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The best Faction depends on your playstyle. The Merchant's Guild is ideal if you enjoy trading and obtaining items through player interactions. If you prefer finding and upgrading items through exploration and loot, the Circle of Fortune is the better choice.
In cycle Harbingers, you will additionally join the Forgotten Knights faction and be able to get seasonal bonuses.
Yes, faction ranks are account-wide. You can pick your Faction on alternate characters in the very first town. For example, suppose one character unlocks the Trade Factions. In that case, new characters can choose their Faction immediately.
Yes, you can switch factions, but you need to rank up and gain favor with the new Faction. Your progress with the previous Faction will be saved if you switch back later.
Items obtained from a faction often require you to be aligned with that Faction to equip them. If you switch factions, you may lose access to these items until you regain ranks with the original Faction.