How to open a business bank accounts for a startup

Find the right bank account to help get your business off the ground.

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By

Katherine Denham

Edited by

Holly Jennings

Updated

Fact checked

As a new business, you’ll want to find a bank account that can alleviate some of the admin so you can focus on getting your business off the ground. The good news is that there are business bank accounts created specifically for startups — many of which are free and come with perks and features.

What is a startup business bank account?

Some business bank accounts are designed for young companies in their first year of trading. They might offer features, such as free accounting software, invoice tools or programmes to help improve the way you run your business.

You might also find that some startup accounts have a free introductory period. However, once the promotional period ends, the account automatically converts to a normal business account. Once it converts, you might have to pay a monthly fee. You can compare business accounts with sign-up bonuses here.

Also, keep in mind that some banks don’t offer a dedicated account for startups and only offer one type of business account.

Does a startup need a business bank account?

While it’s not a legal requirement, it’s a good idea to have a separate business bank account, particularly if you are set up as a limited company.

A limited company is a separate legal entity from you, and the money belongs to your business, so you should have a separate bank account from your personal one.

This is mainly for accounting reasons, as your business transactions should be clearly shown. It’s much easier to be transparent about your business expenses if all the payments relate to your company rather than being muddled with your personal transactions.

You might find that many banks just won’t process company payments into a personal account anyway, so you may not have much choice other than using a business account.

If you are a sole trader, this might be less of an issue because your business is not legally separate from you. But it’s still a good idea to have different accounts for personal and business transactions.

Business bank accounts also tend to come with extra features that might be useful for your new company and can make you seem more credible. Learn more about this topic here.

How to choose a business account as a startup?

If you’ve never run a business before, it might be hard to imagine what you might need from a bank account, but it’s important to think about this carefully.

Here are some things to consider:

  • Customer support. If you’ve got a 24-hour business, you might want to look for a bank with round-the-clock support.
  • Invoicing. Some accounts make it easy to create invoices and mark them as paid or notify you when a company has missed the payment date.
  • Accounting software. Most business accounts let you link to accounting software, but some give you access to this for free.
  • Restrictions. Check your chosen bank’s requirements because it may have restrictions on things like the type of business or annual turnover, which might rule out some accounts.
  • Customer satisfaction. It’s also worth looking at reviews from existing customers to see if the bank’s service is up to scratch.

How to apply for a startup account (what documents you need)

The banks have different requirements to set up a startup bank account, but most need:

  • A form of ID, like a driving licence, passport or national ID card
  • Proof of your address
  • Your registered company number or name (if you’re a limited company)
  • Your unique tax reference number
  • Information about the nature of the business

The bank could likely ask for other documents, too, particularly if you’re opening a limited company account.

For example, you might need to provide details about the shareholders and directors of the company, who may also need to carry out an identity check.

Depending on the nature of your business, you might need to provide other documents, such as proof of:

  • Qualifications, registrations or licences
  • Property ownership
  • Membership to an industry body

The exact documents you need to provide might not be evident until you apply for an account.

Bottom line

Given that most startup bank accounts are free, you shouldn’t have to worry about bank fees.

They also typically come with features that suit a new business, so they are worth checking out. That’s not to say that you specifically need a startup business account. But as other business bank accounts may charge you fees, you’ll need to make sure they’re worth the extra cost.

It’s important to compare features and other perks of the various bank accounts, as they could make a difference to the future of your business. Check out our best business bank accounts guide.

Frequently asked questions

  1. Tax Assist
  2. Metro Bank Online
  3. Monzo press office
  4. Revolut press office
  5. Starling press office
  6. Companies House press office
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