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If you’re starting up a business, then setting up a business bank account is an important part of the process. In some cases, having a dedicated bank account for your business – and not simply a personal account where you can handle company finances – is mandatory. Whatever sort of venture you’re planning, a business current account can help make your finances much easier to manage.
In this post, we’ll provide information to help you get started, but you should seek the advice of a legal or financial expert for your specific needs.
What is a business bank account?
A business current account works in much the same way as your personal bank account, but under the name of your enterprise rather than an individual. While not required by some types of business, a business bank account, along with a business saving account, offers numerous benefits, making them a smart choice for any company. They facilitate tracking profit, expenditures, tax, and the general finances of your venture, streamlining financial management and promoting overall financial security.
Do I need a business bank account?
For Limited companies and business partnerships, setting up a UK business bank account is required before they can trade. Charities and non-profits have their own requirements for operating in the UK – key information on what various business types require can be found on the gov.uk website.
These requirements vary from country to country (England and Scotland, for example, have different requirements) so if you plan to register a business in the UK, make sure you are aware of the regulations about the specific country you intend to trade in.
If you are a sole trader, you can continue to use your personal bank account for your business needs. However, many traders still opt for a business bank account. This simplifies the admin side of things and doesn’t require you to separate your business dealings from your personal ones. Some banks offer exclusive access to small business advisors for individuals who hold a business bank account with them, making them a sensible option for sole traders.
How do I open a business bank account?
Business bank accounts are offered by most high street banks. For your own convenience, you can open a business bank account with your current bank, but this is by no means necessary, and you may even save money by looking elsewhere.
To open a business account, first you need to choose your preferred bank. Then, gather the relevant documents (see below) and complete the application form. Finally, wait for the bank to check your information and approve your application.
What do I need to open a business bank account?
To make a business bank account application, you’ll need to provide the following:
- Proof of identity (your passport or driving licence)
- Proof of address (a utility bill or bank statement will suffice)
- Business name and registered address
- The nature of your business
- Your business plan (in some cases)
If you have a poor credit history then you are less likely to be accepted for a business bank account, and banks may enquire about your personal finances before granting any business banking services to you.
Who is eligible for a business bank account?
If you wish to set up a business bank account, UK residents with a clean credit rating are in the best position to be accepted by providers, but being a native resident of the UK isn’t required.
If you have a locally-based representative of your business i.e., one half of your partnership, then your application for a UK business current account, even by a non-native can still be accepted. International residents may face greater amounts of admin due to any bank’s increased wariness of fraud.
Can a business bank account be opened online?
Most UK banks will allow you to open a business bank account online through their website or by downloading their app. You will be required to provide the documents listed above as part of the application. Some banks will let you verify your ID remotely (for example, by uploading a video of yourself onto the app), while some may ask you to come into the branch.
Charges and fees of business bank accounts
Business bank accounts come with a fee and this varies depending on what services you require. Types of payments in and out of the account incur different costs, with cheques and credit payments often being charged at a higher rate than their electronic or cash counterparts.
Special introductory rates are also common, such as offering what appears to be a free business bank account. UK high street banks favour this approach in particular, with many offering 12 months free banking for new accounts. A glance at the small print will show that this may not be applicable to your business based on turnover or other similar details, so make sure to study the terms and conditions carefully.
Variations from bank to bank can include offering a dedicated mobile app, an online bank account, overdraft facilities or none of the above. As such, you are advised to not simply settle for the first business bank account you are offered, as it may not accommodate the way you plan to manage your business.
The best business bank accounts in the UK
Once you understand how to open a business account, the next step is to compare business bank accounts to find the right option for your business. When it comes to finding the best bank for business accounts, UK high street banks are the most commonly used providers, but they vary in their fees and offerings. Some banks will also charge differently for those who switch bank accounts compared to those who are opening a new bank account with them.
Below is a summary of what you can expect from the biggest names on the high street, helping you pick the best business bank for your needs.
Offers listed below current as of 3 March 2024 and are subject to change. Please visit individual bank websites for up-to-date pricing.
Barclays
Barclays has a business account for start-ups, which you can apply for online. It’s free for the first 12 months then £8.50 per month after that (new customers only). Included in the account is free accounting software from FreshBooks and 24/7 business support through the app.
Electronic payments, debit card payments and cash out are free; cash in is 60p per £100; cheques in and out are 60p each. Barclays also offers business accounts for established businesses with an annual turnover of more than £400,000.
Lloyds
Lloyds’ business bank account is also free for the first 12 months then £8.50 per month after that (new customers only). You can apply through the Lloyd’s mobile banking app, and you can also apply for finance through the app once your account is set up. The account includes access to Lloyd’s free accounting software.
Electronic payments in are free; electronic payments out are free for the first 100 per month, and £0.20 after that; cash payments and cheques in and out: £0.85-£1.50 for every £100.
HSBC
The HSBC Kinetic current account is suitable for sole traders and single director shareholder businesses. It’s free for the first 12 months then £6.50 per month after that. Download the HSBC Kinetic app to apply; most accounts are opened within 48 hours. Account holders have discounted access to accounting software from Ember and the opportunity to apply for a small business loan.
Credits and debit card transactions are free; cash in and out is charged a 1.5% of the value deposited or withdrawn; mobile cheque deposits are 50p per cheque.
Royal Bank of Scotland
Royal Bank of Scotland’s start-up bank account has no monthly charge at all, not just for a promotional period. You can apply online and the account comes with FreeAgent accounting software
Transactions are free for the first 2 years, after which charges apply. Automated payments in and out are £0.35; cash payments in and out are £0.70 per £100. Manual payments, including cheques, in and out are £0.70 each. RBS also offers a business bank account for businesses with a turnover of more than £1 million or that have been trading for more than one year.
Account fee comparison
| Bank | Account fees |
| Barclays | Free for 12 months then £8.50/month |
| Lloyds | Free for 12 months then £8.50/month |
| HSBC | Free for 12 months then £6.50/month |
| Royal Bank of Scotland | Free |
Alternative business bank accounts in the UK
There are business bank accounts alternatives beyond major banks. The
Starling business current account and Tide business bank account are entirely online and though limited in their offerings compared to high street banks, may be the more convenient choice.
If your business has an ethical slant then Triodos Bank has business account offerings you may be interested in. With customers including River Cottage, Triodos aims to help businesses that are making a positive difference to society socially, culturally or environmentally.
Business bank account FAQs
How long does it take to open a business bank account?
The time it takes to open a business bank account in the UK can vary depending on the bank and your circumstances. As long as you have all the necessary documents to hand when you fill out the application form, that part of the process should be quick. However, the bank then needs to verify your information, which can take anything from a few hours to a few weeks. If the bank requires you to verify your ID in-branch, that will take longer than completing the process digitally. If any of the information you provide is invalid or incomplete, that can cause delays.
Can you use a personal account for business?
Limited companies are legally obliged to open a separate business bank account, while sole traders can use a personal bank account for their business. However, it’s advisable for sole traders to set up a dedicated business account as it provides proper separation of finances for tax purposes, and it conveys professionalism to clients and suppliers.
Can a business have two bank accounts?
Yes, a business can have multiple bank accounts, and there’s no legal limit to the number of accounts a company can hold. Having multiple accounts can be beneficial for separating funds, managing cash flow and taking advantage of different features or products offered by various banks. However, it’s important to consider your business structure, financial management needs and the purpose of each account before opening multiple accounts to avoid unnecessary complexity.
Linking your business bank account and setting up transfers with Square
Once you have your business bank account, it’s simple to link it to your Square account and begin receiving funds as soon as the next day with Square Transfers. You can set up PayPal with Square Online but you will need to upgrade your Square Online site.
Square will need to verify your account before money can be transferred, however, you can still accept payments – these will be securely stored in your Square balance.
To add your bank account to Square:
- Sign in to your Square account and go to Bank Accounts
- Enter your account holder name, sort code and account number
- Check your information is correct and click submit
- Square will verify your account and complete the process, this can take up to 7 business days.
Following your account being verified by Square, you can have payments transferred straight to your account. Square’s transfer schedule has payments transferred by 16:00 the following business day. Transactions made from Friday – Sunday will be transferred the following Monday. If you pay 1.5% of the transfer amount, you can select Instant Transfer. This initiates transfers instantly and they arrive in 20 minutes or less, including on weekends and bank holidays.
You can change your Close of Day time in your Square Dashboard to better reflect your trading hours; this allows Square to group the transactions of the past 24 hours into one transfer and is especially useful for businesses trading after midnight.
For further information of transfers and linked account settings, visit our Support Centre.
Using Square Instant Transfers
The quickest way to get your money is to take advantage of Square’s instant transfers.
Sometimes you need your money immediately – that’s when instant transfer can help. If it’s available on your account, you can instantly send funds to your linked bank account 24 hours a day, 7 days a week, for a fee of 1.5% of the transfer total. Using instant transfer, you can instantly send up to £2,500 per 24 hour period to your bank account. The funds will arrive in your bank account within 20 minutes.
Before you get started, make sure you have at least £50, after processing fees, in your Square balance.
Learn more about sending an instant transfer.
