Starling Bank vs Tide – which online bank account should I choose?

With some banks charging as much as £150 per month, it is important to choose your business bank account wisely. Two of the best starter banks that we’ve noticed are Tide and Starling Bank. Here we compare the two by looking at a few key factors.

But first, why have a business account in the first place?

1) If you’re a small business or sole trader, it helps to keep your personal and business finances separately. After all, you will be personally responsible for any debt your business incurs.

You don’t want to spend the profits on yourself and then not have enough to pay the tax man, or worse still, not be able to invest back into your business as it grows.

2) When you’re taking payments, people like to be able to pay a business rather than a person. It just looks a bit more professional and trustworthy.

3) If you have an accountant, you don’t want to be paying them to look at your personal bank transactions so that they can decide how to treat them! That would be a waste of their time and your cash.

4) If you’re a Sole Trader you don’t have to have a business bank account (but check the small print). If you’re a Limited Company, you do.


So, you’ve decided to open a business account, which one do you choose?

Here we take a look at two of the latest start-up accounts, provided by challenger banks Tide and Starling Bank.

1. How much do they cost?

Starling Bank: No monthly fees, free electronic payments and free ATM withdrawals.

Tide: No monthly fees, free electronic payments. £1 fee for ATM withdrawals.

Winner: Starling Bank

 

2. What about overseas spending?

Starling Bank: No charge for overseas spending. Starling Bank also provides a Euro account, and you can send money abroad easily.

Tide: No charge for overseas spending.

Winner: Starling Bank

 

3. How easy is it to pay in cash and cheques?

Starling Bank: Send cheques in the post for free – just write your name and bank account details on the reverse of the cheque.

It can take a week from posting to seeing the money in your account.

Depositing money into your account at the Post Office will attract the following charges:

Deposits up to £1,000: £3 per deposit

Deposits of £1,000 and above: 0.3% of the money deposited.

*Starling Bank are looking at trialling ‘image-based cheque clearance’ where you take a photo of the cheque using your smartphone and it is paid in electronically.

Tide: Deposit cash at the Post Office for £1 per deposit or with a 3% fee at PayPoint. They do not accept cheques at all.

Winner: Tide. Small businesses are arguably more likely to be taking cash rather than cheques.

 

4. Is it easy to set up?

Starling Bank: For limited company directors. you can open an account from the comfort of your armchair on your phone. It only takes a moment (and a video) to get the account open assuming everything is straightforward.

If you’re a sole trader, you just need to have a personal account first which you can set up from the Starling Bank app.

If clarification of anything is required there may be a slight delay of a day or two.

Tide: Easy to set up online. Can have the account up and running in around an hour.

Winner: It’s a tie!

 

5. What’s the Xero integration like?

Starling Bank: You can share your transaction feed with Xero instantly, from within the Starling Bank app, and in real time, making those daily reconciles easy and straightforward.

Info here on integrating Starling Bank with Xero.

Tide: Integrates with Xero and updates every two hours.

Info here on integrating Tide with Xero.

Winner: Starling Bank.

 

6. Can you have separate accounts/pots?

Starling Bank: You can set up “pots” within your account to put money aside for your Emergency Fund or for your tax or VAT bill.

This money cannot be spent unless it is transferred into the spending area of the account so stops any temptation!

Tide: You can have separate accounts and instantly switch between them to help you keep organised.

Winner: Starling Bank.

 

7. How can I access my account?

Starling Bank: The business account has been built for businesses where multiple PSCs (Person with Significant Control) need to access the account – such as husband and wife or civil partnership teams.

Tide: The app only be accessed by the account holder, but you can order up to 35 team cards per account and grant employees or your accountant read-only access.

Winner: Starling Bank.

 

8. What interest can I earn?

Starling Bank: There is no interest paid.

Tide: There is no interest paid.

Winner: It’s a tie!

 

9. What’s the customer support like?

Starling Bank: In app messaging support; Live Chat; or Email.

Tide: In app messaging support; Email. You can email them your phone number and they’ll call you back if you wish to actually speak to a person.

Winner: Starling Bank.

 

10. How easy is it to switch?

Starling Bank: Offers a switching service similar to those on offer with personal bank accounts.

Tide: No switching service offered.

Winner: Starling Bank.


Kinder Pocock’s Verdict:

Whilst both banks offer very similar features, we think Starling Bank just has the edge, and comes up as a winner in most areas.

But because every business and its needs are different, it’s important to work out exactly what you want your bank to do for you.

Please also have a look at our blogs on Open Banking and How Open Banking your Xero bank feeds. These will help you with the open banking changes, and how this affects your Xero bank feeds too.

Thanks for reading!

Sharon

making tax digital ready

 

Kinder Pocock are an approachable cloud-savvy firm of accountants based in Herefordshire but supporting businesses on the move.

We specialise in Security/Technology, Design and Indie Hospitality businesses.

@KinderPocock

01432 273400

Contact Us to see how we can help