Compare bank accounts for sole traders

Do you need a business account as a sole trader? Our guide explores why you might want to open one for your everyday banking.

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Monzo Business Lite logo

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  • Apply for a free business account in minutes
  • Free instant UK bank transfers
  • 24/7 customer support
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The free business account offer only applies Monzo Business Lite. Sole traders or directors of limited companies. UK businesses only. Ts&Cs apply
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Table: sorted by promoted deals first
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Name Product Account fee Bank transfers Requires credit check Accounting integrations Arranged overdraft Account management Key benefits Business bottom txt Link
OFFER
Monzo Business Lite
Free
Free
N/A
Online & app
Get a free business account with no monthly fees
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Finder Award
OFFER
Mettle by Natwest
Free
Free
FreeAgent, QuickBooks, Xero
App
Comes with a suite of free accounting software to integrate with (conditions apply)
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Finder Award
OFFER
Start Up Business
Free
£0.35
FreeAgent
Branch, online, app & phone
Use the digital accounting tool FreeAgent to make invoicing, payroll and managing your cash flow easy. It’s worth more than £145 + VAT a year (based on annual fee as of Aug 2021), but free for you.
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Revolut Business Free
Free
Free
FreeAgent, Xero
Online & app
No annual or monthly fee when you apply using the Finder link
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EXCLUSIVE
Tide Free
Free
£0.20
Free if both accounts are with Tide
Clear Books, FreeAgent, KashFlow, QuickBooks, Reckon One, Sage, Xero
Online & app
Free Tide Accounting + VAT Manager until end of May (T&Cs apply).
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OFFER
Cashplus Business Go Bank Account
Free
£0.30
Free for first 3 payments sent each month (£0.30 for every transfer thereafter)
Clear Books, FreeAgent, KashFlow, QuickBooks, Sage, Xero

By invitation
Online & app
No annual or monthly fee when you apply using the Finder link
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FREE TRIAL
The Co-operative Bank Business Current Account
£10
(waived in first 30 months)
Free
QuickBooks, Sage, Xero, Multiple providers

On application (subject to status, eligibility and The Co-operative Bank's Lending policy)
Branch, online, app & phone
Free everyday business banking for 30 months with the original ethical bank, plus access to the free ‘Go Get Paid’ app from BankiFi to help you get paid faster. Sole traders or Single Directors only. Charges apply for cash and cheque transactions. Apply online. T&Cs apply.
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FREE TRIAL
HSBC Kinetic Current Account
£6.50 per month (waived in first 12 months)
Free
N/A
Branch, online, app & phone
No monthly account fees for 12 months, thereafter a monthly charge of £6.50 applies
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Finder Award
OFFER
Business Account - Standard Tariff
Free
£0.35
FreeAgent
Branch, online, app & phone
Use the digital accounting tool FreeAgent to make invoicing, payroll and managing your cash flow easy. It’s worth more than £145 + VAT a year (based on annual fee as of Aug 2021), but free for you.
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View details
OFFER
Start Up Bank
Free
£0.35
FreeAgent
Branch, online, app & phone
Use the digital accounting tool FreeAgent to make invoicing, payroll and managing your cash flow easy. It’s worth more than £145 + VAT a year (based on annual fee as of Aug 2021), but free for you.
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View details
OFFER
Countingup Starter Business Account
£3 per month
(waived in first 3 months)
£0.30
N/A
App
No monthly account fee for the first three months
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CASHBACK
ANNA Free
Free
Free
2 free UK transfers per month
Sage, Xero
App
Earn 1% cashback for paying with your ANNA card in selected categories.
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OFFER
Small Business Account
£12.50 per month
(waived in first 3 months)
From £0.30
N/A
Online, app & phone
No monthly account fee for the first three months
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OFFER
Tide Plus
£9.99 per month
Free
20 free per month
Clear Books, FreeAgent, KashFlow, QuickBooks, Reckon One, Sage, Xero
Online & app
Register your limited company for free (usually £12) and open a Tide account in one go: choose 'Register a company' from the Tide homepage menu. T&Cs apply.
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CASHBACK
Tide Cashback
£49.99 per month
Free
150 free per month
Clear Books, FreeAgent, KashFlow, QuickBooks, Reckon One, Sage, Xero
Online & app
Get 0.5% cashback with your Tide card. Plus register your limited company for free (usually £12) and open a Tide account in one go: choose 'Register a company' from the Tide homepage menu. T&Cs apply.
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Tide Pro
£18.99 per month
+ VAT
Free
Clear Books, FreeAgent, KashFlow, QuickBooks, Reckon One, Sage, Xero
Online & app
Get your first month free
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View details
FREE TRIAL
ANNA £4.90 a month
£4.90 per month
(waived in first 6 months)
Free
4 free UK transfers per month
Sage, Xero
App
Free for the first 6 months. Plus earn 1% cashback for paying with your ANNA card in selected categories.
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FREE TRIAL
ANNA £9.90 a month
£9.90 per month
(waived in first 6 months)
Free
35 free UK transfers per month
Sage, Xero
App
Free for the first 6 months. Plus earn 1% cashback for paying with your ANNA card in selected categories.
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View details
FREE TRIAL
ANNA £19.90 a month
£19.90 per month
(waived in first 6 months)
Free
200 free UK transfers per month
Sage, Xero
App
Free for the first 6 months. Plus earn 1% cashback for paying with your ANNA card in selected categories.
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View details
Revolut Business Grow
£25 per month
100/month free then 20p per transfer
FreeAgent, Xero
Online & app
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Can I use my personal bank account as a sole trader?

Unlike limited companies, there’s no legal requirement for a sole trader to open a business bank account.

However, legal aspects aside, most banking providers don’t allow personal current accounts to be used extensively for business purposes.

So, if you’re a sole trader, it shouldn’t be a problem to accept payments for the work you have carried out. But if a high volume of business-related payments is noted going in and out of your personal account, then your bank may contact you and ask you to set up a business account.

Should I get a business bank account as a sole trader?

If you’re going to be doing a huge amount of business banking, we’ve already established that even as a sole trader you probably won’t be allowed to use your personal current account for that.

But apart from that point, there are lots of other advantages that come with setting up a business bank account.

For one, it makes it a lot easier to keep your personal and business finances separate, especially when it comes to the end of the financial year and you need to work out your tax bill.

And then there’s the fact that some business accounts come with great features to help you manage your cash flow and bookkeeping.

Depending on which account you sign up for, you could benefit from an invoice creation service, expenses management, spending categorisation, budgeting tools and tax and VAT calculators. If you already use a different accounting software package, such as QuickBooks or Xero, these accounts can often integrate directly with those too.

And with a raft of new digital account providers on the market, you can usually manage all of this on the go through a click mobile banking app.

How to set up a business bank account as a sole trader

Some banking providers have specific accounts designed for sole traders, while other banks just let you use their standard business account. The application process varies by provider, but most can be completed online now.

In general, when you open a business account as a sole trader, you’ll be asked for proof of ID, proof of address and your contact details (plus your business name and address, if you have chosen to set these up as separate to your own). You might be asked for some details about your business, and a credit check may also be carried out.

How much do business bank accounts for sole traders cost?

This varies depending on which banking provider you go with, but unlike personal current accounts (which many of us are used to getting for free), it is far more common to be charged for using a business account.

Some business accounts come with a monthly fee, typically between £5 and £10, while others are free to set up and operate.

There will often be small charges for individual transactions, such as setting up direct debits, making or receiving payments or depositing cash into the account.

With some accounts, you get a certain number of transactions for free each month, or you may have the option of choosing a plan that reflects your payments mix. For example, if you know you’re going to be paying in a lot of cash, you could choose the plan with cheaper cash transactions charges as opposed to one with cheaper electronic payment charges.

Make sure you take all of this into consideration when you select your account since tiny individual charges can run up to a big total if you’re carrying out a lot of transactions.

And remember to look out for any free introductory offers. Some banks will offer free everyday banking for the first few months or even the first year or two (although you will have to pay any business banking fees after that).

Pros and cons of setting up a business account as a sole trader

Pros

  • Keeps your personal and business finances separate
  • Easier to work out your tax and expenses
  • Some business accounts come with tools to help with invoicing, expense management and tax calculations

Cons

  • Business bank accounts usually come with monthly and/or transaction fees
  • A sole trader with small-scale banking requirements may not need one

Our verdict

It’s not a legal requirement for a sole trader to set up a business account for their banking needs (like it is for limited companies), and business accounts do often come with fees attached. But there are several advantages to opening one, including making the management of your business finances easier and being able to take advantage of any invoicing, cash flow and calculation tools that may come with it.

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