Business bank accounts for contractors UK 2021

Depending on how you have set up your contracting business, you will likely need a business account. Here are some tips on how to find the best one.

From a finance and tax point of view, contractors are no different from other types of business, meaning that they can hugely benefit from having their own dedicated current account.

A business account is a great financial tool to get paid, manage expenses, and keep your finances in good working order.

Name Product Account fee Bank transfers Accounting integrations Non-Sterling transactions Overdraft Account management Key benefits
OFFER
Tide
Free
£0.20
Free if both accounts are with Tide
FreeAgent, KashFlow, QuickBooks, Reckon One, Sage, Xero
Free
App, Online
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
FREE TRIAL
ANNA
Free
Free up to a max. balance of £5,000 (or up to £500 paid in per month)
Free
2 free transfers per month and unlimited free transfers to Anna accounts
Xero
Free
App
Earn 1% cashback for paying with your ANNA card in selected categories. Get a 6-month free trial
OFFER
CardOneMoney
£12.50

From £0.30
N/A
2.75%
App, Online, Telephone
No monthly fee for the first 3 months
Acorn
£12.50

From £0.30
N/A
2.75%
App, Online, Telephone
Fair Everywhere Small Business Account
£12.50

From £0.30
N/A
2.75%
App, Online, Telephone
Cashplus Business 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
2.99%

On invitation
App, Online
OFFER
Mettle by NatWest
Free
Free
FreeAgent, Xero
Unable to make international payments
App
Comes with a suite of free accounting software to integrate with
Finder Award
OFFER
Starling Business Account
Free
Free
FreeAgent, Xero
Free
App, Online
Add the new Business Toolkit onto your free Starling account, and get the first month free of charge (RRP £7pcm)
FREE TRIAL
HSBC Kinetic

No monthly account fees during early access*
Free
QuickBooks, Sage, Xero
2.75%

Up to £30,000 subject to eligibility and application
App, Online
*No monthly account fees for 18 months, thereafter a monthly charge of £6.50 applies
GoSolo
Free
Free
Free or 0.20p depending on type of account
N/A
NA
App, Online
FREE TRIAL
Countingup
Free
£0.20
3 free per month
N/A
N/A
App, Online
Get your first three months FREE
FREE TRIAL
Amaiz
£9.99 per month
Free in first month
Free Starter plan available
£0.20
FreeAgent, KashFlow, QuickBooks, Reckon One, Sage, Xero
1%
0.5% in Europe, 1% elsewhere
App, Online
Monzo
Free
Free
FreeAgent, QuickBooks, Xero
Mastercard's wholesale rate with no added fees
App
Monese
Free
Free
N/A
£2000 allowance with 2% fee after

No but will deduct the money from your balance the next time you make a deposit and will not charge you a fee
App, Online
Revolut
Free
Free
5/month free then 20p per transfer
Clear Books, FreeAgent, Xero
£3
App, Online
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Compare up to 4 providers

Do you need a business bank account as a contractor?

If your business is set up as a limited company, then yes. As your business is a separate legal entity, its finances must not be mixed with your personal ones.

If you are set up as a sole trader instead, technically there is nothing stopping you from using your personal account for professional purposes. However, it’s not advisable because it will make it harder to separate the two things, work out how much you earn exactly, keep track of paid invoices and so on.

Using your personal account for business purposes is also likely to violate your bank’s terms and conditions.

How to open a business account if you are a contractor

Depending on the account provider you choose, you will be able to open the account in person or online.

You will need to provide both your business and your personal details and documents, including:

  • Your business name and address
  • Companies House registration number if you’re a limited company
  • Certificate of incorporation
  • Your own personal details and contact information
  • A form of ID
  • Proof of address
  • Estimated business turnover
  • Personal bank or financial statements

Eligibility criteria and required details and documents can vary from bank to bank.

How to compare business bank accounts for contractors

There is no such thing as dedicated business accounts for contractors, so you’ll have to make do with what the market has to offer to small businesses in general. Some things to consider are:

  • Application process. Setting up a business account can take time with some banks, while others are quicker and easier to deal with. As a contractor, you may not need a super complicated account with lots of features, so it’s worth looking for a more straightforward and sleek option.
  • Costs and fees. Business accounts tend to be more expensive than personal accounts, so always check them carefully.
  • Managing the account. How do you prefer managing your account? Online, in person, over the phone? Some banks will not offer all the options, so it’s worth considering this in advance.
  • App and digital services. These days having a good digital banking service and a slick banking app makes all the difference, especially for a busy contractor who doesn’t want to spend a lot of time dealing with banking administration.
  • Customer service. If anything goes wrong, you want a bank that can help you sort things out quickly and efficiently. Having a look at the bank’s reviews online can’t hurt.
  • Extra features. A lot of business bank accounts include features that can help you manage your business finances, such as overdrafts, invoicing and accounting services, and budgeting features in the banking app.

As a contractor, you might find it useful to have a look at online-only business accounts, especially if you don’t deal with cash and are comfortable with technology.

Online business accounts tend to be quicker to set up and cheaper, and pay particular attention to their mobile banking apps, which tend to work better and have more features.

Pros and cons of a business bank account if you are a contractor

Pros

  • If you own a limited company, you must get a dedicated business account.
  • It makes it easier to manage your business finances and keep track of payments.
  • Some business accounts are relatively easy and quick to set up.
  • You can get extra features to help you with your business finances, from overdrafts to accounting software integration.
  • You can manage most business accounts online or from your phone.

Cons

  • Business accounts usually have more fees compared to personal accounts.

The bottom line

Business bank accounts may sound complicated, but in fact it’s quite easy to get one for a small business, and it will help you organise your finances and manage them easily.

As a contractor, you probably want to look for a straightforward business account without too many frills, that can be accessed online in no time from wherever you are.

Frequently asked questions

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