Companies that want to survive these uncertain times already know that it must protect its revenue base. Now is not the time to spend anyhow or incur avoidable expenses because COVID-19 is drastically affecting people’s economic fortune. So, in what way does your company stands to benefit if it operates a business savings account in the UK? Of course, answering this question would require knowing what a UK business savings account is.
What is Business Saving Account?
A business savings account is a particular account that business owners can open in the UK for depositing surpluses from their businesses so that it can earn them interest. This account ensures that business expenses you can avoid do not make their ways into your balance sheet, thereby limiting your company’s ability to bounce back during depressions. Now that coronavirus is testing the economic strength of most companies, it’s pertinent to examine whether operating a business savings account is worth it.
Benefits of Running a Business Savings Account in the UK
- The Interest Rate Is High
The two types of a business savings account -fixed and easy access- offer a significant interest rate for business owners more than what a business current account will offer. The interest rate is even higher if you go for the fixed savings account. However, you won’t be able to access your money until the time it is due. So, if you will need to withdraw regularly to run your business, it’s better to settle for the flexible account type.
- Possible Governmental Bailout
Your business may benefit from any financial assistance you may wish to give out through the UK’s Financial Services Compensation Schemes (FSCS). Of course, this is not a guarantee of some sort, but your company benefits little by not having a business savings account.
- Prevents Needless Expenses
In the time of plenty, it’s easy to be wasteful in handling funds. But when there is an account that promises a meaningful interest rate, it motivates you to save more. If you’ve maintained this habit before the coronavirus setbacks, the chances are that you would have enough revenue to run your company during these times. So, challenging moment as we currently have, it should not make you close your eyes against savings because it will soon be over.
- Avoid Tax Issues
Upcoming businesses may feel they don’t need a business savings account, but that will only lead them into tax issues with the government. Generally, it’s unethical to mingle business money with personal money unless both are, in effect, the same. You have insurance on your deposit: so, you may not have to worry.
Operating a business savings account even during this coronavirus period, is beneficial. You get to monitor your company’s spending closely, save money, and earn interest on it later. But like we noted earlier, you should not put your company’s funds in a fixed savings account if you know you may need it urgently.