Opening a business bank account – how-to and best accounts

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By Ben Lobel on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Business bank account concept. A piggy bank and coins next to a calculator on a desk.

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.

Here, we’ll look at how to go about opening a business bank account in the UK and 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 process 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.

Here are the key benefits of each banking option:

Traditional banks

Barclays

Eligibility: Suitable for most businesses with a turnover of up to £6.5 million. Specific criteria for businesses in certain sectors e.g. agriculture, social housing

Free banking period: 12 months

Account fee: £8 a month (Mixed Payments Plan) £8.50 a month (e-Payments Plan)

Co-operative Bank Business Direct Plus

Eligibility: Customers must be £1,000 in credit at all times to qualify for free banking (will be £7 otherwise)

Free banking period: 30 months

Account fee: £7 a month

Co-operative Bank Business Current Account

Eligibility: Customers must be £1,000 in credit at all times to qualify for free banking (will be £10 otherwise)

Free banking period: 30 months

Account fee: £10 a month

Co-operative Bank FSB banking account

Eligibility: For Federation of Small Businesses members

Free banking period: Free

Account fee: n/a

HSBC Kinetic

Eligibility: For single-director limited companies or sole trader with turnover up to £2m

Free banking period: 12 months

Account fee: £6.50 a month

HSBC Small Business Banking Account

Eligibility: Turnover below £2m and your business does not wish to borrow more than £30,000

Free banking period: 12 months

Account fee: £8 a month

Lloyds

Eligibility: Start-Up and Small Business Account is aimed at businesses with estimated turnover of up to £3m

Free banking period: 12 months

Account fee: £7 a month

Metro Bank

Eligibility: Businesses must have a turnover under £2 million

Free banking period: Free for account balances over £6,000

Account fee: £6 a month

NatWest Business Bank Account

Eligibility: Suitable for businesses with turnover of over £1m

Free banking period: No – standard tariff applies

Account fee: n/a

NatWest Start-up Account

Eligibility: For businesses with turnover of less than £1m

Free banking period: 18 months

Account fee: Free – charges apply

RBS Business account

Eligibility: For businesses that have been trading for over 12 months

Free banking period: No – standard tariff applies

Account fee: n/a

RBS Start-up account

Eligibility: For businesses with turnover of less than £1m

Free banking period: 24 months

Account fee: Free

Santander 1I2I3

Eligibility: Trading for less than 12 months and business is opening first business account with Santander

Free banking period: Discounted monthly fee of £5 for start-ups for 18 months and switchers for 12 months

Account fee: £12.50 a month

Santander Business Current Account

Eligibility: Trading for less than 12 months and business is opening first business account with Santander

Free banking period: 18 months

Account fee: £7.50 a month

TSB

Eligibility: Open to sole traders, partners and directors

Free banking period: 30 months

Account fee: £5 (waived if your average balance in the month is £10,000 or more)

Virgin Money Business Current Account

Eligibility: Suitable for businesses with turnover of less than £6.5m

Free banking period: 25 months

Account fee: £6.50 a month

Virgin Money M Account

Eligibility: For businesses with an annual turnover less than £1 million

Free banking period: Permanent

Account fee: n/a

Digital banks

ANNA

Features: Smart invoicing, automatically chase outstanding payments

Pricing: Pay-as-you-go tariff means you just pay per transaction such as 20p per transaction moving money in or out: otherwise, its Business package is £14.90 per month + VAT, which bundles £35 worth of free activity and then adds charges per transaction

CardOneMoney

Features:
– For companies with turnover of less than £2m. Text alerts confirming when money is in and to confirm that bills have been paid
– Check your balance using text messages
– Up to four additional prepaid corporate MasterCards linked to your business account
– Export statements to a cloud accounting network

Pricing: £12.50 a month plus a £55 application fee

Cashplus

Features:
– Add up to 20 additional business expense cards for your employees to use
– Cashplus integrates with accounting software

Pricing:
– Business Go: £0
– Business Extra: £9

Countingup

Features:
– 2-in-1 business account and accounting app. Automated bookkeeping, professional invoices and automated receipt scanning as key features along with tax calculated and filed for you
– Add notes and attachments directly to your transactions
– Receipt capture and tax estimate

Pricing: First three months free then: £3 a month if you deposit up to £750; £9 is you deposit £750-£750,000; £18 a month unlimited deposits

Mettle

Features:
– Create and send invoices directly from your smartphone, complete with company logo
– Manage recurring payments in-app, add receipts to transactions and export your expense data
– Can connect with Xero, Freeagent and Quickbooks

Pricing: Free to use and free to join

Monzo

Features: Integrations with Xero, FreeAgent and QuickBooks; set aside a percentage of your earnings to put towards tax every time you’re paid

Pricing:
Lite: Free
Pro: £5

Revolut

Features: Hold, exchange and transfer currencies with real exchange rate, issue free corporate cards to employees, perks from commercial partners

Pricing:
– Companies pay between £0 – £100 a month, depending on the account (or they can speak to Revolut and get a bespoke deal)
– Freelancers pay £0 for the free account, £7 a month for the Professional account and £25 a month for the Ultimate account

Starling Bank

Features: No monthly fees, categorised transactions, integration with Xero, FreeAgent and Quickbooks, overdraft facility

Pricing:
– No monthly fee
– Can add a monthly £7 ‘business toolkit’ for extra functionality

Tide

Features: No fees on card payments in UK or abroad, Tide Mastercard, instant invoicing, integration with FreeAgent, Sage and Xero

Pricing:
– Free (£0)
– Plus (£9.99)
– Pro (£18.99)
– Plus Cashback (£49.99)

Airwallex

Features: Tools and integrations including Xero and Oracle, take payments from customers in their preferred currency

Pricing: Free (£0). Small currency conversion fee applies

Wise for Business

Features: Get a Wise business debit card too where you can earn one per cent cashback on all eligible business debit card transactions

Pricing: It costs £45 to open an account and £3 for a Wise debit card. Other charges vary

SumUp

Features:
– You can link your MasterCard with Apple Pay and Google Pay to make faster payments
– With a SumUp card reader, you can also make a sale and access the money on the next working day, even on bank holidays and weekends
– SumUp also has a built-in invoicing tool so you can send customised invoices from your phone or your computer
– Share payment links with customers through text, WhatsApp, Facebook or another platform

Pricing: Free (other charges apply)

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12 of the best digital banking platforms for small businesses

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