Having a business savings account may seem like a luxury, especially if you’re just starting out – but have you considered the hidden costs of not having one?
Your business could be missing out on interest, spending money on unnecessary borrowing, or unknowingly reducing your business creditworthiness, to name just a few.
Here are 5 reasons why you may want to consider a business savings account.
This is a paid content promotion brought to you by Tide.
Boost your business savings with up to 4.22% AER (variable) on your balance — no withdrawal fees, no need to switch bank accounts. Open a Tide Instant Saver Account in minutes and start earning interest on your surplus funds, all managed easily in the Tide app.
Make your money work harder. Learn more
When you’re a business owner, you need to think about how to maximise your money and resources. If you don’t yet have a business savings account, your spare cash won’t be working as hard as it could. A business savings account keeps money separate from the daily flow of income and expenses, while also earning interest.
If you’re new to business savings, then an instant access account like Tide’s Instant Saver Account will mean you can still access your money whenever you need, with no penalties on withdrawals.
New members can take advantage of the Max + Boost plan rates for no cost within the first 6 months. This plan allows you to earn interest on unlimited balances, starting at 3.60% AER (variable) and going all the way up to 4.22% AER for balances over £1 million.
One of the other key things to note about the Tide Instant Saver Account is that there’s no need to switch bank accounts. You can simply fund via your existing business bank account.
Much like personal savings accounts, there are different types of business savings accounts. Instant access accounts allow you to withdraw your money when you like but tend to have a lower interest rate, while a fixed-rate savings account will lock your money away for a period of time but could pay a higher interest rate.
A sneaky hidden cost of not having a business savings account is not having somewhere you can save towards your tax bill – something that every business has to deal with.
Having savings set aside for VAT or corporation tax means you can avoid any nasty shortfalls. You can better plan and keep money ringfenced for when the taxman comes knocking.
The key advantage of using a business savings account to do this is that you’ll be earning interest on the money you’ve set aside, further increasing your buffer.
As with your own savings, it’s always a good idea for your business to have a dedicated savings buffer.
A lack of funds when you have unexpected expenses or a shortfall in income can leave you turning to high-interest borrowing options like credit cards or overdraft fees.
Your business can avoid these unnecessary costs by building a healthy buffer and keeping them separate in a business savings account. That way, you can keep cash flowing by leaning on your savings pot, rather than panic borrowing.
Not having a business savings account could indirectly hurt your business creditworthiness, especially in the eyes of lenders, investors and even suppliers.
If you’re looking to fundraise or borrow money, then lenders and investors will want to look at how you manage your cash reserves. Having a decent business savings pot shows good financial hygiene and business health. In turn, this could open the door to lower interest rates when applying for loans or higher credit limits when it comes to financing.
Not having a business savings account doesn’t directly lower your creditworthiness, but having one could be a tick in the right box for when it comes time to raise funds or apply for credit.
As a business owner, you won’t want to miss out on opportunities for growth due to a lack of funds. Building up your business savings will allow you to make new hires, commit to that timely marketing campaign or buy that new piece of equipment that will take your business to the next level.
Having a pot of money that you dip into when needed will give you flexibility to take advantage of opportunities that come your way. Without accessible funds, chances for growth can be delayed or missed altogether.
2 in 5 Brits (39%) have a side hustle in 2025. The average income from side hustles in the UK is £210 a week or £914 a month.
By switching your business bank account, you may be able to reduce your monthly fees or take advantage of different features like smart bookkeeping tools.
Learn more about Juni’s business account for ecommerce and online marketing entrepreneurs.
Learn more about the benefits of opening a business account with Wise
Find out more about the SumUp business account, including its pros and cons.
We look at the features and fees of GoSolo’s business account range.
Santander has some great free banking offers for startups, as well as accounts for charities and companies who hold money on behalf of clients.
Challenger bank Monzo now offers business banking. Check out what accounts it provides and whether they could be the right business banking solution for you.
Thinking about opening a Starling business account? Take a look at our analysis to find out if it’s suited to your company.
Challenger Countingup draws accounting and business banking together in one account. Our review looks at how it works and what it costs.