Getting a business bank account
A business bank account allows you to separate personal and business finances. Certain types of businesses, like limited companies, must have a business bank account.
Benefits of business bank accounts
A business bank account is specifically for your business finances. A business bank account makes it easier to:
- find business transactions
- track and manage cash flow effectively
- keep records for accounting and tax purposes
- build a credit rating for your business, allowing for smoother applications for business loans or business credit cards
- access business-specific loans and overdrafts
- accept card payments from customers
- handle large or high-volume transactions
Sole traders and normal partnerships are not legally required to have business bank accounts, but separating personal and business finances makes accounting simpler.
Using a personal account for your business finances
Some personal bank accounts do not allow business transactions. Check with your bank if you plan to use a personal account for your business.
Some personal bank accounts do not allow business transactions. Check with your bank if you plan to use a personal account for your business.
Choose an account provider
Most major established UK banks offer business accounts. Comparison websites can help you see the main features, eligibility criteria and pros and cons of these.
Newer digital banks, often called ‘fintech’, also offer business banking.
Traditional banks
- Can take longer to set up.
- Good for cash-handling businesses.
- Offer overdrafts and loans.
- May have local branches and provide businesses with a relationship manager.
- Better for complicated structures, such as those with trustees.
- Better if you will need specialised banking services, like large cash withdrawals or letters of credit for exporting.
- Can take longer to set up.
- Good for cash-handling businesses.
- Offer overdrafts and loans.
- May have local branches and provide businesses with a relationship manager.
- Better for complicated structures, such as those with trustees.
- Better if you will need specialised banking services, like large cash withdrawals or letters of credit for exporting.
Fintech providers
- Set up online in minutes.
- Good if you want to integrate with digital payment solutions and APIs.
- Overdraft or loan facilities may be limited.
- Focus is on digital self-service and automation.
- Work well for simple structures, like sole trader or single limited company.
- Have a more limited range of services for businesses.
- Set up online in minutes.
- Good if you want to integrate with digital payment solutions and APIs.
- Overdraft or loan facilities may be limited.
- Focus is on digital self-service and automation.
- Work well for simple structures, like sole trader or single limited company.
- Have a more limited range of services for businesses.
Open a bank account
You can typically only open a business bank account if:
- you are 18 or over
- you are a UK resident
- you are a sole trader, the director of a limited company or a partner in a partnership
Bank accounts for new businesses
If your business has not started trading, you may need to apply for a start-up account. Some banks only offer business accounts to businesses that have been trading for at least a year.
If your business has not started trading, you may need to apply for a start-up account. Some banks only offer business accounts to businesses that have been trading for at least a year.
Documentation you will need
Each bank will have its own requirements for new customers. But you will typically need to provide:
- your name and home address, and proof of these
- your contact details
- your legal business name and your business’s trading name, if this is different
- the date you started trading
- a business plan, if your business is new or expanding
- a description of your main business activity
- your business address and business correspondence address, if this is different
- financial information, like information about turnover, taxes, loans and existing accounts
If your business is a limited company, you will also have to provide:
- your Companies House registration documents and Certificate of Incorporation
- information about all your company directors
- your company registration number and date of incorporation
- your company’s registered address
Credit checks
If your business does not have a credit rating, the bank may carry out a personal credit check. If you have poor credit, look for accounts that do not offer credit or overdraft facilities as you may find it easier to qualify for these.
If your business does not have a credit rating, the bank may carry out a personal credit check. If you have poor credit, look for accounts that do not offer credit or overdraft facilities as you may find it easier to qualify for these.
Opening a UK bank account as an overseas company
It can take much longer to open a business bank account if you are based outside the UK.
The bank will need to carry out additional checks on you, the company’s directors and owners and any foreign investors using global databases to satisfy identity, security, and political requirements.
To open a UK business bank account as an overseas company, you must:
- register your company in the UK
- develop a UK business plan showing why you need the UK business bank account
- contact your chosen bank’s inward investment team to begin the process and find out what information you must provide
- send a representative to the UK to sign a bank mandate once all documentation has been provided and approved
Using a fintech account
You may be able to start UK operations with a digital account from a fintech provider, but you will need a full business bank account to fully establish your business in the UK.
You may be able to start UK operations with a digital account from a fintech provider, but you will need a full business bank account to fully establish your business in the UK.
Switching business bank accounts
You may want to switch business bank accounts if you find an account that better suits your needs, or if you have problems with your current provider.
Many businesses think this will be a complex process, but you can use the free Current Account Switching Service (CASS) for business current accounts, as long as:
- your annual turnover is less than £6.5 million
- your current bank and your new bank are part of the CASS scheme, (most traditional banks and many fintech banks are)
- you have fewer than 50 employees
Advantages
- Banks may offer incentives for new customers.
- You can take advantage of better interest rates or lower charges.
- Another bank may offer better or more modern services.
- Banks may offer incentives for new customers.
- You can take advantage of better interest rates or lower charges.
- Another bank may offer better or more modern services.
Disadvantages
- You will lose the personal relationship you had with your bank.
- You will need to update payment details on stationery, financial records, software and payment accounts.
- You will lose the personal relationship you had with your bank.
- You will need to update payment details on stationery, financial records, software and payment accounts.
