Choosing the right business bank account is an opportunity to get your business fundamentals right from the beginning. While it may be inconvenient to maintain a separate account for both your personal and business activities, it is good practice to do so to keep your accounts apart.
In this article we will step you through the process of opening a small business bank account in the UK as well as examine the benefits of doing so and give an overview of what options are out there.
Pros of having a business bank account
Having a business bank account is a good idea for most businesses; even freelancers and one-man-bands.
As a sole trader, you may want to open a business bank account for a few reasons.
Firstly, your bank may specify that a personal account is for personal use only and threaten to close your account if they see a large number of business-related transactions.
Secondly, if your personal costs are mixed up with your business costs, it could be difficult for you to inform HMRC about how much money your business has made.
Finally, having a dedicated bank account is likely to make your business appear more professional to clients and partners.
It’s important to be aware of the process to open an account, otherwise you could waste a lot of time choosing the wrong one for your needs.
What documents and details do I need?
For businesses setting up a bank account in the UK, the process is relatively straightforward, as long as you comply with the eligibility criteria. Make sure you have the following documents to hand when you open your account:
One document to prove your identity:
Your full and valid UK or foreign passport
Your national identity photocard
Your full UK paper driving licence
Your full UK or foreign photocard driving licence as issued by a member state of the EU or the EEA
One document to prove your address in the UK:
Your full UK driving licence;
Your full UK or foreign licence photocard driving licence as issued by a member state of the EU or EEU;
UK or foreign bank or credit-card statement (must be less than three months old and not printed from the internet);
UK mortgage statement (less than 12 months old and not printed from net);
Council tax bill, payment book or exemption certificate (must be less than 12 months old);
A letter or bill from a utility company (less than six months old, avoid mobile phone bill).
Business-wise, you’ll need:
Your Companies House registration number (if you have one)
Details about your business including turnover, tax information and other capital
Details of all company directors or partners, including name, date of birth, address and National Insurance number
How to open a business bank account
The steps involved in opening a business account can vary between banks.
It’s advisable to start by researching the options online. Whether you can make your application online depends on the bank.
You should tell the bank if you have foreign shareholders and/or directors of your business and that you need a UK business bank account (rather than an international business bank account that’s held offshore).
When the bank account is open, you are free to use your local bank branch for your banking needs on a day-to-day basis.
For more information on opening a business account in the UK from abroad you can contact the government’s Invest in Great Britain & Northern Ireland hub.
Business banking monthly fees
It is typical for there to be monthly fees charged for business bank accounts and users should be aware of this before they open an account. Most UK business bank accounts come with an introductory offer such as free banking lasting for anywhere between 12-30 months.
While these are tempting, always make sure you know how much you will end up paying once the introductory period is over.
As a general rule, the more transactions you make on the account, the higher the charges are likely to be.
How long does it take to open a business bank account in the UK?
It can take anything from a matter of minutes to a matter of weeks for a bank account application in the UK to be approved and possible meetings to be arranged, so make sure you factor this time into your business planning process.
With some operators, for example Metro Bank, it is possible to walk into a branch and make an appointment that day. Digital banks promise a quick application as the process is all done online.
Best business bank accounts in the UK
There are a variety of retail bank accounts available in the UK, including the high street banks; Barclays, HSBC, NatWest/RBS, Santander, Metro Bank, TSB and Lloyds/Bank of Scotland.
But it’s worth being aware that the best business account for your needs may not always be one of the high street banks.
When you look at business account comparisons it may also be worth considering newer-established “‘challenger” banks such as Starling Bank or Tide.
Remember that “best” is subjective and that your needs as a business are paramount. For example, look at the software that you already use, such as accounting platforms. Matthew Boyle, banking and mortgages publisher at finder, also advises you to think about the ways that you take payments. If it’s by cheque or largely by cash, it’s wise to be with a high street bank that has a branch near your business.
Here are the key accounts from both traditional banks and digital platforms.
Traditional banks
HSBC Small Business Banking Account
Features:
Borrow up to £100k and arrange overdraft
Free Visa commercial card for your first year
Free digital banking services via app
Pricing:
No monthly fees – transaction fees apply
TSB Business Plus
Features
Deposit cash and cheques in Post Office branches as well as TSB branches
Free specialist business advice for 12 months
Take payments with a smartphone
Pricing
30 months free – £5 thereafter
Co-op Bank Business Current Account
Features
Payment app, Go Get Paid, lets you automate your financial admin
Exclusive payment and commerce benefits from Clover
Free support tools such as webinars and start-up guides
Pricing
No account fee – transaction fees apply
Barclays Start-up Business Account
Features
Free invoicing and account software from FreshBooks
Expert advice from Barclays’ Business Eagle Labs
Pay in cheques using the Barclays app
Pricing
Free for 12 months, £8.50 a month thereafter
Metro Business Bank Account
Features
Local Business Manager as a key point of contact, but all colleagues can support you with day-to-day banking
Store opening 6 days a week
Transaction and service charges apply
Pricing
£8 a month – free if your balance stays above £6,000
Virgin Money M Account
Features
Free UK bank transfers
Xero free for six months and other accounting integrations
Scan checques in-app
Pricing
No monthly fees – transaction fees apply
Digital banks
Revolut
Features:
Hold, exchange and transfer 25 currencies at real exchange rate
Issue physical and virtual corporate cards to employees
Integrates with more than 45 other platforms
Pricing:
Basic: £10 per month
Grow: £30 per month
Scale: £90 per month
Enterprise: Custom
Tide
Features:
Accounting integrations
Create and send invoices
Expense cards
Pricing:
Free: £0 per month
Smart: £12.49 per month
Pro: £24.99 per month
Max: £69.99 per month
Zempler
Features:
Deposit money at the post office
Separate pots for tax money
Expense cards
Pricing:
Go: £0 per month
Extra: £9 per month
Pro: £19 per month
WorldFirst
Features:
Multi-currency account with competitive FX rates on transactions
Send funds in over 100 currencies to more than 210 regions
Earn up to 2.1% cashback on eligible card spend with World Card
Pricing:
No ongoing or monthly fess – transaction fees apply
Equals Money
Features:
Multi-currency account – send and receive in 38 currencies
Expense card – compatible with 21 currencies and can be used in 190 countries
Track revenue and expenses in real-time from business platform dashboard
Pricing:
Business Tier: £250 per year
Business Plus Tier: £350 per year
Enterprise Tier: Custom
Airwallex
Features:
Local bank details in more than 20 currencies
Free local transfers to 120+ countries and access to interbank rates
Company and employee cards
Pricing:
Explore: £0 if you deposit or maintain at least £10k in your account each month (otherwise £19 per month)
Grow: £49 per month
Accelerate: From £999 per month
ANNA Money
Features:
Free card in any currency
Free or cheap local transfers
Tax support, including calculations, filing and bookkeeping (add-on subscription)
Pricing:
Pay As You Go: £0 (transaction fees apply
Business: £22.90 per month
Taxes add-on: £29 per month
Starling Bank
Features:
Connect to accounting software
Deposit at the Post Office (for a fee)
Invoices and transaction auto-matching, tax estimation (with add-on)
Pricing:
Free account £0 (transaction fees apply
Business Toolkit: £7 per month
Read more
What are the best bank accounts in the UK? – Make the right decision about your bank account, whether you’re just starting out or you’re more established
12 of the best digital banking platforms for small businesses – These platforms all offer an alternative to traditional high street accounts, they are quick to set up and operate entirely from your smartphone where you can access all their digital banking services.
Compare business bank accounts now – Easily find the top business bank accounts from a range of providers here.
Get a business bank account quote today – click here.
Important Information – Some of the products promoted are from our banking and affiliate partners from whom we receive compensation. While we aim to feature some of the best products available, we cannot review every product on the market.
