Most people know about the benefits of shopping around for the best buy savings accounts, especially in these times of rising inflation and low interest rates.
However, not everyone knows that a business can also open a savings account, to hold any spare capital that their business might have.
There are a number of reasons why businesses might hold capital, which is not needed on a day to day basis. For example:
- Money needed to pay a future Corporation Tax or VAT bill
- Money earmarked for future PAYE payments
- Money put aside to cover emergencies
- Money which has accumulated from retained profits
Business current accounts generally offer a very poor rate of interest and should only be used for day to day transactions and not holding significant capital. However, finding business deposit accounts which pay a higher rate of interest can be hard, which is why we are delighted to announce that we have extended our best buy tables to include a wide range of business deposit accounts.
In common with personal savings accounts there are a wide range of business deposit accounts available, from accounts offering instant access to your business capital, but which offer a better rate of interest than your business current account, to longer term fixed rates.
Notice and short term fixed rate accounts are also available, which might be very useful for holding capital earmarked to pay future tax liabilities.
You can see the range of business deposit accounts currently available by clicking here.
Business savings accounts and the Financial Services Compensation Scheme
Whilst we are talking about business deposit accounts it’s also worth highlighting how the Financial Services Compensation Scheme (FSCS) works for this type of account.
Whilst the FSCS was set up principally to protect individual savers, it also protects the savings of some smaller businesses. As an indicative guide, to qualify for protection, in the event that a bank or building society fails, a business needs to satisfy two of the following criteria:
1. Turnover less than £6.5 million
2. A balance sheet with less than £3.26 million in assets
3. Less than 50 employees
If a company qualifies for protection the level of maximum compensation is the same as it is for individuals i.e. £85,000 per institution.