How to set up a business bank account

How to select a business bank account

Before you even think about applying for a business bank account, you need to consider your options and work out exactly where you’re going to apply. Don’t just apply for the first business account you see.

Check multiple banks

Virtually every bank will offer some kind of business account. The temptation might be to opt for a traditional high street bank, particularly if there is still a branch near you, but don’t settle for a particular bank just because of its location. Look at your options with as many banks as possible.

It’s also sensible to check online challengers. Many newer banks don’t have branches, meaning you may find an innovative account that offers the options you’re looking for online.

Pick the correct account

Your search shouldn’t end with the banks themselves. Ensure you look at the benefits each bank account offers, and read the terms and conditions carefully. Many provide different banking functions and have different charging structures, which all need to be considered. 

Look at features such as:

• FSCS protection, which protects funds up to £85,000 in the case of a bank collapse

• Transaction limits, which may cause you to be charged if you exceed a certain number of payments or deposits

• Monthly account fees, or other additional charges

• Online banking features, as these may be the primary way you manage your business bank account

• Accounting functions which can simplify the tax return process – consider whether your account can be linked to the bookkeeping software used by your business

We’ve selected some of the best business accounts here, but every business is different. Do your due diligence and find what works best for you.

How to apply for a business bank account

Once you’ve selected an account, the next step is to fill in an application. Note that you will usually need to be the owner or a director of the company to apply for a business bank account in its name. 

What do you need to open a business bank account?

As part of the application process, you will be expected to provide certain information to the bank so that it can decide whether you are eligible for the account. The requested information could include:

• Proof of identity. Although you are applying on behalf of your business, you need to provide personal ID, such as a passport or driver’s license

• Director details. You may need to provide personal details of other significant members of the business or directors if applicable

• Proof of address. The bank will need to know the trading address of the business or see a utility bill or similar official letter if you are a sole trader

• Business documentation. If you are applying on behalf of a limited company, you may need to provide your articles of association or business registration documents, along with your registered company number

Banks may also request a number of financial details, including those relating to:

• Business accounts

• Personal accounts

• Assets or liabilities

• Year-end accounts

• Cash flow forecasts

Fill out an application

Most business bank account applications are now performed online. Once you have all of the relevant information to hand, the process couldn’t be simpler: visit the website of your chosen provider, find the application link, and start filling in the form, making sure that all the information you provide is accurate.

How long does an application take?

The length of time an application will take really depends on the bank you’re dealing with. You could apply for some business bank accounts in as little as ten minutes; the process with other providers might take a little longer.

Don’t rush the application by trying to fit it into a spare half hour. It will take as long as it takes, and it is important to get it right.

How quickly will I know if my application has been accepted?

Again, this can vary between providers. Some banks automate the process and can provide you with an instant yes or no. Others might take a few business hours or as long as a few days. 

Banks will usually offer a clear indication of their acceptance times, so look for this before you apply. 

What to do if your application is rejected

Your application may not be successful in certain cases. This could be for any number of reasons, and you may or may not be told why. 

Check that all of the information you provided in the application process was correct. An application could fail simply because you entered the wrong details into the wrong field. In this case, you should reapply with the correct information.

It may also be worth applying for an account with a different bank, or a different, more suitable product with the same bank, as this may alter your chances of being accepted. 

Applying for multiple bank accounts may cause a temporary dip in your credit score, but theoretically, it shouldn’t matter in the long run. However, it may be prudent not to have more than one application open at any one time.

Note that most banks will not open business accounts for individuals who have been declared bankrupt or faced a County Court Judgement or Court Decree.

Do I have to apply again if I’m switching business accounts?

Sometimes when you’re switching your business bank account, you won’t need to fill out a whole new application. If you are applying for a second account with your existing bank, for example, you may just need to complete a second account form.

If you’re switching to a new bank, business accounts are covered by the Current Account Switch Service (CASS), provided that both your current and new banks are signed up to the switch guarantee scheme.

To qualify, your business must have fewer than 50 employees and an annual turnover of £6.5 million or less. When applying for your new account, let the bank know that you wish to use CASS, and they’ll do the rest.