Keeping small business bills down is easier than you think, using the same techniques as for slashing household costs. This is a speedy small business Money Saving Guide with best buys for business bank accounts & savings, utilities, phones, broadband & insurance and more.
Top Bank Accounts for Businesses
Personal bank accounts are usually fees-free if youre in-credit, yet the opposite’s true for their business brothers. There, charges of £25 per transaction are possible on top of monthly account fees, and this can be a nightmare. There are four steps to beating this…
Step 1: Use a personal account if you can.
If you are a sole trader (ie not a limited company) then you can simply use your normal bank account for your business, with all the better terms that involves. However, using a separate, dedicated account could make your record keeping a lot easier. For all the best buys see the top bank account guide.
Yet if you make large amounts of transactions, of big sums, or need to regularly bank cash, then your bank may request you get a business account. If thats likely, start with the right one straight away.
Step 2: Lowest charge business account
Based on charges, the Abbey Business bank account stands head and shoulders above the competition, offering free day-to-day transactions for life, within set limits (eg. 100 cheques, or £3,000 in cash deposited per month) and relatively low charges after that.
It also pays 6% in-credit interest on the first £2,500 held in the account if you pay at least £1,000/mth in. For small turnover businesses, this is certainly the top option.
However it’s effectively just like a consumer bank account. If you need complex facilities, such as an account that automatically works with Sage software or need business assistance, other banks tend have more rigorous systems, but at a price.
Even if you cant find one with the services you like at a low charge, dont give up with business accounts, its often possible to negotiate with your bank to waive the charges as long as you stay within set transaction constraints e.g. max. 10 requests to process business cheques each month.
Step 3: Minimise the charges you pay
Whatever the account, make your first job listing down the fees that apply and ensure you (and any staff) are aware of them.
Think about how you operate to minimise charges: ensure youre paid by BACS rather than cheque, stick to online banking, cut down on the cash you pay into the account, use automated transactions where possible and avoid using unauthorised overdrafts.
Make sure you check the charges in your statement, it may also help you spot problems for example, if you accept a cheque thats been returned unpaid by the debtor’s bank, your bank will charge you an administration cost, and you wont get the money due. So then you can chase the payment up and ask them to pay the incurred charges too.
Step 4: Sweep cash into savings
If youre in the fortunate position to build cash up in your account, be sure to have a business savings account linked to it, that you can sweep the money into to maximise interest (see below).
Top Business Savings
If you have spare cash that isnt needed day-to-day, it makes sense to stash it away. Yet where to put it depends on your company type.
Sole Traders – Use the top personal instant access accounts
Being a sole trader means money from the business is in your name and so can be moved into accounts opened by you. This allows you to get the top personal savings account rates, which beat specific business accounts hands down. It also means, regardless of how big your business is, you get the normal £50,000 per person per institutions savings safety.
Limited Companies – Find the best paying business savings
If you have a limited company then legally the company is an entity and the money belongs to it not you. If you therefore tried to move money into your own name it will trigger a tax liability.
So if you just want somewhere to stash the companys cash and earn interest, then you need a business savings account, sometimes called Deposit, Reserve or even Investment accounts. But with all, the aim is to put your money somewhere safe and maximise the interest on it.
The highest rate depends on how much access you want to your cash, and the amount of money you’ve got to save.
Top Fixed Rate: Standard Life, 2.9% AER for a year
If you are prepared to lock the cash away without access for a time, the Standard Life Fixed Rate Business Bond pays 2.9% AER fixed until 9 September 2010, from a minimum balance of £1,000.
If you’d rather fix for exactly a year, the top payer is Scottish Widows’ Fixed Term Business Deposit Account, which pays 2.5% AER, from a higher minimum balance of £10,000.
Guaranteed Good Rate: Investec 2.5% AER
The Business High 5 account from Investec pays the average of the five highest business savings rates in the market, currently 2.5% AER (as decided by price comparison site Moneyfacts).
You need to save over £50,000 and give three months notice to withdraw any money, so only go for this if you dont need instant access to your cash. The account’s operated by post or over the phone, and has a maximum allowed balance of £250,000.
Top Easy Access: Scottish Widows, up to 2% AER
If you want to be able to lay your hands on your funds more quickly, a choice of two phone and postal Scottish Widows accounts are your best bets.
The Business 7 Day Notice account (min £500) pays 1.75% AER for balances under £50,000 and 2% AER if your savings top this, though youll have to wait a week to get your cash out.
Alterntaively the same bank’s Business Deposit account pays 1.25% AER if you’re saving less than £50,000, and 1.5% AER if the balance tops £50k and takes as long as a standard payment takes to get in your account.
The protection your limited companys savings are due depends on your firms turnover.
Annual turnover under £1,000,000.
If you have a company with turnover under a million pounds, money in UK registered banks all the above are – has the same £50,000 per person (company) protection as private individuals (see the Savings Safety guide). So if youre saving more than that, for ultimate safety you need to spread it over different accounts.
Annual turnover over £1,000,000
Here you have no guarantee at all, so it’s a question of considering or even taking advice on mitigating risk. The spreading your savings philosophy is quite a good one here too though, as it does mean the risk of losing all your cash is mitigated.
Cut Business Gas & Electricity bills
Just like domestic energy bills, its possible to compare and switch to cheaper providers, The right comparisons to use depend again on what type of business you are running.
Limited companies (or anyone with commercial premises)
Here youre limited to using special business tariffs, but luckily some of the top energy price comparisons have cottoned on to the small business market.
However while there are websites, for their business comparison services they tend to operate through callback systems (ie you request it calls and goes through the savings with you), not online.
Sole trader (working from a house)
If you are working on a small scale, eg. in you or your colleagues house, and are a sole trader, you can usually deduct a proportion of your household bills as a business expense.
Switch the house to the cheapest gas and electricity providers using the top standard price comparisons (plus get cashback), using the normal Gas & Electricity switching technique.
Use less energy!
The bigger the bills, the more you can save by being energy efficient. Spending a little money on decent draft insulation, turning off lights, turning computers of standby, and more – see Energy Saving Trust.
Office Phone & Broadband
Costs here can vary enormously, depending on whether your business is consumer facing and how professional your telecoms need to appear.
Are you based at home?
Its far cheaper to use domestic suppliers for home & broadband, providing you just want to make and receive calls, use voicemail and access the web for surfing. It’s possible to get lines installed for free, broadband for around a fiver a month and dirt cheap calls. See your local business advisor today or email firstname.lastname@example.org
However consider whether you want extra features (hold, ability to transfer, call divert etc) or faster, higher capacity services. If you do, think about plumping for the admittedly more expensive options below, aimed at business or office premises.
Dont think you need a one-stop shop; at each junction consider the cheapest line, broadband, calls provider and then whether you can cut costs further.
Step 1. Need to get a line installed?
The technology for the vast majority of lines, even if you pay line rental to TalkTalk, Sky or others, is provided by BT Openreach. Currently OneSolution Works is offering a free line if you sign up to its Broadband service for 24 months which, as some of its broadband tariffs are one of the most competitive anyway, its a great deal.
Step 2. Get the cheapest deal…
As youre extremely likely to need both phones and the internet, and unless youre a heavy online business needing specific services, operators tend to bring the packages together for business.
BTs Featurelines Compact* option is one of the cheapest too. If you sign a three year contract, for £15.17 plus VAT you get 500 mins/month to UK landlines and features including call hold, divert, transfer and conference calling among others.
For cheap broadband One Solution Works, is from £10/month for up to 24Mbps, unlimited downloads on a two year contract, but you must have its line rental to get it even so overall it’s one of the cheapest.
Do remember though with the comparison services, they wont mention or factor in the override providers below, which can substantially save you cash.
Step 3: Slash call costs with override providers
All the main calls packages include some free calls, but you can slice the cost of the rest too – whether it’s calls to daytime landlines, mobiles or international destinations or 0870 numbers.
This is all about the use of override providers, these are specialist companies which you can access without changing your phone provider and get much cheaper calls e.g. 5p per call to landlines during the day no matter how long you speak for. Read a quick override provider briefing.
The Top Override providers
If calls arent included in your free minutes, the cost can really stack up: providers charge up 4p/min or more for daytime calls to landlines, and around 12p/min to call mobiles. Yet it’s easy to slash the price.
Sign up to 18185, then dial that number before every call you make. This gets you access to much cheaper call costs: 6p/min to mobiles in the daytime (less at other times) and just 5p per CALL to phone other landlines, no matter how long the call!
Alternatively, if your provider blocks the use of 18185 (eg TalkTalk does) use the daily updated UK CallChecker to find the cheapest simply dial providers (where you phone an 0844 number, then your destination) which cost as little as 0.5p/min
When using overrides, always do some test calls to check youre being charged the price your expecting by your landline provider before going hell for leather on it. Just in case it is operating a different pricing regime and it costs you much more. For more info see Your Local Business Advisor.
Its possible to slash insurance costs right across the board, but before you get to that stage it’s worth checking exactly which policies you should have.
If you have staff there are some compulsory policies use the tool below which should establish exactly what you need, then run through whats needed. Heres a quick run though of some of the key ones, weve also linked to some comparison services, though you may be able to negotiate a better deal by using a local broker and putting all the policies through them.
If youre using a van or car for your business, make sure you tick the business use box and not just the more usual domestic and pleasure use. This will almost certainly increase the price, but you should still be able to get a decent deal, use the Cheap Car Insurance or Van Insurance guides for full info.
Do you have employees?
If so consider Employers Liability (EL) insurance cover of at least £5 million is required by law for limited companies and you can be fined up to £2,500 for EACH day you arent covered. There is an exemption if the limited company has only one employee and that employee owns 50%+ of the company
These policies protects you / your business for any claims made by employees who have been injured at work or experienced illness as a result of work, where the fault lies with you. It also covers you for expenses in legal cases against your business taken by employees.
Plus, if your business goes into liquidation or receivership, EL insurance means that your employees can still claim and be paid damages.
While thats the only compulsory service others to consider include Public Liability (PL) Insurance; this covers damages and legal fees if your business has caused injury or death to a member of the public, or damage to their property. There are also business premises insurance, contents insurance (for stock, machinery and contents) and product liability insurance & professional indemnity insurance
Grab Grants to aid your business
Any leg up in business is worth taking especially if its from the Government. Theres a lot more money out there than you think, many businesses thrive on grant cash.
These often come with strings attached, for example it may provide the cash for you to invest in equipment but you need to match it with your own cash.
Grants are typically pretty specific, and can only be spent on certain costs, or are targeted at small locations or industry sectors. Funders will also probably want to see a business plan so prepare this in advance to make the application process quicker.
For information on funding schemes in the UK for small businesses, community groups or voluntary organisations there are a number of websites to try.
The free websites, Grantsnet, Grantnet and j4bgrants while Grantsonline gives a 7 day free trial list of grants followed by a subscription system
Governmentfunding has a searchable database of government grants for the voluntary and community sector, with downloadable application forms and guidance documents.
Funder Finder is a small UK charity that gives information on how and where to look for funding for individuals, community groups or voluntary organisations.
The Business Link service is part of a campaign by the Government to encourage business start-up in the UK. Its Grants and Support Directory lets you search for start-up or business development help. You can search for financial assistance, advice or practical involvement with projects.
Local council grants
There may also be grants to help your organisation available from your local council. As councils can offer different funding, search for details on its website or contact them to ask for more information. To find your local councils details enter your postcode in the DirectGov website.
Free courses for your employees
As part of the government funded Train to Gain programme, employers in England of all sizes and in all sectors can get free or subsidised training courses for their employees.
Companies are given a training package tailored to their business, with free courses tending to be for literacy and numeracy, yet apprenticeship and leadership and management skills are also available. Similar programmes are available in Scotland, Wales, Northern Ireland.
For up to date money saving tips for your business contact
Your ONE Solution Works, Local Business Advisor
ONE Solution Works Ltd UK Head Office 8 Exchange Quay Manchester M5 3EJ
Regional Offices throughout the United Kingdom,
Sheffield, Sunderland, Belfast,Bristol, Brentwood, Glasgow, Coventry & Bromley