You have a brilliant idea for a new company, but before it starts bringing profits there are just so many small expenses that build up and affect your start-up capital? Check out these simple tips to lower the day-to-day costs.
Online Business Account
One of the essentials for any company is a bank or online business account to manage the main finances. Depending on your country’s regulations you may be obliged to have an official business bank account. However, it’s still worth to research some of the most popular online platforms because it’s simply easier to manage sales and keep track with the accounting.
1. Be careful of maintenance fees and inactivity penalties
In some cases there might be monthly charges for maintaining the account. Alternatively, you may be required to meet a certain amount of transactions or total income. Before you start with your sales or, if you know that the character of your business involves periods of inactivity, it’s best to look for free to use accounts. Otherwise, remember to meet these goals each month to avoid paying extra fees.
Mainstream banks usually offer a free period for start-ups to help them develop and lower initial costs. For example, Lloyds Bank, TSB or HSBC give you a free period for 18 months. In other cases, instead of monthly payments, there might be a one-time payment just to open the account. Online-based banks like Azlo, Nbkc, Wise or platforms such as PayPal and TransferWise usually don’t charge you for opening and maintaining accounts.
2. Exchange Rates
If you receive payments from all over the world, be careful with the exchange rates, which can eat a significant part of your income. Also, make sure that receiving international payments doesn’t generate any additional costs depending on your account offer.
Some platforms offer multi-currency accounts, which can eliminate the need for exchanging the currencies constantly. You can simply keep them in your online wallet or even spend them locally during your international business trips.
Watch out for platforms who offer “free” currency conversions because in many cases there are some hidden fees.
One of the popular methods is to put mark-up on the exchange rates, so while you don’t pay anything extra for the sole conversion, you get less currency because of the worse rates. Always check the current official exchange rates.
3. Which Business Account to choose?
Remember to check reviews and customer experiences before opening an account to learn from first-hand experience. Learn more details and be sure it’s a good choice. Some of the most popular places to do this is TrustPilot, Wirly, Finder or Monito.
The most common choice is obviously PayPal. It has become almost an industry standard for online startups and e-commerce businesses. Even though you receive great technological support and you can find the PayPal logo at almost every online store’s checkout, the 2.9% + $0.30 per sale might be too expensive for some. Since we are covering ways to save money in this article, let’s take a look at some cheaper, yet equally reliable alternatives.
It all depends on what features are important to you and your business. Do you need an API to connect to your e-commerce store? Do you plan an international expansion? Below are some popular and well-rated alternatives to PayPal.
TransferWise – their main feature is a so-called “borderless” account which lets you store multiple currencies and even spend them with one card. Since the platform offers good exchange rates, it can be a good choice for businesses with international clients. TransferWise seems to be well-rated by customers and various ranking sites and has more than 6 million users. With the Transferwise API, you can use it as a payment processor for any eCommerce store.
Revolut – it has been gaining a significant userbase when it comes to personal transfers and international payments. Now with their business offering, you can benefit from no mark-up on exchange rates which is great for international businesses. On the downside, it’s not supported in all countries, so check if you will be able to open an account.
There are also some mobile-focused apps which can be great for smaller businesses since they have total balance limitations. Tide Business Banking is the best example. There are no monthly operational fees, the app is well-designed and easy to use, and they even offer automated bookkeeping and integrated invoicing. However, you can’t keep more than 100,000GBP in your account.
In most cases setting up an online account for your business will be quite convenient, especially as nowadays most sales take place online. If your business is more offline-focused, then a well designed-app which you can always access with your smartphone can come in handy.