Zero to Hero: Building a Brand
Business Incorporation 101: Part 3
Business Banking
Having a good business structure is only one part of running the business – A good company needs to have the best tools to be financially viable. In this blog posts we will talk about business banking, transfers and international exchange rates. As your business grows, you can’t afford to lose money in fees, for this reason, it’s important to choose the best banking tools you can find.
Regardless of the country you choose to incorporate in, we suggest you have:
1 Business bank account In the country of incorporation
1 Bank account in you home country or country of residence
1 International Bank Card(HSBC, Chase, Deutsche Bank etc)
1 Currency Exchange Account
We recommend having accounts in all 3 major world currencies – US Dollar($), Euro(€) and Pound Sterling(£). You may ask why would you need so many accounts if you’re only operating in one country or currency?
There are 3 reasons:
1. Market Crashes & Recession
As we have experienced in the past, countries have market crashes or recessions which greatly devalue the local currency. This can sometimes be so severe to eliminate your profits or worse put you out of business. Having an second account in another currency will enable you to switch/move your assets and reduce the risks.
2. Global Expansion
At some point in your business, you will want to expand into other markets besides the US. Having an account in the local currency combined with a low exchange rate account; will save you fees on money transfers.
3. Material Prices & Sourcing
A lot of E-commerce sellers overlook this very important aspect, materials rise and fall according to the local(and global) stock market affecting labour costs – and increasing you Cost of Goods Sold. A good way to go around this issue is:
Source different types of materials so your risk is spread out (Wood, Aluminium, Titanium, Textiles etc.)
Source from different markets. Example: Electronics from China, Textiles from India and Merchandise from the USA
In every business there is risks involved, however, what separates successful businesses from unsuccessful ones is that they prepare their business for every situation.
Here are some of the best business accounts in the world you can use – there are no affiliate links and all the companies/banks mentioned are listed because they truly provide the best value and they are tools we use.
Best Global Banks
HSBC
As we will mention in this blog post, nowadays, there are a lot of banking options. However, I would also recommend having a bank account with a major, global brand. While their fees may be higher, the fact that they have a global presence is perfect for E-commerce. HSBC is probably the best choice if available in your country since they offer:
Free ATM withdrawals from HSBC ATMs worldwide.
Insurance packages – Travel Insurance, product liability insurance, house insurance etc.
Free Transfers to any HSBC account worldwide – If your supplier has an HSBC account, this will save you a lot of fees!
Account opening assistance worldwide if you’re an HSBC customer
Very good online banking & secure
Citibank
Citibank is a great alternative to HSBC(if it isn’t available in your country). Their service is top-notch and their accounts come with a lot of benefits. The Citibank Plus Account in particular is a really good option, it’s features are:
No monthly/yearly costs
No ATM fees worldwide – However, they don’t refund ATM charges that local banks charge abroad.
No foreign transaction fees
No currency exchange mark-up – You get charged Visa’s official rate.
No fees on international transfers
USA Bank Accounts
Charles Schwab Bank
This is probably the best bank account in the US to have if you travel overseas a lot. Almost every service the bank offers is FREE – One amazing feature that is very rare in banks: they refund you worldwide ATM fees you get charged by the overseas banks. Their only downside is their online banking system, which is a bit lacking. However, having this account as part of your banking is definitely an asset.
You need to be a US resident or have a US address(if you’re not a US resident you can use a mail forwarding service). You can open an account online and they have a few branches across the country. If you’re not a US resident, we suggest to visit a branch to open the account.
Features
No monthly fees
No set-up fees
No ATM fees – Worldwide
No foreign transaction fees
No currency exchange mark-ups – You only get charged Visa’s official rate
Alternative: Capital One 360 USD Account
The Capital One 360 offers the same benefits as the Charles Schwab Account, however, they don’t refund worldwide ATM fees. If you travel frequently outside the US, then this might be a deal breaker.
European Banks
United Kingdom
Metro Bank
Fee-Free in Europe(SEPA Countries)
Low ATM fees Worldwide
Very low transfer fees(if transferring within SEPA)
Norwich & Peterborough Building Society
No debit card fees worldwide – including ATM withdrawals
£5 monthly fee – Free if a balance of £5000 is kept in the account or deposits of £500 monthly
Germany
DKB
Free – no set up costs & no monthly/yearly subscriptions(for the basic plan)
No ATM fees worldwide – However, they don’t refund ATM fees the local banks charge(if using an ATM outside the EU).
No foreign transaction fees
No currency exchange markup
Downside – Their English customer support is very limited. However, it’s a pretty good option for German residents.
Sweden
ICA Banken
No ATM fees worldwide
Free SEPA transfers
No currency exchange fees
Monthly fee 25 SEK(~2.50€) – Waived for students and persons younger than 21 years old.
Free Travel Insurance for trips up to 45 days
Online Only Banks
N26
N26(Formerly Number 26) is by far the best online bank in Europe! Based in Germany it is now available in all EU & SEPA countries except Malta & Cyprus. The bank offers three plans – N26, N26 Black & N26 Business. N26 is now a certified bank and they offer deposit protection up to €100,000 according to EU regulations.
Features
Free – no set up costs & no monthly/yearly subscriptions(for the basic plan)
No ATM fees worldwide – However, they don’t refund ATM fees the local banks charge(if using an ATM outside the EU).
No foreign transaction fees
No currency exchange markup – You only get charged Mastercard’s official rate.
The entire account opening process is online — you never have to physically show up anywhere
Card usage notifications directly from the app
Free Mastercard
Customer Service Support in German & English
To be eligible for a N26 Account you need:
EU resident/citizen – You need to submit proof to be eligible
A mailing address in Germany – You can use a German virtual address for this.
This is by far the best online-only bank if you’re from the EU & travel a lot!
Monese
Monese is an online bank that offers a UK bank account to anyone residing in the EU. They are a really good bank, however, there is a monthly fee of £4.95. If you plan on doing extensive business in the UK or need a bank presence there(especially when Brexit takes effect in a couple of years) – Having this account is a must. You can see all the features Monese offers below:
Simple – US Only
Simple is an online-only bank and it’s shaping to become one of the best very quickly. They offer some really cool features & everything is done through their app. Some of the features include:
No monthly/yearly fees
Free Debit Card
iPhone & Android App
In-app budget tracker & visualized spending reports
High level Security
Goal Setting via their app
Simple is also a full member of the FDIC, so deposits are secure. Furthermore, the bank has been getting a lot of investor funding, so expect more features in the future.
Currency Accounts
Currencies Direct
If your exchange fees are eating up your profits, you will need a service that offers the following:
Low Exchange Rates
Ability to transfer large sums of money
Experience in dealing with online sellers
A platform that supports multiple currencies
Currencies Direct ticks all the above! The set up process is quite is easy – just fill out the form on their website and a representative will contact you to see what type of business you run. Currencies Direct offers:
Extensive experience in dealing with online sellers – particularly Amazon
Low Exchange Rates
Risk Management – if you transfer huge sums of money, you want the best rate in real-time. This service will contact you when the exchange rate is ideal so you don’t loose money on extra fees.
Supplier & Manufacturer Payment – This is what separates Currencies Direct from the rest. They cater to a specific need us importers want(ie paying suppliers)!
Amazing customer service
I can’t stress enough how important having a good currency exchange account is. While Paypal is great to start with, their fees will eat your profits as you grow larger and payments become bigger.
This will also be true when you start to outsource different tasks of your business. It is likely that your employees/contractors/freelancers will be from different countries, having a currency account will allow you to streamline payments more effectively.
Conclusion
This three-part series was meant to give an overview for the legal and financial aspect of this business. Although it can be quite overwhelming, having a proper legal business will greatly benefit you in the long term. Our goal with the series is to create Sell-able Brands, and a business that has a good legal structure and management, is more attractive to potential investors.
In the next part of the series, we will move over to Product Selection, but with a twist, many sellers are realizing that to succeed in Amazon & in other E-commerce platforms – products need to be unique and innovative. In the next few weeks, we will explore how you can improve existing top seller products and releasing products that customers’ in your category want. Myself and Manuel will give you a complete guide on Product Design, Certifications, Patents & Manufacturing.
This topic is very requested, so if you have any questions or if you want us to talk into more detail, kindly leave a comment below.
All the best & Happy Selling,
Duncan
http://importdojo.com/importdojo-masterclass/