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Solopreneurship (a reference to individuals who start businesses – in some cases without a formal company structure) has been on an upward trajectory in recent years in South Africa.
Many solopreneurs and part-time hustlers, who include more than 600 000 of FNB’s own clients, have been using their personal accounts for their business and side-gig transactions. This has caused confusion, particularly when transactions need to be separated for tax purposes.
To address this problem and the needs of solopreneurs, leading banks in South Africa, such as FNB, Nedbank, Standard Bank and Absa, have created specialised bank accounts for solopreneurs.
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These include the FNB First Business Zero; Nedbank Startup Bundle; Standard Bank MyMoBiz and MyMoBiz Plus, and Absa Business Evolve Lite and Business Evolve Core. But what are the benefits and charges involved and can you find ways to reduce the fees?
THE BENEFITS
FNB’s side hustler account – the First Business Zero account – is the newest entrant. Aware of the need to manage things in one place, it allows customers to manage their personal and business affairs from one account.
The concept is nothing new though. These solopreneur accounts are offered by its rivals too and are easy to open. “Anyone with an idea can start a business, they do not have to register with the Companies and Intellectual Property Commission (CIPC) to open a business account. There are benefits to registering a separate entity, but it’s not required to get started,” explains Tracy Afonso, executive head at Nedbank Segment Strategy and New Business.
You don’t even have to have a minimum balance to open these accounts or, in some instances, pay monthly fees. But if your turnover increases, you may need to upgrade to a different offering. For instance, Absa’s Business Evolve Lite has no monthly fees for all businesses, segments and sectors with an annual turnover of R0 to R1.5 million.
However, its Business Evolve Core applies to those with an annual turnover of up to R5 million – again with no monthly fees. With FNB, however, you can use its entry level First Business Zero account or the Gold Business account for turnover up till the R5 million mark – thereafter, it offers the Platinum Business account for turnover between R5 million and R60 million.
“We provide access to funding linked to our transactional offerings as well as the ability to earn interest on surplus funds by using our savings and investment products,” explains Chris Wood, managing executive of product for Absa Relationship Banking.
Some link up to their respective reward schemes. FNB’s Solopreneur Bundle, for instance, offers customers a once-off eBucks allocation on activation, as well as 50% back in eBucks on tax return submission fees through its partnership with online tax filing solution, TaxTim.
THE FEES
Standard Bank, for instance, offers a MyMoBiz account which is a more affordable entry-level business transactional account that only charges entrepreneurs for the transactions they make.
Its all-in-one solution, MyMoBiz Plus, charges a service fee of R150 per month, but it comes with a number of transactions included, such as 10 free electronic payments; 10 free salary payments; one free immediate payment; three free ATM cash withdrawals; free ATM cash withdrawals at a Standard Bank ATM up to R25 000 and free unlimited debit orders, to name but a few perks.
Absa also offers two options. Both the Business Evolve Lite and Business Evolve Core charge no monthly fees. However, the Core offering has heftier transaction charges, such as R7.50 per immediate payment transactions, R0.90/R100 or part thereof for cash withdrawals from an Absa ATM, with a whopping R68 +R2.20/R100 or part thereof for branch counter cash withdrawals.
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FNB’s Business Zero charges no monthly account fee and offers unlimited free card swipes. If entrepreneurs want to make ATM cash deposits and withdrawals, a R9 per R1 000 or part thereof charge applies. Over-the-counter transactions become even more expensive, with a R57 cash handling fee and R4 per R100 for deposits and withdrawals fee.
Meanwhile, the Nedbank Startup Bundle charges no monthly fees for the first six months and this includes 20 transactions, with one cash withdrawal a month, eNotes, a dedicated relationship banker, and services such as SimplyBiz – a blog offering help and mentorship to small businesses.
Afonso said:
When comparing fees, it’s important to consider your unique transactional behaviour.
“Careful discernment is necessary when comparing fees across banks – it is important to calculate your total cost of banking. Solopreneurs should also review their current package on a regular basis to ensure it meets their ever-changing needs,” says Wood.
