Our editors pick these deals by weighing up several factors such as the set up time, software integration, fees and more for each product.
“A great business banking solution for SMEs, combining convenience with essential tools like accounting software integration and personalised invoicing. Additionally, you can manage your finances securely and efficiently through the intuitive smartphone app.”
“A reliable, reputable business account designed for simplicity and peace of mind. With no monthly fees, unlimited free payments, and 24/7 fraud protection, it’s easy to manage your finances online or in-app, with UK-based support exactly when you need it.”
“If you open a bank account for your business with Revolut then you have the flexibility to change it or cancel at any time. It’s also completely free and it can be managed online with 24/7 support.”
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A business bank account is a type of bank account specifically designed for businesses to manage their finances, keeping business transactions separate from personal ones.
It provides essential banking services and makes life easier when it comes to tax returns, audits, expense tracking and cash flow management. Specific business banking statements can also be helpful in business plans if you're looking to grow and need to quickly evidence your business' performance.
A business current account works like a personal current account but with additional features tailored to meet the needs of businesses. It allows you to deposit and withdraw funds, write and cash cheques, make electronic payments, receive payments from customers, access banking services online or through mobile apps and, subject to checks, have a business overdraft facility.
Some business bank accounts also come with, or allow the integration of, software to help with business operations. This might include payroll or accounting software.
It’s not a legal requirement for most businesses to have a dedicated business bank account, but it’s highly recommended for several key reasons:
Keeps personal and business finances separate: Separating your finances simplifies accounting and makes tax reporting far more straightforward.
Improves cash flow management: Business accounts often include overdraft facilities, helping you manage cash flow and cover unexpected expenses with ease.
Streamlines financial tasks: Many business bank accounts integrate with accounting and payroll software, saving you time and effort on administrative tasks.
Boosts credibility: A dedicated business account signals professionalism to customers, clients, and suppliers. It shows you’re serious, and many suppliers prefer dealing with businesses that use a business account.
Offers tailored financial tools: Business banking services are designed to improve efficiency, with features specifically aimed at making business finance management easier and less stressful.
Not having a business bank account can also lead to potential risks:
Tax errors and penalties: Mixing personal and business finances increases the likelihood of filing an incorrect tax return. This could result in missed transaction records and fines from HMRC.
Legal obligations for limited companies: If you run a limited company, you are legally required to keep company finances separate, as it is considered a distinct legal entity. Failing to do so could result in penalties.
For limited companies and sole traders alike, opening a business bank account is a smart move that helps you stay compliant, organised, and professional.
H2k Botanicals
Since founding H2k Botanicals in 2000, Hazel Barry has grown the company from a personal vision into a respected name in the skincare industry. With innovative, cruelty-free products, H2k Botanicals not only supplies the UK market, but exports to the Middle East and is now poised for further international expansion.
Hazel reflects on her business journey and how the company is thriving in an ever-evolving market.
CCU International
Beena is a CEO and co-founder of CCU International, a business with proprietary carbon capture technology that can help large and small businesses to achieve net zero by 2050.
Beena has big plans for the next 18 months, and here she reflects on the lessons she’s learned from the first two years of trading.
selfcatering.co.uk
Richard Young co-founded selfcatering.co.uk, after managing his own self catering properties for years. The online business helps people find their dream holiday cottage by working with rental companies across the UK. The website currently has thousands of properties available for people to browse.
Here, Richard shares his business story and highlights the challenges and opportunities that come with an online business.
To open a business current account in the UK, you will typically need to provide the following:
Proof of identity: This can include your passport, driver's licence, or national ID card.
Proof of address: Utility bills, bank statements, or official letters showing your name and address.
Business documentation: This may include your business registration certificate, partnership agreement, or articles of association.
Personal and business financial information: You may need to provide details of your personal and business income, assets, and liabilities.
Other account providers may require additional documents too - they'll let you know what they need during the application process.
Switching your business bank account can seem daunting. But if you're unhappy with your existing bank account, there's no reason not to look for a better option. Many banks and providers offer incentives for switching your business bank account.
The Current Account Switch Service (CASS) is a free service that allows you to switch your business bank account between participating banks quickly and easily. The service is backed by the Current Account Switch Guarantee, which means that your old bank will be responsible for any payments that are missed during the switch.
But before you use the CASS, do your research and compare different business current accounts. Make sure that the new bank offers the features and benefits that you need and make sure to read the terms and conditions carefully before you sign up for a new account.
Once you've found an account you like, just follow these simple steps.
Apply for a business account with the new bank.
When applying for the account, tell the new bank that you want to use the CASS.
The new bank will then contact your old bank to initiate the switch.
The switch should take place within seven working days.
By following these tips, you can make the process of switching business bank accounts as smooth and stress-free as possible.
Yes, sole traders can open a business current account, just like partnerships and limited companies. Having a business current account as a sole trader helps you manage your finances more efficiently by keeping your personal and business transactions separate, which is especially useful for accounting and tax purposes. Many banks also offer tailored features and tools specifically designed to support sole traders.
While it’s possible to use a personal current account for business transactions, it’s generally not advisable. Mixing personal and business finances can create complications when managing accounts, tracking expenses, and filing taxes. If you run a limited company, using a business bank account is a legal requirement because your company is a separate legal entity.
The fees associated with a business current account can vary depending on the bank and the specific type of account you choose. Common fees include monthly account maintenance charges, transaction fees for deposits or withdrawals, and additional charges for services such as overdraft facilities, international transfers, or using a debit card. Carefully review the fee structure of the selected business account before opening it to ensure it aligns with your business needs and budget.
It can be more challenging to get a business current account with bad credit, but some banks may offer options specifically designed for businesses with poor credit history. Taking steps to improve your credit history and ultimately your credit report can be helpful too.
Yes, you can have multiple business current accounts. It can be useful for separating different aspects of your business or if you have multiple businesses.
Whether you need to maintain a minimum account balance depends on the specific terms and conditions of the account. As with any bank account you might open, it's important to check specific terms and ask the account provider if you're still unsure.
Business current accounts may have limitations on the number of free transactions or cash deposits you can make each month. Additional fees may apply if you exceed the limits.
If you close your business, you should inform your bank and close your business current account. The bank will guide you through the process, and any remaining funds will be transferred to another account.
There's no guarantee you'll get an overdraft with your business bank account. Just like with a personal bank account, you'll still need to pass a credit check to be approved for an overdraft facility, and the amount approved can differ depending on your circumstances.
If you need an overdraft facility for your business then it's worth speaking to your account provider to see what options are available to you.
You can use this service if your business has fewer than 50 employees, an annual turnover of £6.5 million or less, and both your current and new banks are part of the switch guarantee scheme. If you're unsure whether your business qualifies, it's best to contact your new bank for more information.
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