How to set up a bank account for your community group
Managing your finances as a community group or team is extremely important. It ensures that any money that comes through the club is kept safe and secure and that no one is liable personally for the money.
Disclaimer: Due to the current coronavirus situation, quite a few banks are no longer accepting new business bank account applications. We advise you to continue checking your chosen bank’s website for more information during this time period. If banks are accepting applications during this time, it may be taking them much longer than normal to process the account.
How to open a bank account
There are a number of banks in the UK that offer community groups and not-for-profit organisations appropriate bank accounts. Usually you’ll be asked for proof that your group is not-for-profit or voluntary and this can be done in a few ways. If you’ve created a constitution or guide for your group, submit a copy of this with your bank account application. You can also submit a copy of your registration certificate, if the group is a charity – or, if you don’t have any of these to hand, a letter from your chairperson and secretary will usually be sufficient.
From the very beginning of your application, you need to ensure the bank you are applying to is made aware that you are a voluntary or not-for-profit organisation, as you may end up paying extra bank charges and fees – usually because the bank will simply view you as a small business. Often, community group bank accounts will still be managed by the business team at the bank, but as long as you specify clearly from the beginning that it’s for a community group, you won’t incur the same charges.
Certain banks will request different types of information from you, so make sure you have these available, dependent on the bank you choose. Although it’s necessary to have a treasurer for your group, you’ll also need to have another person (or people) who is allocated to sign a cheque, or approve care payments online. Ensure you name signatories on the account, so that if certain individuals aren’t available, the cheque can still be signed.
Proof of identity for the signatories and the person who’ll be in charge of the bank account (usually the treasurer) will be necessary when opening a community group bank account. Your driving license and passport can be used as photo evidence of your identity, as well as something to indicate proof of address. This might be a recent utility bill or council tax letter.
When choosing your signatories, ensure they have a good credit rating. This can be difficult to talk to people about, but it’s necessary that there are no individuals deemed as ‘high risk’ linked to the account.
You may also be asked about your tax residency. This will be a CRS Entity Self-Certification form, which you’ll need to fill in. Although this can look quite intimidating, it shouldn’t take you too long to fill in, as a voluntary or community group. You can find more information about this form via the Resource Centre website.
How to choose the right bank
Most banks will offer ‘free banking’ to community or voluntary groups. Although you won’t be charged as a normal business, community group bank accounts will still receive charges for ‘normal’ banking aspects, such as overdraft charges (if you have one). We’ve outlined some of the main accounts available to you below, but please remember that there are others out there and you are not obligated to choose a bank account from this list.
- Free banking for clubs, societies, and groups with an annual turnover under £100,000
- If needed, you can also get free change supplied at HSBC branch counters
- You can apply online with a simple mandate and written constitution (the rules and regulations of your group)
- Free audit letter or certificate of balance
- Up to four signatories
- Free banking, whether you choose to do so online, on the app, on the phone, or in branch – for not-for-profit groups, with an annual turnover of less than £100,000
- Up to three signatories
- Can be allocated six debit cards and a cheque book
- Group must have three officials or fewer
- Free banking for groups with a turnover of up to £100,000 per year
- Access to free online accounting software (FreeAgent), so you can manage all your group’s finances accurately
- Up to four signatories
- Access to online banking and mobile app
- Free, everyday banking, including online
- Account should not exceed a credit turnover of £1million or deposit more than £100,000 in cash
- With this account, you may be able to apply for project funding from the Co-op’s Customer Donation Fund
- Winner of Business Moneyfacts Awards 2016 – 2019 for best charity banking provider
- Free banking, with an annual turnover of below £2million, below 200 monthly UK transaction fees, and below £10,000 monthly cash withdrawal / deposit fees
- Banking options, wherever that’s in branch, online, or via the app
- Free giant cheques, ideal if you’re a charity and receive donations
If you’re thinking about starting or setting up a group in Lancashire, you can find out more information on how to that by visiting our website.