gives family businesses the confidence to invest in future growth.

Reports that the Chancellor intends to review the Business Property Relief (BPR) in the upcoming Budget, are deeply concerning to the UK’s family run businesses.  Family businesses employ over 13 million people and generate 28% of the UK’s GDP.  Family firms continue to exist for generation after generation by innovating, adapting and looking for new markets and opportunities. They make investment decisions for the long term.

Every year 85,000 family SMEs are expected to transfer ownership of their businesses to the next generation. Removing BPR would force family run firms to pay a tax penalty on transfer, which others don’t have to. 

Fiona Graham from the Institute for Family Business said:

“Family firms are the driving force across all regions, communities and sectors of the UK. Well over 80% of businesses in Yorkshire, the North West and the East and West Midlands are family owned. In those four regions alone family firms employ nearly four and a half million people.

“Inheritance tax relief is essential to their future prosperity.  Scrapping it would have a catastrophic impact on family firms. It would lead to family run businesses being sold or broken up to pay an Inheritance Tax bill, with knock on effects on employment.  It will also damage confidence in the sector, where families would reduce investment and always plan for the worst.

“The introduction of BPR positively impacted the health of family businesses and the wider economy by giving business owners the confidence to invest and expand.

“The majority of British businesses are family businesses.  They are dependent upon BPR for their current and future prosperity. Any change to it would inevitably result in a decline in growth and investment coupled with stagnation in the number of new jobs being created.

“As the UK seeks to level up nationally in the coming years, the success of family businesses will be a crucial factor in doing so. In order to succeed and grow, they require a stable tax system and an economic environment.  The future of the family business sector – and ultimately the Government’s ambitions for regional growth and investment – rely on maintaining BPR.” 

The Institute for Family Business is the UK’s family business organisation, supporting and promoting the UK family-owned business sector through events, networking, representation, and thought leadership.

Two-thirds of British businesses are family businesses – ranging from multinational, multibillion-pound businesses to micro start-ups, the sector employs over 13 million people and contributes £182 billion in taxes. 

Brexit Opportunities: How Small Businesses are Impacted by Brexit (Plus Ways to Pivot)

Brexit is nothing short of a political tsunami, unlike anything we’ve seen in recent UK history.

It sent powerful shockwaves across the economic landscape. Small business owners are scrambling to grasp the magnitude and nature of this disruption. They have to deal with looming uncertainty and revamp their strategies, which doesn’t come easy.

But, to be fair, it’s not all doom and gloom out there.

There’s no shortage of emerging Brexit opportunities to expand, pivot, and grow your small business. They are concealed both in unexpected places and in plain sight. Leveraging them is a matter of survival in the harsh business environment.

Here is how to navigate the treacherous waters are emerge stronger than ever before.

A Deafening Wake-Up Call

We probably don’ have to repeat all the ways in which Brexit has disaster written over it.

There is a slew of notions floating around in public, which those sentiments. Instead, we want to offer something that comes in short supply– the good news.  

You can work your way around new obstacles and business risks on the road to business success. Indeed, Brexit gives us plenty of reasons to rethink our approach.

So, the first thing to do is educate yourself on all the practical consequences. The main goals are to identify opportunities amidst the chaos. They are your chance to position your business better and elevate its profile.

Some opportunities exist in the long-term horizon, while others involve a limited window of opportunity. They are also more applicable to some companies than others. There simply aren’t easy solutions and clear-cut answers.

On Top of the Game

To get on top of decision-making, factor in the particularities of your business case.

The following elements should be a part of the equation:

  • Size of the company
  • Growth/lifecycle stage
  • Industry sector
  • Type of products/services
  • Geographical presence

It’s safe to say these aspects don’t carry the same weight. Nevertheless, none of them are to be ignored.

First off, Brexit opens doors to various opportunities beyond the EU. In case you already export or serve customers overseas, that’s great news for you. If anything, it could significantly boost your sales and reinforce the market foothold.

This is also possible thanks to a weaker pound, which is conducive to export-oriented businesses. In other words, a lower exchange rate makes UK goods cheaper. It also acts as a magnet for foreign investment.

Two Sides of the Coin

The flip side is that imports are going to be more expensive.

Hence, businesses that rely on them will struggle to maintain operational profitability. One way to overcome this obstacle is to seek more UK-based partners.

Yes, such a transition requires time, resources, and thoughtful planning. But, it can pay dividends down the road.

Rest assured domestic demand is poised to surge in the wake of Brexit. In many cases, customers will be tempted to forgo foreign brands because they’ve become pricier. This is to say many UK businesses will be more competitive than their counterparts from abroad.

Of course, these are all general predictions that may not always hold to the scrutiny of reality.  

A lot will depend on the ability of the government to negotiate favourable bilateral deals. Therefore, keep up with the changes in trade tariffs, as well as currency fluctuations.

Thriving in an Unforgiving Climate

Another major influence of Brexit is regulation getting less stringent.

Yes, in general, the UK is likely to stay aligned with the EU legal framework. At the same time, however, it might diverge from it in some important ways.

This development will give more wiggle room to UK businesses. It will facilitate certain key business processes, making them quicker and possibly cheaper.  

Furthermore, bear in mind there’s one great way to capitalize on Brexit.

Namely, you could try to address newly-arising customers’ concerns and dilemmas.  The idea is to discover pain points in relation to leaving the EU and attempt to mitigate them.

A consultancy service is an obvious choice, especially for those who possess the necessary skills and expertise. But, this kind of small business is far from the only option. In fact, it’s more of a short-term, situational opportunity.

A Breath of Fresh Air

A more approachable alternative would be to refine your products and services according to the wants and needs of post-Brexit customers.

Some of the focal points to guide the process are:

These opportunities aren’t one-size-fits-all solutions. For example, legal firms are inclined to gravitate toward employment law. What is more, they could prosper by aiding UK firms in hiring employees aboard.

On the other hand, accountants may want to jump on VAT changes. A lot of businesses need assistance in comprehending them, as well as in refining related processes.

The bottom line is: conduct extensive market research and see what makes sense in your context.

Making a Strong Account of Yourself

To go the extra mile, establish yourself as a reputable expert.

Share your insights and experience with how your small business is coping with change. Turn your networking, publishing, and personal brand-building efforts a notch. Take part in discussions on how the industries ought to respond to disruption.  

Consider joining Brexit committees sprouting up recently. Get in touch with trade associations and other relevant organisations to figure out where these opportunities lie. Government consultations could also deliver a nice boost and put you close to the source of information.

Beyond that, you should feel free to explore other avenues. Trends such as automation aren’t exclusively tied to Brexit, but they certainly enable small businesses to move ahead.

Make sure you don’t miss out on those.

Brexit Opportunities: You Can Either Shape Up or Ship Out

Brexit implications come in all shapes and forms, ranging from good to bad and ugly.

This is a less-than-ideal turn of events, but it shouldn’t give rise to panic. You’re much better off embracing a proactive, paced, and strategic approach.

Do your homework to properly assess the reconfigured ecosystem. Recalibrate your business strategies and processes in the light of Brexit.

For instance, you may need to start looking either closer to home or further away from the EU neighbourhood. Make do with new tools to cover vital business functions and pave the way for expansion.

These are the stepping stones to gaining a powerful edge in the brave new market. It’s time to seize lucrative Brexit opportunities before the competition beats you to it.

Check out the entries in our economics and business section to stay in the know and future-proof your business.

Should You Open a Joint Bank Account with a Business Partner?

When you first start your business, having one bank account may have been enough to handle your financial needs. Now that you’ve grown, you’re wondering if it’s time to consider a joint bank account for your business.

Opening a joint bank account could make it much easier to handle your business’ financial needs. 

Have you never had a joint bank account? Are you curious about the benefits and disadvantages of having one?

We’re going to give you a quick rundown on what you need to know about having a joint account.

What Is a Joint Bank Account?

The concept of a joint bank account isn’t difficult to understand. Essentially, a joint bank account can allow different account holders to deposit and withdraw money. 

In terms of function, there isn’t much difference between having a joint bank account and a regular bank account for your business.

Each account holder will have their own chequebook and debit card that can allow them to make purchases or take out money at ATMs.

They’ll be able to access their account online and have all of the regular functions associated with a normal account.

Most joint bank accounts only have two account holders like spouses or two business partners, but you don’t have to stop at giving only two people access. You can open a joint bank account with three people, five people, or as many as you desire.

Joint Bank Account Pros 

Opening a joint bank account with your business partner can have a lot of benefits.

If you’ve been on the fence about whether or not opening one is the right thing to do, take some time to learn about all of the different ways having a joint account can help you and your business partner.

Transparency   

Does it occasionally feel like you and your partner are on completely different pages when it comes to finance? Opening a joint bank account can give you some much-needed insight into your spending and cash flow.

It’s easy to say that you’ll always let someone know when you make a big withdrawal or deposit, but emergencies and last-minute purchases do happen. 

Juggling multiple bank accounts for one business can start to be a little tricky. Eventually, you’ll start to lose track of what’s in each account. 

When you have a joint account, you and your business partner can handle making all of your purchases and manage all of your business expenses out of one account. It’ll make paying bills and managing finances a lot easier. 

Having two sets of eyes on the same account can also be helpful when you’re balancing the books and making purchasing decisions.

You may think that you’re able to make a purchase, but your partner can double-check your numbers to be completely sure.

Speed

You’ve found the perfect office space for your growing team and the realtor you’re talking to wants you to make an offer fast. Unfortunately, your partner has your bank account information, and they’re on vacation for the next 10 days.

Working out of a single bank account can seriously slow down some of the work and decisions you want to make.

When you have a joint account, you won’t have to worry about delaying any important purchasing decisions. As long as you have your account information, you can make purchases whenever you want.

Extra Insurance

You’d like to think that every deposit you make is foolproof, but you never know what can go wrong.

The person that wrote you a cheque may have miscalculated how much they have in their account. It’s even possible that the bank itself could have problems with clearing deposits.

You may not know this, but both the FDIC and NCUA provide $250,000 of federally backed insurance coverage for each depositor. This is done in case of bank failure.

If you open a joint account with your business partner, that $250,000 will turn into $500,000. This can give you some extra much-needed protection in case anything goes wrong. 

Joint Bank Account Cons

So far it may seem like opening a joint account could be the best thing you do for your business, but it isn’t for everyone.

There are plenty of benefits that come with having a joint account, but there are downsides too. Before you decide on opening your joint account, make sure you keep these potential downsides in mind.

No Individual Protection 

Depending on how you set up your account, creditors could have the ability to claim funds in your shared account.

If your partner is going through financial trouble or a legal matter like a divorce or lawsuit, the money you have in your joint account could be used to settle legal matters. 

You may have deposited the vast majority of the money into the account, but since the account will be in both of your names, you could lose money if creditors come after your partner.

Security Concerns 

If you give more than one person access to your secure bank account, you’ll leave yourself open to potential problems with security. 

Your business partner may accidentally lose their wallet or have it stolen. Someone getting a hold of their debit card could be enough to drain the money you have. 

Physical things don’t have to be stolen for your account to be compromised. Logging in to your bank account of a public device and forgetting to log out could be enough to put your business finances at risk.

Choose Wisley 

Ultimately, you should only open a joint bank account with your business partner if you truly trust them. 

You won’t want to share a joint account with someone that has a history of making bad money decisions, isn’t responsible, or could have serious legal trouble on the horizon. 

Do you have more questions about baking for your business? We have a lot of helpful content that can help business owners make the best decisions possible around their banking needs.

Be sure to browse all of the content in our banking tagged posts so you can learn everything you need to know about banking when you own a business.

How to Get a Secured Business Line of Credit the Right Way

A secured business line of credit is one of the best loans an owner can get.

Business is all about maximizing profits and earning a passive income. Unfortunately, not everyone has the necessary funds to start a business. This can leave many people struggling to figure out how they’ll start the business of their dreams.

Businesses borrow money for a variety of reasons, mostly to invest and make purchases benefit them. While there are a plethora of loan types, a line of credit is the only type that allows a business to keep borrowing. 

Keep on reading to learn more about lines of credit and how to get one!

What Is a Secured Business Line of Credit?

A secured business line of credit is a type of loan that you can use whenever you’d like. The line of credit (LOC) is the maximum amount that you’re able to borrow.

One of the most common lines of credit is the credit card. A credit card can be used continuously, so businesses can opt for these or other types of LOC.

If your LOC is £5,000, you can’t borrow past that. However, you can continue to borrow providing that you pay some of the money back. If you’ve maxed out your line of credit, paying off £1,000 would allow you to start borrowing up to £1,000 again. 

What makes a secured line of credit different from an unsecured line of credit is that, unlike an unsecured LOC, you need to provide collateral.

Collateral can come in the form of many things. When it comes to businesses, they’ll usually offer property and equipment as collateral.

Obtaining Traditional Bank Credit

A line of credit can be acquired at most banks and credit institutions. Many businesses will opt for traditional bank credit because it’s secure and can provide a lot of funds. The best private banks have better rates than public ones, so consider that when you’re looking for a loan.

Depending on your credit, you can get a high borrowing limit with low interest rates providing that you’re making minimum payments. 

Newer businesses will need to apply for a secured line of credit because they’ll have a hard time proving their financial eligibility. As your business establishes itself, you can start looking into unsecured LOCs. Keep in mind that you’ll have to pay high interest rates if you go for unsecured ones.

Banks often require borrowers to have a good credit score, so it may be difficult to obtain a LOC if you have a poor score or little to no credit history.

Small Business Loans

Small business loans are designed to help startup businesses get their feet off the ground. With this type of loan, you’re guaranteed low interest rates and can borrow several million.

You can get them at most banks, similar to traditional bank credit. Be sure to look at the terms and conditions of the loan. You’ll want to know the interest rate and the duration of the repayment period.

Seeking Out Investors

Seeking an investor is a great source of an LOC because they can provide a cash reserve when you need money. Investors regularly put their money into things like stocks, but you can ask them for direct money and offer them something in return.

When an investor buys a stock, they technically become an owner of the company. If you’re trying to borrow money from them, you could offer partial ownership similar to that of a stock.

You can also work out a deal in which they offer a continuous flow of money, essentially providing you with revolving debt.

No matter what you do, ensure that you have everything in a written, legally binding agreement. This protects both you and your investors in case someone doesn’t fulfil their end of the deal.

How to Guarantee That You’re Approved

Businesses have to go through a business credit application process similar to the loan process that most individuals go through. As an owner, you’ll need to meet with a lender and convince them that you’re suitable for a loan.

Do the following to guarantee that you’re approved:

Improve Your Credit Score

To get a loan of any kind, you’ll need to have a decent credit score. When it comes to a business line of credit, lenders will want to see that you’ve previously had an LOC and have managed to pay it off. 

What builds credit is paying off debt and reducing how much you borrow. The best way to do this is to start putting most of your money into the debt with the highest interest rate. While doing this, make minimum payments on your other debts to continue raising your score.

Bring Financial Records

You need to show up with organized records of your finances. This will include things like documentation of income, previous debts, and receipts of your payments. Being organized will look good to the lender and you’ll be able to present them anything when they ask.

Start Considering a Secured Business Line of Credit

If you own a business or would like to start one, a secured business line of credit can help you get ahead by providing the funds to make bigger purchases. While it’s possible to find success without borrowing, paying out of pocket will be difficult if you don’t have much money saved.

We encourage you to start looking into various banks and decide whether you should get a secured line of credit. If you have the funds to operate a business without borrowing, avoid getting an LOC so that you don’t have to pay interest.

Browse our business section to learn more about business-related finances and tips.

Drawing the Line on Free Business Giveaways

There are few business marketing practices that have stood the test of time as well as free giveaways. Whether offering products or services, this arm of advertising is popular for a reason. It gives customers a chance to get something for nothing, and it gives a business an opportunity to illustrate their strengths to the greater market. When done right, in many ways, it can be a win-win.

With that that in mind, it’s also important to remember that this can be a dangerous game. Making an avoidable mistake, or working without full comprehension of the possible positives and negatives of a position, can put both finances and reputations at risk.

When Should Giveaways be Avoided?

One of the biggest issues with free giveaways is how nebulous the results can be in terms of costs and benefits. Larger businesses might have the ability to hire marketing firms or invest in research to accurately predict the outcome of a free giveaway but, for small to medium-sized businesses, such actions can be an impossibility.

To address this issue, it can be a good idea to look at the worst possible outcome of a free giveaway, and check whether or not a bottom-line can afford the hit. Imagine a struggling Ford garage offering incentive projects where specific vehicles purchased within a set time-frame go into a draw to be fully paid off by the dealership. In the worst-case scenario, no more cars would be sold than usual, effectively adopting an enormous financial hit for zero real monetary rewards.

Businesses also need to know that not all that glitters is gold, and not everything that is offered for free is appreciated. While this is only one aspect of the free giveaway game, it is one of the most fundamental features, which even the biggest businesses can overlook.

Drawing the Line on Free Business Giveaways
Drawing the Line on Free Business Giveaways. Source: Pixabay

Take, for example, how Apple made headlines by giving away a free U2 album to iTunes users back in 2014. Apple saw this is a way to give people some of what everyone loved. Unfortunately for them, they vastly overestimated U2’s actual appeal. On top of this, the act of downloading the album automatically onto people’s devices used up room and bandwidth and messed with their shuffle functions.

In other words, just because you have the stock, doesn’t mean customers will necessarily care. Instead of such a broad shotgun approach, it’s best to narrow your sights to those who show informed interest.

When Should Free Giveaways be Used?

The most important part of this question lies, again, with the potential cost. Can a business afford the cost no matter the outcome? Then, and only then, should the business continue with this plan of action.

In the modern age, free giveaways are used to draw attention to not just a business as a whole, but also to a specific part of a business. This saw an enormous take-off at the turn of the new millennium as businesses increasingly turned to creating their own websites and, more importantly, online ordering systems.

Drawing the Line on Free Business Giveaways
Drawing the Line on Free Business Giveaways. Source: Pixabay

Online ordering and interaction systems are an enormous boost for businesses, in that they free up man-hours for staff, they can handle much more traffic than direct human interaction can, and they can operate 24/7. In these instances, free giveaways tied to online ordering systems could create unprecedented leaps in productivity. Walmart was one such example of this, where already legendary convenience was raised to an entirely new level.

More recently, this has taken the form of mobile-focused ordering systems. As more users turn to mobiles for internet use, this has again pushed for fresh illumination. Again, smaller free promotions can drive engagement, and can help spread word of mouth. This can be especially useful for businesses offering smaller goods and services, as they won’t have to eat significant costs. This might not matter so much for Walmart-sized franchises, but it will for almost everyone else.

Another method, as utilized by some businesses, is to extend already common bonuses one step further. For example, some businesses, such as online casinos for example, have long offered deposit matches as bonuses for new users, to the point where these are usually standard. New casinos, trying something different, turned to giving away no deposit bonuses, effectively one-upping the competition.

Of course, this particular industry can protect itself from what is known as wagering requirements, but the general concept of one-upmanship can still apply to a wide range of other markets.

Looking From Inside and Out

Measuring when a free giveaway is and isn’t worth the effort means walking a balancing act. What works for one industry or business might not work for another, even if the two are nearly identical. Because of this, the most important part is not to get lazy, and not to make assumptions on what will work.

By taking a step back from the industry, and doing individual research on what customers want, it can be possible to gain a much clearer picture. Work for success, but protect against failure. Try something new, but observe what others have done that worked and didn’t. Remember that there is no easy solution, but performed at the right place and the right time, a free giveaway can be a business-saver.

5 Benefits of Opening a Business Bank Account

Opening a business bank account may not seem necessary when you first start your business, but having a separate account from the beginning comes with many benefits.

Once you reach a certain size or incorporate your business, you’ll need a business bank account anyway. It’s easier to start a separate account when you establish your business to keep everything separate from the beginning.

Starting a business bank account is a simple process, but you’ll want to compare the account fees to find the best option for your situation. You might have fees for not meeting a minimum balance, transactions, cash deposits, ATM use, and monthly service fees. 

If you’re on the fence about starting a business banking account, check out these five benefits.

1. Separation of Personal and Business Finances

Once you deposit business funds into your personal bank account, there’s no way to separate those finances. You can keep records showing which deposits belong to your business, but the money goes into one pool.

This can blur the lines when you’re spending money. Is the money you’re using to buy groceries your personal money or the business funds? There’s no separation.

It makes your bookkeeping more complicated because your personal and business transactions go on the same statement. The transactions are mixed together, so you have to go through line by line to sort them. 

This not only creates more work, but it also makes it difficult to get a quick snapshot of how your business is doing. You can’t just glance at the balance or the transactions. It takes more work to figure out which transactions have processed and which ones are still pending.

If you use an accountant to handle your business finances, having a separate bank account makes your accountant’s work easier. The saved time working on your account can save you money if your accountant charges by the hour.

The mingling of finances also makes your taxes more difficult to do. You may miss some of your business income or expenses when you put everything into one account. A mistake on your taxes can result in penalties. 

If you ever get audited, you’ll have clear separate documentation. Having multiple bank accounts can make the audit go more smoothly.

2. Personal Liability Protection

Running a business comes with financial risks. If your business performs poorly or gets sued, you want as much personal protection as possible.

Separating your business finances can give you some protection. When you combine personal and business finances, your personal assets are at risk if someone comes after your business.

Your business account has the business name and address on it instead of your personal information. This helps protect your identity.

It can also reduce fraudulent activity on your personal account. Each time you write a check for a business transaction from your personal account, you put your personal information out there. If it falls into the wrong hands, you could have your identity stolen or your bank account compromised.

A business account can also be compromised, but you won’t have to worry about your personal bank account being affected. 

If you decide to run your business as a corporation, incorporated sole proprietorship, or partnership, you’ll need a business bank account anyway. Those types of business structures provide greater personal liability protection than a sole proprietorship. 

3. Professional Appearance

Your customers won’t know what type of bank account you have unless you ask them to write the check to you personally. But the bank, vendors, and other people you pay will know.

When you pay your vendors for goods, are you writing a personal check? That can make your company look more like a hobby than a legitimate business.

Having a separate business bank account gives your company a more professional appearance. It looks like you’re taking your company seriously from the beginning.

It can also make people feel like you’re more of a legitimate business. Vendors want to know you’re going to be able to pay them regularly. Banks want to know you’re serious about your business before they lend you money for your company.

4. Business Credit Score

Even if you’re not seeking funding for your business now, you may in the near future. To get that funding, you’ll need to convince a bank or investors that you’re a legitimate business and have the means to pay the money back.

When you set up a business account, you establish your company’s financial history. If you manage your money well, it shows a history of timely payments without overdrafts or other financial difficulties. This builds confidence with potential lenders.

A separate account can also make it easier to get a business credit card account. Having those relationships with the bank as a business owner with a business account helps. 

All of the financial transactions that happen under your business name go into your business credit score. It’s similar to a personal credit score with several factors going into the calculation.

Credit bureaus may use information from your business bank accounts, vendors, business credit cards, and other sources. Your business credit score goes into lending decisions.

By separating your finances early, you slowly build a strong business credit score. When you decide to look for financing, you have that established history as proof of your creditworthiness.

5. Easier Payment Acceptance

Offering your customers as many payment options as possible helps keep them happy and may even encourage people to do business with you.

Processing those various payment types is much easier with a business account.

If you accept personal checks, your customers will likely write them out to your business. To deposit the checks, the name needs to match the account. A separate account listed under your business name lets you easily deposit those checks without issue.

If you plan to accept credit card payments, you’ll need a merchant account. That’s a special bank account that lets you receive credit card payments. It lets you have access to the credit card payment amount less the fees, so you don’t have to wait for the normal processing period.

Opening a Business Bank Account

The benefits of opening a business bank account are worth it to protect your personal assets and simplify your business accounting. Explore our business section for more useful information to help your company grow.

Reed Smith appoints former Deutsche Bank Managing Director in London

LONDON, 7 January UK – Reed Smith today announced that Joe Kohler has joined the firm’s Financial Industry Group, marking another significant addition to its banking advisory and derivatives practice.  Kohler joins Reed Smith from Deutsche Bank, where he served as Managing Director, Legal, Corporate & Investment Banking.  In that role, he co-led the bank’s sales and trading legal function globally, with deep transactional experience across the entirety of the fixed income, currencies and commodities businesses.

Reed Smith appoints former Deutsche Bank Managing Director in London

Over the course of his 18-year career at Deutsche Bank, Kohler led the legal work on many of the largest and most important transactions the bank conducted. He managed Deutsche Bank’s legal department’s response to counterparty defaults, downgrades and worked on enforcement and asset recovery efforts during the credit crisis of 2008. He also worked on the building of the first OTC derivative clearing offerings, on the development of the related market infrastructure and contributed to trade association efforts to standardise the related documents. He then helped shape the bank’s response to new regulatory developments such as EMIR, MiFID II, the collateralisation of uncleared derivatives, Brexit and IBOR reform.  Furthermore, he also has extensive experience of merger and acquisition activity in the financial sector, having led on the acquisition and disposal of many businesses and portfolios.

Kohler has led large teams on strategically critical projects within Deutsche Bank and brings to Reed Smith a deep understanding of the inner workings of the legal department within a global investment bank.  Given his sophisticated knowledge of structured finance and products, expertise across industry asset classes, and litigation and regulatory enforcement experience, and in-house familiarity, Kohler is well placed to add to Reed Smith’s bench strength providing strategic advice to banking clients on these transactions.

“Joe’s arrival adds to the bench strength of the firm’s highly regarded banking advisory and derivatives practice,” said Ed Estrada, global chair of Reed Smith’s Financial Industry Group.  “Joe is immensely respected and regarded within Deutsche Bank and throughout the investment bank community, and his reputation for providing steady and sound leadership on complex transaction and litigation matters as in-house counsel is an invaluable asset that our clients will certainly benefit from.  We are excited to have him join our team.” 

Kohler said, “As an in-house counsel, I wanted the law firms my team instructed to add something to secure a better solution than we could deliver on our own – perhaps insight, experience or capability. I was always reassured when we selected Reed Smith, because they always delivered what we had been looking for, and did so efficiently and with a profound understanding of the commercial context.  I am really excited to be joining Reed Smith’s highly impressive team.”

About Reed Smith

Reed Smith is a dynamic international law firm dedicated to helping clients move their businesses forward. Our belief is that by delivering smarter and more creative legal services, we will not only enrich our clients’ experiences with us, but also support them in achieving their business goals.

Our long-standing relationships, international outlook, and collaborative structure make us the go-to partner for the speedy resolution of complex disputes, transactions, and regulatory matters.

For further information, please visit reedsmith.com.

SMEs in cashflow black hole as they wait for £24bn in late payments

Late payments up more than £10bn in a year

15% of British freelancers spend 4 hours and above a week chasing invoices

CEO of ETZ Payments, Nick Woodward, provides commentary on how late and inconsistent payments are hurting businesses and freelancers alike

Today, new research showed that Small and medium-sized companies are waiting to receive £23.4billion, up from £13billion in 2018. More than half of businesses are chasing money owed, with the bill for trying to collect it hitting £4.4billion, says retail payment authority Pay UK. This comes as ETZ Payments reveals startling national representative research that shows that nearly a sixth of freelance and contract workers spend over 10% of their working week chasing invoices and payments. The new research from PayUK showed that the average amount owed to each firm had risen from £17,000 last year to £25,000 today. This demonstrates that across the board, self-employed contractors, freelancers, and small businesses are under strain. As we near the general election and with almost guaranteed further Brexit uncertainty, SMEs and workers are going through one of the most turbulent periods of their existence.

Nick Woodward, CEO of ETZ Payments, a back-office solution provider for the recruitment sector, offers the following commentary:

“This year and next year will undoubtedly be a turbulent period for small businesses and workers alike with myriad political and economic issues and an increasing amount of late payments. This issue is seriously harming cash flow, investment and growth across the UK economy. There are over 2 million freelancers and 5.7 million SMEs today, and with financial constraints such as chasing invoices, this will harm productivity and profit, and more needs to be done by the next government to ensure that these entrepreneurs, business owners, managers and workers, are paid justly and on time to keep the economy moving.”

Three reasons why Corbyn’s Labour manifesto will bring economic chaos

Jeremy Corbyn’s Labour party’s radical Marxist manifesto will bring far-reaching economic chaos for Brexit-battered Britain, affirms the boss of one of the world’s largest independent financial advisory organisations.

The founder and CEO of deVere Group, Nigel Green, is speaking out as the Labour leader unveils his party’s manifesto on Thursday ahead of next month’s general election.

Mr Green says: “Labour’s Marxist manifesto is the most radical and dangerous in decades.

“It would bring far-reaching economic chaos for a Brexit-battered Britain already on the brink.

“Corbyn and McDonnell’s agenda would create a nightmarish scenario that would hit those very people the most that it is proclaiming to try and support and protect.”

He continues: “There are three fundamental reasons why the Corbyn-led Labour manifesto would damage the UK economy.

“First, it would drive down already stagnate business investment in the UK. 

“The mammoth nationalisation programme will leave companies thinking ‘who’s next?’ Plus, the snatching of 10 per cent of the shares in every big company and a significant increase in trade union power, including a return to collective bargaining, will leave UK and international investors justifiably concerned that their investments will not be safe under Labour.

“This will seriously erode any attempts to generate long-term, sustainable economic growth.”

Mr Green goes on to say: “Second, it would trigger an exodus of some of the most successful and wealthiest individuals.

“This would likely be due to concerns regarding Labour’s stance on inheritance tax, income tax, stamp duty and capital gains tax, potentially even capital controls, and the slashing of pensions tax relief.

“Typically, these people have the resources to move to safe lower tax jurisdictions if the tax burden in Britain becomes too great. 

“Should these largely job and wealth-creating, tax-paying individuals quit Britain, the government’s finances will suffer significantly because they contribute a disproportionately large amount to the state’s coffers. Indeed, they prop-up the system.

“And third, a renegotiation of the Brexit deal, which would be put to a second referendum, would create many more months of uncertainty for businesses.”

The deVere CEO concludes: “Labour’s economic agenda is a risky gamble. Its potential for serious adverse consequences is massive. 

“And whilst the radical plans are already far-reaching, this might be just the beginning, with more misguided policies to come.”