Best free business bank accounts

Best for small businesses

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No monthly fee

• Flexible account options
• Mobile app with lots of good features
• Ability to issue cards to all employees

Best for new businesses

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£150 cashback

• 24/7 customer support
• Categorised spending
• FCA regulated

How we chose these accounts

“Best for” picks are those we’ve evaluated to be best for certain product features or categories – you can read our full methodology here. They’re chosen from among the brands we work with. If we show a “Promoted for” pick, this means it’s been chosen from among our partners and is based on factors that include special features or offers, and the commission we receive. Keep in mind that our picks may not always be the best fit for you, and it’s important to compare for yourself to find a product that works for you.

What is a free business bank account?

A free business bank account is simply one that doesn’t charge a monthly or annual fee, and there are no fees for opening the account either. This can be ideal if your business is new and needs to keep overheads low or if you only need to carry out a few transactions each month. However, the remaining account features depend on the provider, so you’ll need to compare them carefully.

Sole traders and freelancers are not legally obliged to open a business bank account as their business isn’t legally separate from them. But if you’re a limited company, you need to open a business bank account. This is because you’ve registered your business with Companies House, which means it’s a separate entity to you legally and financially.

Do free business bank accounts really exist?

A number of business bank accounts don’t charge a monthly or annual fee. But some of these might only offer this for a limited time, say, 12 months. Even if your bank account never charges a monthly or annual fee, you might still have to pay for certain banking transactions.

For example, some business bank accounts might allow you to make a certain number of free bank transfers or payments each month but charge a fee if you exceed this limit. Others might let you carry out certain transactions for free, say UK transfers, but will charge a fee for others. And others still might charge for all banking transactions on a pay-as-you-go basis.

What is the difference between free and paid-for business accounts?

The key difference between free and paid-for business accounts is that free accounts don’t charge a monthly or annual fee.

How they differ beyond this depends on the provider. You might find free business accounts don’t offer as many perks as paid-for accounts. For example, you might not benefit from features such as invoicing tools or integrated accounting, or you might not earn cashback on your purchases.

Other free business bank accounts might offer the same features as paid-for options but could charge more for everyday banking transactions or have stricter monthly limits. This could suit smaller businesses that only carry out a handful of business banking transactions each month. But a larger business that carries out high volumes of business transactions will likely be better off with an account that charges a monthly fee but offers unlimited free banking transactions in return.

How to open a free business bank account

Many free business bank accounts can be opened online. You’ll usually need to fill in an online form, providing a few personal details and some information about your business. Alternatively, you might be able to open the account through the provider’s app, in a branch (if your provider has one) or over the phone.

You usually need to provide your business’ registered address and contact details, and if you’re a limited company, you’ll need to provide details of your company’s registration at Companies House. You’ll also need to provide proof of address and proof of ID for all company directors.

How to choose the best free business bank account

When comparing business bank accounts, you should think about the features most likely to benefit your business, as well as the features you can do without. Consider the below to help you with this:

• What are the fees for everyday banking transactions? Consider the types of transactions you’re most likely to carry out, whether bank transfers, cash payments or cash withdrawals, and look for the account with the lowest fees.
• Do you need to carry out international transactions? If so, you’ll want an account that allows you to do this, ideally for a low or no fee.
• Do you need accounting integration and invoicing tools? If you do, look for a free account that offers these features.
• Do you need an overdraft? Some business bank accounts let you request an overdraft when you apply, while others won’t offer an overdraft.
• Is there FSCS protection? If the provider has a UK banking licence, your money will be protected up to £85,000 under the Financial Services Compensation Scheme.
• Do you qualify? Some free business bank accounts require you to have been trading for a set time and might have a maximum annual turnover requirement.
• How is the account managed? Check whether you can bank online, via an app, over the phone or in branch.

Bottom line

Free business bank accounts can be particularly beneficial for small businesses just getting off the ground. However, many free accounts come with other charges or limited benefits, so you’ll need to consider exactly what you want from your business bank account to be sure of choosing the right one for your business.

Frequently asked questions

• How long does it take to get a free business bank account?

  If you’re applying for a business bank account online or via the provider’s app, this can often be done in a matter of minutes. You’ll need to wait to be approved, but some digital bank accounts can be up and running on the same day.

  If you’re applying for a business bank account with a high street bank, the process will likely take longer and could be between 1 and 4 weeks.

• Can I use a personal bank account for my business?

  If you’re a sole trader, it’s possible to use your personal bank account for business transactions, as long as your provider permits this. But if you’re a limited company or limited partnership, you’ll need to open a separate business bank account, as your business is a separate legal entity.

• Can I open a joint business bank account?

  Yes, some providers will let you open a business bank account with a business partner, but you’ll need to check first.