Compare our latest business bank account deals and apply online, whether you're a start-up, SME or a large enterprise.
We're on a mission to improve the finances of the nation by helping you to spend wisely and save money
We're on a mission to improve the finances of the nation by helping you to spend wisely and save money
By Laura Rettie, Personal Finance Journalist.
Business bank accounts are essential for most business owners. Learn about how they work, why you would need one, and how to find the best deal.
It's a type of account held with a bank, building society or e-money issuer for making financial transactions related to business. They're used by sole traders and company owners to manage money generated by their business.
Business bank accounts help you manage and keep track of things like:
Not all business bank accounts offer the same services, so whether you need a business current account for everyday expenses or a full wrap-around provision, you'll find one to suit your company's financial needs.
You'll get all the banking services you'd expect from a personal account, but depending on the account you choose, you'll also get other financial services thrown in, like accounting software or tax assistance.
With a business bank account, you'll typically get:
Business-specific features may include:
Some business bank accounts are free, but you'll be charged fees for various transactions. Other business bank accounts may offer a free introductory period and charge a monthly fee thereafter.
Banking costs you can expect to pay are:
1. Monthly fees between £5 and £12.50 per month, which may scale with your business.
2. Fees and charges based on a percentage of the transaction or a flat fee. The sort of transactions that may attract a charge are:
Transaction charges are rarely highlighted and are often hidden in the small print, so seek out the tariff or fees sheet before you apply for a business account. A cheap business account is not always the best business account once you add up the charges.
Most of the major high street banks offer business bank accounts. This means you can use branch facilities to pay in money or sort out problems. If you're already with a traditional bank, you may prefer to stick with your existing bank when you open a business account.
However, there's a new breed of online business banks that offer a range of integrated services, more flexibility and app-based mobile banking. They're often cheaper, and you can scale services to fit your business.
Popular online business banking providers include:
It depends. If you own a limited company and are registered on Companies House, you're legally required to have a dedicated business current account. It has to be legally distinct and managed separately from your personal finances.
However, business bank accounts aren't compulsory if you're either a sole trader or in a partnership. If you're freelancing or contracting, you're classed as a sole trader.
So, although sole traders and partners aren't required by law to have a business account, it's a sensible option to get one if you have lots of income and expenditure to track. It will help you keep control of your finances and make it easier to complete your tax returns.
Whether you're a sole trader or the director of a limited company, there are many advantages to opening a business bank account. There are also a couple of disadvantages to bear in mind, so it's worth weighing up the pros and cons before you apply.
The bottom line is a business bank account will help you stay in control of the money you make and keep your business finances in check.
Opening a business bank account is very similar to opening a personal current account, although the documentation you need depends on whether you apply for an account with a traditional bank or choose an online business bank account.
It will also take more time if you're setting up a new business bank account as a limited company rather than as a sole trader.
You'll need to provide documents as proof of identity and address. In addition, if you are applying for a business account with a high street bank, you may have to provide evidence of your Companies House registration, annual turnover and go through a credit check.
Check with each banking provider before you start the application process, and make sure you have the following information to hand before you sign up.
You'll need:
In many cases, you or the business may undergo a credit check. However, this isn't always a requirement for digital banking providers like Tide or Monese.
Yes, most banks allow you to open a business bank account online rather than in person or over the telephone.
Many digital banking providers offer online business banking only, so the process is very quick and easy. You'll likely be identity checked to comply with money laundering rules, but you can still be up and running in less than ten minutes.
Yes, you can with certain banking providers, although you're unlikely to be accepted by one of the high street banks, especially if you have been declared bankrupt in the past five years.
Many of the online digital banks or app-based providers will accept you without running a credit check, and digital providers like Cashplus offer credit builder services that can help you repair bad credit as you bank.
The best business bank account is the one that most closely fits your business needs and helps you manage your finances with minimum costs.
Whether you're a sole trader or start-up opening an account for the first time, or a small business director planning to switch small business accounts, it's vital to take your time and compare accounts.
Think carefully about which bank account best suits your business finances and which services you're likely to need.
Consider:
The information provided does not constitute financial advice, it’s always important to do your own research to ensure a financial product is right for your circumstances. If you’re unsure you should contact an independent financial advisor.
Yes, the process of opening a joint business bank account is similar to the process of opening an individual account. You’ll need to provide proof of identity and other supporting documents for both account holders. If one of you has a poor credit rating, it makes sense if the person with the best credit rating opens the account.
FSCS stands for the Financial Services Compensation Scheme. It’s a free service that allows you to claim compensation if the provider you use has gone out of business and can’t pay your claim.
Some business bank accounts won’t be covered by the FSCS. If you’re concerned about this or you’re likely to hold large sums of money in your business account, it’s important to choose one that comes with FSCS protection.
Applying for a business bank account is usually a quick process, however, it can often take up to four weeks for your provider to process the application and run all the necessary checks.
Yes, as long as your provider displays the Current Account Switch Guarantee logo you can use the service, however, there are some conditions to this.
If you’re unsure whether you qualify for the Current Account Switch Service, the best thing to do is check with your new provider.
Yes, as long as you meet your provider requirements, you can open as many business bank accounts as you like. Having more than one business account can be a useful way to separate your business finances and keep track of your business spending.
