A bank account is a must for all startups. At the minimum, you should have a current account to deposit funds into and pay day-to-day costs out.
Apply for a credit card at the same time — it will be required to pay day-to-day costs when you set up initially, as your company will not have a credit history.
Before you choose a bank, list out what you require from your banking relationship in the near-term and as you grow — current accounts, deposit accounts, credit/debit cards, merchant services, overdraft facility, loans, online banking, etc.
Things to consider when choosing a bank
- Accessibility to your local branch: This is particularly important if you are a cash business and need access to deposit cash (not an easy task these days!).
- Dedicated support: Some banks have dedicated teams for certain sectors (e.g. tech companies are being targeted by some of the larger Irish banks who have dedicated teams to help with their specific business banking requirements). This is helpful as, prior to this, banks didn’t really understand tech companies and struggled with the fact that tech companies tend to lack tangible assets (IP was not seen as an asset). The dedicated support teams will arrange face-to-face meetings if required, do calls, and support you through your development. They also offer startups certain benefits, like loans, flexible repayments, and overdrafts.
- Costs of transactions: Depending on your business, these costs could be substantial — so do understand what your annual charges will be and compare them on the market.
- Terms and Conditions for Additional Services: Make sure to ask prospective banks about about terms, conditions and costs related to credit cards and overdrafts, even if you don’t require these services at the beginning. For example, some banks may only offer an overdraft facility if a personal guarantee is given.
- Global relationships with other financial institutions: If you plan on scaling your company globally, you will need local accounts in other countries. If your bank has local offices in those regions or they have relationships with other banks globally, that will be very helpful as you expand.
- Recommendations from peers: As always, a recommendation is the best route when starting a banking relationship — as long as it comes from someone who has (or had) similar requirements as you. Honest feedback about the online services offered by various banks can be very valuable.
Irish startups: Frontline works closely with AIB which has a dedicated department for startups.
If you want to set up a day-to-day operating account in a currency other than Euro, e.g. US$ or STG£, contact Silicon Valley Bank in London.
Opening a bank account
Setting up an Irish bank account is reasonably straightforward if you are local and have a base in Ireland (it may be challenging if you are not based in Ireland). Your bank of choice will send you an account opening pack, which will detail all of the required documents to get an account open. Typically, the application for a credit card is included in the account setup pack.
It is recommended you go to a bank where you have a personal introduction / you are already known – this will help you to navigate to the correct team/department.
Normally, you will need the following to open the bank account (read the application form to verify):
- Certified copy of your certificate of incorporation for the company
- Copy of your companies constitution/articles of association
- Certified copy of your passport or drivers license
- Original utility bill showing name and address of the director/signature. The bill should be not more than 6 months old (typically). They will also accept a document from the Revenue, such as a P30, less than 6 months old.
- Irish tax reference number, if available
- Completed application form – most forms have more than one place to sign, so read carefully to ensure you have signed all relevant places. Both a director and company secretary are required to sign.
Where a certified copy is required, bring the original into the bank and they can certify it. Alternatively, have your solicitor do this and bring the certified copy with you.
Tip: Securely email all documents to your bank prior to sending them in (in hard copy), so that they can review and confirm that everything is completed correctly. This will save time if you have missed a signature somewhere or a document isn’t within their required date timeline.
Debit/Credit Card Processing
If your company wants to process credit/debit card transactions via your high-street bank, you will need to apply for this separately. These services are known as “Merchant Services.” Put some thought into how many (if any) consoles you want to have, the type of access to your account you will want to see, and if you want funds deposited into your current account or into a separate account set up to deal with all credit/debit card processing.
If you don’t want the complexity and compliance requirements of having a direct merchant services account with a bank, there are many payment processing alternatives available. Many startups, and other companies, use Stripe for payments. Stripe handles the background complexity so that you don’t have to find/integrate with a separate merchant account provider, gateway, or subscriptions manager. Stripe can accept payments in 135+ currencies.
As of February 2016, when you process payments with Stripe, you pay a fee of 1.4% + €0.25 on European cards and 2.9% + €0.25 on non-European cards (excluding VAT).
- If you’re a SaaS business, use the subscriptions option
- For platforms and marketplaces, use Connect
- If you simply want payments on any device, use Checkout
Alternatives to Stripe are services like Paypal and Square. All of the services mentioned publish their pricing and you should compare pricing and service levels to see which provider suits your business, which can depend on whether you take payments mainly online or e.g. via telephone or in person.
Loans / Overdrafts and Credit Cards
Loans and Overdrafts
As a startup, it is highly likely that a bank will only give you loan facilities with secured collateral, so be prepared to be asked for this if you are looking for a loan. They are also likely to look for personal guarantees — this is not something you should enter into without fully understanding the legal implications. Seek advice from a lawyer prior to signing anything. Some banks may give you preferential rates as a startup, so ask about this when you initially meet with your bank.
When assessing applications for a loan banks will consider:
- Capacity to repay
- Creditworthiness (Note: Banks will look at the directors and their credit history, both personally and professionally)
We recommend that you get a credit card solely associated with your company from an annual reporting and good practice perspective.
- Pro tip from a founder: “When applying for a credit card when you have zero credit history with the bank as a company, prepare a cashflow forecast and share this with your bank manager. When we started with a nominal amount of cash, we requested a €2000 line of credit and were approved.”
It is worth keeping in mind that a bank may require you to deposit an amount equal to the credit limit on any credit card that you get from them, as they will likely need some collateral (as an alternative, they may ask the directors to give a guarantee). If this is requested, look to understand what would be needed to avoid doing this or having this requirement removed as you grow your company.
Other banking products
Banks offer a number of other products in addition to the ones listed above, such as:
- Asset finance
- Financial planning and protection
- Pension services (all companies must offer access to a Personal Retirement Savings Account, or PRSA)
- Deposit/savings accounts