Opening a business bank account

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

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.

Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

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.