How to open a business bank account

If you’ve just started your own business, or are currently researching how to become your own boss, you’ll be keen to learn how to open a business bank account.

Starting your own business is hugely rewarding, but it does require you to wear many hats, one of which is ‘finance’.

Recording your company’s financial transactions (bookkeeping) and using this to make informed decisions, keeping an eye on your cash flow, and finding out what tax you owe (accounting) is much easier if you have a separate business bank account.

Do I need to open a business bank account?

A separate business bank account is mandatory if you run a limited company.

As a sole trader, it’s up to you whether you run your personal and business transactions through one account or set up a separate business account.

However, some banks will not allow personal current accounts to be used for business transactions, so check your T&Cs to be sure.

How to open a business account

Before opening a business account, do your research to make sure you select the right one for your business needs.

Scroll down for a handy checklist of things to look out for before signing on the dotted line.

How to open a business bank account online

To open a business bank account online, first read this article, so you know what documents you’ll need for your application.

Next, from our checklist, make a list of things you must have as part of your business bank account and things that would be nice to have. Each provider offers something slightly different from the next. This will therefore help you to make the best choice for your business.

What do I need to open a business bank account?

As with a personal account, you’ll need to provide a few documents to open a business bank account.

What documents are required to open a business bank account?

• Proof of ID (a passport or driving licence)
• Proof of address (as a UK resident)
• Proof of residency (if you’re from outside the EU)

If you’re opening a bank account for a limited company, you’ll also need to provide your registered business name, address, number, and date of incorporation. You’ll also need the personal details of anyone else on the application. Depending on the bank you choose, you may also need your tax and VAT registration details.

You may be asked a few questions about your business, including your estimated annual turnover, how many transactions you expect to go through the account per month, and which countries you do business with.

How long does it take to open a business bank account?

Opening an online business bank account takes a matter of minutes, as long as you have the right details and documents to hand.

To open a business account with a high street bank, you may need to make an appointment in the branch or via the phone to complete your application.

Complex applications can take a little longer.

How much do I need to open a business account?

If you’re wondering how much you need to open a business account, it’s best to check with individual providers. Initial deposits and minimum balances will vary by bank and account type.

What is the best business bank account for a sole trader?

The best business bank account may not always be the one that offers free business banking for a limited time (usually 12-24 months) to attract new customers. You will need to start paying the monthly fee once that offer expires. This can be between £5 – £15 per month.

Look past the offers and assess which accounts offer your business the best value in the long term.

Most business bank accounts have account fees, either as:

• A fixed monthly fee for using the account, regardless of how many transactions you make
• Fees for transactions, for example, making a cheque deposit, ATM withdrawals, or transfers to other bank accounts
• A mixture of both. Make sure you read the small print to make the right choice for your business needs

Business bank account checklist:

• Will you be charged fees for having the account, paying in cheques, depositing cash, and using an overdraft facility?
• Are there transaction limits, and would this affect your business?
• Would you have access to an overdraft facility if you need one?
• Can you link the business account to your accounting software?
• If you’re looking for online banking, does that bank’s app have good ratings on the App Store or Google Play?
• Do you need physical access to a branch? If so, does the bank have a branch near you?

And don’t forget to check the customer reviews before taking the plunge.

What is the best free business bank account (in the UK)?

It depends on your business needs.

If your business transactions are mostly digital, receiving payment by bank transfer, and needing integration with accounting software, the likes of Starling Bank, Monzo Lite, and Tide are good options.

If you need to deposit cash and cheques on a regular basis, you may be best choosing a high street bank with a branch near you, for example, TSB, Royal Bank of Scotland, or NatWest.

Always do your own research before opening a business bank account.

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How to start taking card payments

Summary

• By law, limited companies must have a separate business bank account for company transactions
• Sole traders can use the same bank account for personal and business transactions as long as the T&Cs allow it
• Most business bank accounts will charge a monthly fee, which is sometimes waived for a limited time as an introductory offer
• Check the transaction fees of several business bank accounts before deciding which one is best for your business
• If you need to deposit cash and pay in cheques regularly, consider a bank with low fees in this regard, and check if they have a branch near you
• If your business transactions are largely done via bank transfer, an account that can integrate with accounting software might be more attractive
• Lastly, check whether the account has transaction limits and, if it has an overdraft facility, what it will cost you

FAQs

What is the minimum amount to open a business account?

Initial deposits and minimum balances will vary by bank and account type, so it’s best to check with individual providers.

Can I open a business account by myself?

You can open a business account by yourself if you are a sole trader. Some high street banks require an appointment in a branch or over the phone to complete the application.

What do you need to open up a business account?

You will need to provide proof of address and proof of ID to open a bank account as a sole trader. As a limited company, you will also need proof of business account, proof of business name, number, and date the company was incorporated. You may also need to provide tax and VAT registration documents.

Which bank account is best for a small business in the UK?

The best bank account for small businesses in the UK is one that provides the best value for your particular needs. If your transactions are mostly digital, consider an account that will integrate with accounting software to make your business more efficient. If you need to make regular cash and cheque deposits, choose an account that has low fees for deposits, and one that has a physical branch near you.