Monzo business account – what’s on offer?

Monzo, which has become a current account favourite over the past five years, has launched a new business offering with integrated accounting and fee-free spending overseas.

There are two products to choose from: Business Lite, which has no monthly fees, or Business Pro which is one of the cheapest business bank accounts currently available, at £5 per month. Both are serviced by Mastercard.

The business account is designed for small businesses, though it’s not currently available to charities or ‘higher risk’ industries including construction and civil engineering.

It is fully regulated by the Financial Conduct Authority and  can be opened via the Monzo app only. 

So what does it do, is the premium version worth it and could it be the perfect bank account for your small business?

What does the fee-free account offer?

Customers opting for the Business Lite account, which has no monthly fees like rival challenger names Tide and Starling, will receive a debit card and be able to use all the standard account features including the mobile app, web access and free instant UK bank transfers.

Money can also be saved into ‘pots’ – the feature that made the Monzo personal account so popular. Firms can put money aside for costs such as bills, without worrying about spending it on anything else. 

Spending can be broken down into categories and monthly budgets can be implemented to keep track of payments.

Despite being an app-based account, there is also the ability to pay in cheques by posting them to Monzo or using a PayPoint for a £1 fee.

Another favourite feature from the personal account is fee-free spending abroad, which is also available to business account users. 

There is no charge for spending in stores anywhere in the world, however there are some limits when it comes to withdrawing cash. 

Withdrawals from an ATM are fee-free in the European Economic Area. For countries outside the European Economic Area, withdrawals of up to £200 can be made for free every 30 days. Beyond that, there is a 3 per cent charge. 

What else do I get for £5 per month?

The Pro Business account costs £5 per month and offers customers all the features available from the Lite model plus some extras to make managing their firm’s finances easier.

An extension on the popular pots feature, and one that is currently unique to Monzo, is the use of tax pots. Customers can fix a percentage to be automatically set aside for tax every time they receive a payment. 

There is an integrated accounting feature which allows customers to sync their business account with platforms such as Xero, FreeAgent and QuickBooks, making tax and accounting significantly less hassle. 

The Pro account also allows you the option to add up to two other people to the app, handy for limited company accounts and allowing finances can be managed together with everyone able to keep track of what’s going on. 

Monzo is currently working on implementing different levels of permission for users with multiple card holders, including read-only access and  payment approvals.

And it’s worth nothing that Monzo is already in the process of developing further features for its business customers following feedback from early adopters, including the option to manage more than one business, make batch payments and to send and receive money abroad.

Is this the right account for my business?

The Monzo business account isn’t available for everyone yet and may never be an option for certain companies.

People who can apply for an account include sole traders and those who run a registered limited company by shares and who are based in the UK. 

Limited companies must also meet the following criteria in order to be eligible:  

• Have an active status, active company director and at least one person of significant control listed on Companies House
• Have no corporate persons of significant control or corporate directors. (This means you won’t be eligible if a company, firm or organisation is appointed as the director of your company)
• Make money mostly from selling goods and/or providing services, rather than from interest or investment income
• Be a tax resident in the UK, and no other countries  

However, regardless of whether or not customers meet the above criteria, there are certain industries not supported by the Monzo business account as they are considered ‘higher risk’ and would need extra checks and controls.

This includes businesses in currency exchange including virtual currencies, and money saving businesses, construction and civil engineering, mining and quarrying, defence and weapons and more.   

Meanwhile certain types of business are also unable to apply for a Monzo business account at present. This includes partnerships (including Limited Liability Partnerships), limited companies by guarantee, charities, community interest companies and trusts and funds, among others. 

Monzo said it may offer accounts to some of these industries or groups in the future but it is not in its plans at the moment.

Businesses that handle a lot of cash should also consider before applying for this account as there are cash pay-in limits of £300 in one go, and up to £1,000 every six months. There is a £1 fee when paying cash in using a PayPoint. 

Bank transfers in are unlimited and there is no charge. 

What are my other options?

Options similar to the Monzo Business Lite account include accounts from Starling, Tide and the latest venture from NatWest, Mettle. Like Monzo Business Lite, all three accounts are fee-free but vary in what customers can get.

For example, Tide and Mettle do not allow cheque deposits and Starling only offers cheque deposits of up to £500, though Monzo allows for any amount. There is no Financial Services Compensation Scheme deposit protection with Tide and Mettle whereas both Starling and Monzo are covered.

The business bank offerings from traditional banks such as Santander, HSBC and Barclays all charge a monthly fee like the Monzo Business Pro account, though Monzo is the cheapest at £5 per month.

It’s worth noting that these banks offer overdraft facilities, which Monzo does not – for the timebeing. 

Customers can also benefit from going into a branch or calling someone for support rather than only having access to help via the app or website as is the case with Monzo.

However, Monzo’s support team is available 24 hours, 7 days a week through its live-chat facility.