A business bank account allows you to conduct your everyday business transactions such paying staff, buying raw materials, or paying for services.

If you are a business owner, a business bank account keeps your company's finances separate from your personal bank account, and usually comes with different features and services. Some banks set specific conditions on your business bank account depending on the size of your business, or the amount of turnover.

Which are the best business bank accounts?

The best business bank accounts differ depending on your banking needs. Different business accounts offer varying features, so pick one that offers what your business needs.

If you're a sole trader ...

Things like monthly fees and functionality will be important factors in choosing a business bank account. As a sole trader, you'd likely want to keep costs down wherever you can, which is why a business bank account with no monthly fees may be an attractive option.

As a sole trader, a digital bank or app-based bank, can be a good option. These are banks that have no physical locations, but operate as an app on your smartphone. These app-based banks offer a slew of innovative features such as:

  • Instant payment notifications

  • Spending analytics.

  • Digital receipts

  • Separate spaces for separate costs.

If you're a small business owner ...

As a small businesses you may not have the luxury of having extra staff to handle all the book keeping involved in running a business. This is why some business bank accounts offer services such as instant invoicing, automated expense categorisation and VAT returns). You may have to pay a small monthly fee for access to these services with your bank account, but it may be a cheaper alternative to hiring a dedicated bookkeeper.

If your a not-for-profit organisation ...

If you're a non profit organisation you could consider a charity bank account. These are available to open to range of organisations, which can include charities, clubs, societies, trusts, religious organisations.

Most of these types of business bank accounts offer free banking for a certain period, remain free for basic services as long as turnover remains under a specific threshold. However, they may charge a fee for services such as direct debits, or standing orders.

How to open a business bank account

You can open a business bank account online in minutes. Using our comparison table above you can compare business bank accounts and fill out the online application when you've chosen one that suits you.

To make it as quick as possible, it's worth gathering as much information as possible before you try to open your online business bank account. Some important documents you might need include:

  • a document to prove your identity

  • a document to prove your UK address

  • further documentation to prove your company address

  • Companies House registration documents

  • registration forms.

If the bank needs to check anything, this could delay the process.

An online business account lets you manage your business finances and make payments 24 hours a day through your computer, tablet or phone.

How much does a business bank account cost?

Fees for the business banks accounts can vary significantly depending on the type of account and the amount of money being held or transactions.

Most business accounts charge a yearly or monthly fee. Some business bank accounts may be free for an introductory period, which range from three moths all the way up to 18 months. Some may be free for basic banking features, but charge fees for add-on features or facilities.

Some examples of fees you may have to pay:

  • £3 up to £50 monthly fee

  • 20p to £1 to withdraw cash

  • 20p to £1 write a cheque

  • 20 to £1 pay money in

  • 20p £1 send money by bank transfer

It's a good idea to check the fees for the transactions your business uses the most. Doing this can help you pick the best business account for your needs.
Here's how much a business bank account costs.

What are the benefits of a business bank account?

The primary benefit of using a business bank account is that it helps you keep your business finances separate from your personal finances.

But a business bank account offers more than that. Some additional benefits of business bank accounts include:

  • Accounting software integrations: Connect your bank account with software such as FreeAgent, Xero or Quick Books, so transactions, are fed in automatically.

  • Tax Pots: Set aside a percentage of money from each transaction for easier tax payments.

  • Multi-user access: Allows multiple users to operate the accounts

  • Invoicing: Lets you send of keep track of invoices

  • instant UK bank transfers: Send and receive money instantly within the UK/

  • Budgeting and spending categorisation: Allows you to create budgets and automatically classify transactions into categories to make it easer to track incomings and outgoings.

  • 24/7 customer support: Access to personalised help whenever you need it.

Money's tips for using business bank accounts

  • Keep your business transactions separate form your personal finances. Although it is possible to run your business and personal life using the same account if you're a sole trader or small business, it can get complicated quickly. Differentiating your mortgage, credit card payments, or food shopping from business transactions can get complicated really fast, especially if your business starts growing. It's better to keep things separate from the start so you don't have to untangle things in the future.

  • Make use of introductory offers. Often man banks have attractive introductory offers of free business banking to lure customers. Typically, these can range from three to 18 months or more. If you're a new business, these are a great way to keep costs down to a minimum as you get established.

  • Look into app-based banks. These are a somewhat recent addition to the banking landscape. Also commonly known as challenger banks, app-based banks have no physical locations, but operate as apps on a smartphone. Many of these banks these days offer a slew of innovative features for businesses at much lower costs that differentiate them from high street banks.

Who can get a business bank account?

Banks usually offer different business bank accounts, depending on what type of company you have. The different types of companies include:

  • start-ups

  • sole traders or partnerships

  • small and medium-sized enterprises (SMEs)

  • large companies and corporations.

Once you've worked out which accounts you're eligible for, find the ones that offer the features you need. You can then compare business bank accounts and choose an account that suits your needs. Check the fees and see whether they pay interest on your balance.

How to switch to a new business bank account

Switching bank accounts is simple.

Businesses with fewer than 50 employees can use the Current Account Switch Service which is quick, simple and stress free. They do it all for you and you're protected by the Current Account Switch Guarantee.

Here's a list of banks that subscribe to the Current Account Switch Service.

Large businesses can ask their new bank to arrange it.

What else does your business need?

If you're running a business, there are lots of services you might need. These include:

Read our guide on running your own business and compare all business products.

Business bank account FAQs

Q

How long does it take to get a business account?

A

You could open one in minutes if you apply online or in a branch, but it could take longer if the bank needs more documents or have to run any checks.

Q

Can I have more than one business current account?

A

You can have more than one business current account but you will have to apply for the new account in the same way you did for the first.

Q

Can I use my personal account instead?

A

If you are a sole trader or your business is a partnership, your bank may let you. Incorporated and limited companies can only use business accounts.

Q

How much can I pay into my business account?

A

Most accounts have a minimum and maximum balance set by the bank. You may be charged a fee if your balance gets too low or high.

Q

Can you get a business bank account with bad credit?

A

Yes. It's definitely possible to get a business bank account if you have bad credit, the only draw back is that your options may be limited. It may also mean that you'll be likely to be accepted for a more basic business account.

Q

Can you send and receive international payments from my business account?

A

Yes. But it's likely that you'll be charged a fee for non-sterling or foreign currency transactions. These fees can vary depending on which bank you use.

In some cases, if you have premium business bank account with a high monthly fee, international payments can be included as part of your account.

Q

Are business bank accounts covered by the FSCS?

A

Yes. Just like other accounts, business bank accounts are covered by the FSCS up to £85,000 per banking license. But be aware that sometimes different banks often operate under a single share banking license e.g. Halifax and Bank of Scotland, as they are both owned by the Lloyds Banking Group.

About our current accounts comparison

Q

Who do we include in this comparison?

A

Our comparison tables include providers we have commercial arrangements with. The number of listings in our tables can vary depending on the terms of those arrangements, as well as other market developments. They are all from lenders regulated by the†Financial Conduct Authority (FCA). Here is more information about†How our website works.

Q

How do we make money from our comparison?

A

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

You do not pay any extra and the deal you get is not affected.

Last updated: 9 June, 2021