Compare business bank accounts in the UK 2023

What is a business bank account?

A business bank account is simply a bank account designed for business transactions. Business bank accounts work in a similar way to personal bank accounts but can help businesses keep track of business income and expenses.

You can use your business bank account to send and receive money, helping you to pay staff wages and receive client payments, and you can set up standing orders and direct debits to pay your bills. Business bank accounts can also offer a range of additional features you won’t find with a personal account, such as the option to carry out transactions in foreign currencies or the ability to integrate with accounting software.

If you run a limited company, you will be required to use a business bank account. If you’re a sole trader, there’s no such requirement, but it can still make a lot of sense to open one and keep your business transactions separate from your own.

How do I compare business bank accounts?

When comparing business bank accounts, there are a number of factors you’ll need to consider:

• Fees. Some business bank accounts will charge a monthly fee for using the account. Others will charge for everyday banking transactions. Some might even charge for both, so be sure to check carefully. In some instances, fees will be waived for the first year or so which can be useful if your business is just starting out.
• Transaction limits. Some banks might limit how much money you can transfer in one transaction, so if you’re likely to be regularly transferring large sums, check if the limit is sufficient.
• Overdraft facility. If you’d like to have an overdraft on your business bank account, look for an account that offers one and check how much interest it charges.
• Account management. Consider whether you’re happy to manage your business account online or via an app, or whether you’d prefer to have a bank branch to pop into. You might need this if you need to pay cash into the account, for example.
• Additional features. Some business bank accounts can integrate with accounting software or help you create invoices, so if these features are important to you, make sure they’re included. Some accounts might also pay interest on credit balances or give you cashback.
• International transactions. If you regularly carry out business overseas, look for a business account that charges low fees for doing so. Similarly, check whether your bank card charges for foreign transactions.
• Customer support. Check how you can contact your chosen provider and whether customer support is available 24/7.
• Eligibility. Before applying for a business account, make sure your business is eligible. Your business will usually need to be registered and trading in the UK, but some banks might also require that your business has been trading for a set time or has a minimum annual turnover.
• Related financial services. If you think you might need a business loan or credit card in the future, check whether the provider offers these options.

What do I need to open a business bank account?

Many business bank accounts can be opened online. Otherwise you can pop into your local bank branch (if there is one). You will usually need to provide details about your business, including its registered address and contact details. If you’re a limited company, you’ll need to provide details of your company’s registration at Companies House.

Additionally, you will usually need to provide proof of ID for all company directors, such as a passport, as well as proof of address, such as a utility bill.

Business bank account fees explained

Unlike with most personal current accounts, many business accounts come with costs attached, which can range from a monthly fee simply for having the account, to a charge for paying in a cheque.

We outline the main types of business account costs below – bear these in mind when you’re looking at a bank’s pricing structure or an account’s terms and conditions:

• Monthly or annual account fee

  This is a flat fee for having and using your business account – it’s usually charged monthly but sometimes it’s an annual fee.

• Electronic payments (in or out)

  This includes things such as direct debits and standing orders, as well as Faster Payments bank transfers made to other individuals or companies (which you might set up or make through online, mobile or telephone banking). Some business accounts don’t charge for these types of payments, while others will give you a set allowance per month or charge you for each one.

• Cash or cheque payments (in or out)

  When you deposit or take out cash at a bank branch (or at a Post Office, if your bank supports that service), you might be charged a flat fee or a percentage fee for any cash and coins you deposit or money you withdraw over the counter. Some banks have a set fee for depositing a cheque and also charge when a cheque you’ve written to someone else is paid into their account.

• International payments

  This could include any purchases or cash withdrawals made using your card abroad (non-Sterling transactions). But there are also usually fees for making an international payment – such as a SEPA payment or SWIFT payment – from your bank account to one based overseas. Some providers will also charge you for receiving an international payment into your account.

• Additional services

  There are some services you might use occasionally that incur a special charge, such as making a CHAPS payment (this a high value payment that is cleared on the same day) or issuing a banker’s cheque. Some business accounts also offer optional services e.g. a VAT calculation and submission service, which you can expect to pay extra for if you sign up.

How can I apply for a business account?

Once you’ve researched and chosen which business account you’d like to go for, you’ll need to apply to that banking provider to open it. Many applications can now be done online or through a mobile app (especially given the growing number of digital-only accounts), although some banks with a branch network might ask you to visit in person.

Every business bank account will have a slightly different application process, but here is a general list of information and documents that you should have to hand:

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

Not every banking provider will ask you for all of this documentation, and on the flip side, there may be some who request even more detailed information about your business and its finances.

Most business bank account providers will also carry out some kind of credit check on you, although there are a few that will let you open an account without one (but be aware these products tend to come with higher usage fees). For more information on opening a business account without a credit check, check out our guide to opening a business account with a bad credit score. You can also check your credit score here.

Getting down to business: How banking is evolving to cater to SMEs in a new era

Finder published a paper in February 2022 exploring current trends, innovations and account switching within the business account sector. The report includes the findings of our survey of business account holders, and insights from experts at ANNA, the Federation of Small Businesses, Kent Business School, Savanta and Starling Bank.

Download your free copy

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Pros and cons of a business bank account

Bottom line

There are many reasons why it pays to open a business bank account. But when comparing them, it’s important to check the eligibility criteria carefully to be sure you qualify, and also check the fees so you don’t get caught out. On top of this, you’ll want to check what perks come with the account, such as invoicing tools or cashback, so that you can be confident of picking the best account for your business.

Frequently asked questions

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

  Many online business bank accounts can be opened within a day or 2. But if you’re opening an account with a high street bank, it could take between 1 to 4 weeks as the bank will need to carry out various identity and business checks.

• Can I open a business bank account if I have bad credit?

  If you have bad credit, your banking options will be more restricted. But the good news is a number of online or app-based providers don’t require a credit check as part of their application process. These include Cashplus, Tide and Card One Money.

• Can I use a personal account instead of a business bank account?

  If you’re a sole trader, there’s nothing really stopping you from using your personal bank account for business purposes. However, some banks won’t like this and could close your account, while it can also make it harder to keep your personal and business finances separate.

  Limited companies are required to open a business account as the business is a separate legal entity.

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