How to set up a business bank account

Opening a business bank account is less complicated than you might think and will help you keep your finances in good order.

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Opening a business bank account is a key part of setting up a new business. While you shouldn’t overstress about it, it’s important to make sure you pick one that works for your circumstances.

It will help you start off on the right foot and avoid having to deal with annoying admin issues further down the line.

Do I need to open a business bank account?

If you have set up your business as a limited company, and registered it on Companies House, then yes, absolutely. Your business is a separate legal entity and you are required to treat it accordingly, including bank account wise.

If you are a sole trader, meaning that you work by yourself as a self-employed, you don’t technically need to open a business bank account, but it may still be a good idea to do so. Having a separate account for work and personal finances will stop you from mixing things up and make admin easier.

For example, you won’t have to scroll through your takeout transactions to check whether a client has paid last month’s invoice… just saying.

How to choose the best business banking provider

We have a longer guide on comparing business accounts, but here are a few things to look at when choosing your business account:

  • Fees. Business accounts tend to be more expensive than personal accounts, so you want to have a good look at costs before choosing. Don’t stop at the monthly fee; there may be transaction fees to keep into account.
  • Eligibility criteria. Always check them out, even if you are confident you will qualify. Better safe than sorry.
  • Digital services. Try and find out whether the account you are considering comes with a good banking app and/or online banking service. Clunky banking apps are always annoying, but even more so when they end up taking up time you should be using to pitch to clients or working on your website.
  • Cash and payments. Think about how you are planning to take payments from clients and make sure it is compatible with your business account. For example, if you have to manage and deposit lots of cash and cheques, you don’t want an account with a digital-only bank that has no branches.
  • Accounting and other additional tools. Many business accounts offer some sort of invoicing service and accounting integration. It’s worth checking them out, they can save you from spending long hours on spreadsheets.

What type of business account should I get?

Each bank categorises its accounts differently, so speaking of business accounts “types” is a bit complicated. But generally speaking, you will be asked to choose your account depending on:

  • Your business type. Sole trader, limited company, partnership, community organisation?
  • Its turnover. Big banks tend to distinguish between big and small businesses.
  • Is it a start-up? If you are opening your business’ first account, you’ll usually enjoy better rates and offers.
  • Online or in-person? Depending on how you feel more comfortable managing your banking, you can consider different accounts with different banks.

What documents do I need to set up a business bank account?

It will ultimately depend on your bank, but you can expect to be asked for:

  • Your business details. Including name, address, what your business does, estimated turnover, number of employees if you have any. If you own a limited company, you’ll need its Companies House registration number, registration documents and certificate of incorporation.
  • Your personal details. Including contact information and proof of ID and address.

As a general rule of thumb it will be useful if you have this documentation ready:

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

If your company has more than one director, they will all need to give their personal details. You will usually also be able to add in other people who have permission to manage the account on the business’ behalf.

Finally, if your business trades abroad, expect to be asked about it. You may have to give details about where your customers/suppliers operate, for example.

Compare and open a business bank account

Data indicated here is updated regularly
Name Product Account fee Bank transfers Accounting integrations Non-Sterling transactions Overdraft Account management Key benefits
Tide
Free
£0.20
Free if both accounts are with Tide
Xero, QuickBooks, FreeAgent, ReckonOne, Kashflow, Sage
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
Starling Business Account
Free
Free
Xero, FreeAgent
Free

Min. 18 months trading to apply
App, Online
Add the new Business Toolkit onto your free Starling account, and get the first month free of charge (RRP £7pcm)
Mettle
Free
Free
Free agent, Xero
Unable to make international payments
App
Comes with a suite of free accounting software to integrate with
Amaiz
£9.99 per month
Free in first month
Free Starter plan available
£0.20
FreeAgent, Xero, Sage, Reckon One, Kashflow, QuickBooks
1%
0.5% in Europe, 1% elsewhere
App, Online
Get your first month FREE
HSBC Kinetic

No monthly account fees during early access*
Free
Xero, Quickbooks, Sage

International payments unavailable

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
Cashplus business
Free
£0.20
First 10 payments sent each month FREE
FreeAgent, Xero, Sage, Kashflow, Quickbooks, Clearbooks
2.99%

On invitation
App, Online
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
Coming soon
Free
App
Earn 1% cashback for paying with your ANNA card in selected categories. Enjoy premium benefits free for the first 6 months.
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Compare up to 4 providers

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

It depends entirely on the bank. Traditional banks are known to be quite slow, while some of the digital-only banks normally accept you within a few minutes.

It will also depend on whether you are able to apply online. Some traditional banks allow you to do so, but usually only if you already have a personal account with them.

How can foreigners open a business bank account?

If you aren’t a UK citizen but live in the UK, it makes no difference. You will still need to provide a proof of identity and a proof of address, and that’s about it.

If you aren’t a UK resident but want to open a business account with a UK bank, things are more complicated; although one of the big banks may still be able to accommodate you. You can also look at international accounts.

Frequently asked questions

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