Which startup bank account to choose?

As a general rule, you ideally want to store your funds in a reputable bank that is not going to go bust without getting a government bailout. However, the banks that meet this criteria (Lloyds, Barclays, etc) usually take 4-12 weeks to set up a bank account. 

Your First Bank Account

Revolut Business has the fastest KYC checks and seems great. However, there is one drawback. They are the only bank in the world to charge fees in the same transaction that you pay with. This means that if you send £100 to someone, your bill will show a spend of £100.20.

This means none of your payment data will match your receipts. If you really need multi-currency accounts, then go with them (the app is great) but this gradually becomes an accounting nightmare.

As a solution, either pay for a premium tier with no payment fees or use someone else, such as Monzo Business, Tide or Starling. Tide says it is good for expenses, but their expense storage doesn’t work at scale. Starling has not approved any of my 3 applications to use them, so I cannot provide a recommendation either way. Revolut Business could be an easy launchpad to a bigger bank. 

Your First Proper Bank Account

Revolut Business has a great product for startups (excluding the payment fee issue), but it does have a few red flags - such as not being given a banking license by regulators.

We use Revolut for working capital day to day, but I would store 95% of our money in a ‘proper’ bank like Santander, Lloyds or Barclays. In a bankruptcy case, the UK government will protect UK depositors and businesses, so a UK bank like Barclays or Lloyds seems safest.

You need to start the clock on this account early as it takes a lot of paperwork. Lloyds provides an experience 10x better than Santander. Adding signatories requires paper forms, that routinely get lost or mis-processed so you have to send them in 3x over a few months to get any changes made. 

Interest Income

The Business Savings Accounts offered by most banks aren’t very good. We aren’t in the business of investment advice & nothing we write is investment advice. Some non-bank investment platforms like Interactive Brokers offer high interest rates on cash deposited there.

Recommendations

• Don’t use Santander. I'm still getting text message notifications for payments from a company that I worked at 4 months ago.
• Only put a small % of your money into banks like Revolut & Starling.