How to open a business bank account in the UK: Step by step guide

If you’re an entrepreneur or business owner, having a business bank account can be a sensible way to keep your personal and company finances separate. Business bank accounts can also come with a range of features and perks not available to personal account holders - which can bring down your banking costs, and make life more convenient, too.

This guide walks through all you need to know about UK business bank accounts including what they are, how much they cost, and how to open one. And because banks might not always offer the best value for your business, we’ll also take a look at alternative providers like Wise and OFX, which may be able to help you save money and get a better deal, especially if you need to make international business payments.

What is a business bank account?

A business bank account is intended for making business transactions, rather than for managing your personal finances. Business bank accounts can be held in the name of your registered company, and can offer a good way to keep track of your business finances. Depending on the type of business entity you have, you might find a business bank account is mandatory. And even if it’s not, it can often be a smart way to cut costs and admin time, freeing you up to focus on keeping your customers happy.

Does my business need a business account?

If you have a limited company registered in the UK, you’re legally obliged to have a business bank account. That’s because opening a limited company means your business and personal finances must be kept separate.

It’s not mandatory for UK sole traders and freelancers to open a business bank account. That’s because as a sole trader or freelancer, your personal and business finances aren’t treated legally as being separate. That said, having a business bank account can bring a huge number of benefits - even for freelancers and sole traders. That might mean you decide to open a UK business bank account even if it’s not a legal requirement. More on that, next.

What are the benefits of having a business bank account?

Opening a business bank account comes with a broad range of benefits. Whether you’re just starting out, or already have an established UK business entity, the right business bank account can really help you grow your business. Here are a few key benefits to consider when you’re deciding if a business bank account is right for you:

  • Having a business bank account keeps your company finance separate from your personal money

  • With a business bank account you can pay and get paid in your company name - creating a more professional impact

  • A business bank account makes it easier to track payments, and analyse financial information and data about your company

  • Business bank accounts often come with features to cut admin time, like batch payments and cloud based accounting integrations

  • Business bank accounts often offer lower fees compared to personal accounts  for the types of transactions companies need to make frequently

  • Depending on your company needs you may be able to access funding, investments, savings products and more through your preferred bank or business account provider

  • It’s easier to manage your tax accounting and company reporting requirements when your company finances are independent of your own money

How to choose a business bank account 

Business bank accounts can offer a really great range of features which make it easier to connect with customers and suppliers, manage your day to day finances, and prepare your accounts and financial reports. However, business bank accounts do come with a pretty broad range of features and fees, so picking the right business bank account for you is crucial.

Before you pick the best business bank account for your needs, consider the following:

  • What are the account opening and monthly fees?

  • How much are transaction and service fees - especially for the types of transactions you make frequently?

  • How easy is the account to use, for checking balances, or for making payments?

  • Does the account offer linked debit or credit card options to make it easier for you and your team to spend and withdraw cash?

  • Can you send and receive international payments - and what are the fees and exchange rates involved when you do?

  • Does the account come with multi-currency functionality?

  • Can you add team members to the account easily, and manage user permissions so everyone has access to the tools they need to do their job?

  • Does the provider have a good reputation for customer service standards?

You’ll be able to get a business bank account from either a high street bank or a specialist provider. While traditional banks might have a broader suite of business services available, like credit services and loans, specialists can often provide an intuitive online and in-app service with lower fees. Picking the right one for you will mean doing a bit of homework and comparing a few options. Here’s an overview of some important features from top business account providers in the UK to start you off:


Account feesCard optionsInternational usageKey features
Wise

One off fee of 45 GBP to open account


No monthly charges, no minimum balance

Linked international business debit cards available


1 card is free, subsequent cards cost 3 GBP each


2 free ATM withdrawals anywhere in the world, to a total of 200 GBP/month; 0.5 GBP + 1.75% after that

Send payments to 80+ countries, from 0.41% fee


Hold and exchange 54 currencies


Local bank details for 10 currencies

Exchange currencies using the mid-market rate and low fees


Integrate with cloud based accounting software


Make batch payments and automate workflow with the Wise API

OFXNo monthly charges, no minimum balanceNot available

Make payments around the world, with currency exchange costs which beat the banks


Local bank details for 7 currencies

Get paid in 7 currencies from marketplaces, payment gateways and direct from clients


Set up one off and automated payments in a range of currencies


Integrate with Xero accounting software


HSBC

5 - 10 GBP/month maintenance fee

Card withdrawals in the UK: up to 0.25 GBP fee + 0.4% - 0.6% of withdrawal amount


International withdrawals: 2.75% conversion fee + 1.5% withdrawal fee

Upgrade to an international account for 96 GBP - 180 GBP/year


International transfer fee up to 30 GBP + exchange rate markup

Pay in cash and cheques


Get face to face service in a  branch 

NatWest

Basic business accounts are available with no fee - plus a range of fee paying business bank accounts

Card withdrawals in the up: 0.35 GBP fee


International payments and withdrawals attract a 2.75% foreign transaction fee

International transfer fee up to 15 GBP + exchange rate markup

Pay in cash and cheques


Get face to face service in a  branch 


Integrate with Xero, QuickBooks and FreeAgent

Barclays

Basic business accounts for startups are available with no fee - plus a range of fee paying business bank accounts

UK in network ATM withdrawals are free


International payments and withdrawals attract a 2.75% foreign transaction fee

International transfer fee up to 25 GBP + exchange rate markup + possible third party charges

Pay in cash and cheques


Get face to face service in a  branch 

How much does it cost to open a business account?

Cost is going to be an important factor when you’re choosing a business account - pay too much and you could see your profits shrink. Typically banks and other specialist providers will charge either a one off fee to open your account, or a monthly maintenance fee. Once your account is up and running you’ll also need to pay transaction fees for the services you use.

Here’s a rundown of the typical opening and ongoing account fees for the providers we profiled above:


Account fees
Wise

One off fee of 45 GBP to open account


No monthly charges, no minimum balance

OFXNo monthly charges, no minimum balance
HSBC

Small business banking account - 8 GBP/month


Business banking account - 10 GBP/month


Charitable bank account - 5 GBP/month

NatWest

Mettle account for sole traders and small companies - no monthly fee


Business bank account - no monthly fee

Barclays

Basic business accounts for startups - no monthly fee


Business current account for companies up to 5 million GBP turnover - 8.5 GBP monthly fee

How to open a business account in the UK

Opening a business account in the UK can be done online in some cases, although many traditional banks require you to visit a branch to present your paperwork and complete your application. If you’re looking to get your account set up online or with just your phone, the good news is that this is often possible with specialist business account providers, which offer digital application and verification processes.

Whether you’re applying for your business account in person or online the steps will be fairly similar:

  1. Choose the provider and account that suits your needs

  2. Check and gather all the information and documents required

  3. Complete the application form in hard copy or online

  4. Provide your documents to the provider - either uploading digital copies or presenting them in a branch

  5. The bank or provider will verify your account, which may be instant, or may take a day or two

  6. Once your account is verified you’ll be able to add funds, and get your linked card for easy spending

It’s good to know in advance that all business account providers - from traditional high street banks to modern alternative services - will need to take some steps to verify your account before you can use it. This is to comply with legislation and make sure accounts are kept secure. It also helps to prevent fraudulent or illegal use of accounts. Invest some time checking what paperwork your provider needs, to make sure you can get verified as quickly as possible - more on the documents normally required, below.

What do I need to open a business bank account?

The exact paperwork you need to apply for a business bank account will depend on the specific bank and account product, and the business entity type you run. In general, though, documents needed can include:

  • Your own proof of ID - usually a driver’s licence, passport, or other government issued photo ID

  • Proof of your residential address - often a recent bank statement or council tax statement

  • Proof of your UK registered business address - banks may accept a utility bill, rental agreement, or letter from HMRC 

  • Your personal and business contact details 

  • Information about your business such as your annual turnover and number of employees

  • Registration number or certificate of incorporation if you run a limited company

  • Your business tax ID and information 

You may also need to provide information and proof of ID and address for anyone with a stake in the business of 25% or above, and anyone who will have joint access to the business account.

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

The UK government states that online business accounts can often be opened and verified in as little as a couple of hours. However, they also warn that opening a full business banking solution with a regular bank can take anything from a few weeks to 3 months to get fully up and running.

When opening a business bank account with an online provider the main thing which can take a little time is the verification process. While this is often completed in a few hours, it can take a few days in some cases, depending on your business type. If you’re a freelancer or sole trader you might find this process moves faster compared to businesses with more complex structures.

Can I open a business bank account in the UK as a non-resident?

Although there’s no legal reason why you can’t open a business bank account in the UK as a non-resident, traditional banks tend to be reluctant to extend their services to people who don’t have a UK residential address. This is usually because it makes it tricker to complete the checks required to comply with UK and global anti-money laundering legislation.

If you’re not a UK resident, but have a UK registered business you’ll need to shop around if you want a business account from a traditional bank. A good alternative is to look at accounts offered by specialist providers, like Wise or OFX. These products offer GBP banking details, but tend to be more international in focus, which often means that the providers are willing and able to accept a proof of residence from a country other than the UK.

Can I open a business bank account online?

Specialist providers will often let you open your business bank account online or using an app - some banks will also provide this service, but often this will depend on the business entity type. It’s worth shopping around to find the perfect business account for your needs, including looking at both traditional banks with online opening options, and modern alternative providers which are opened and managed online or in app.

Can I switch business bank accounts?

Yes. If you find that the business bank account you’ve opened doesn’t meet your needs, you’ll be able to switch to another bank or provider. 

If you have a small business with under 50 employees, and a turnover under 6.5 million, the Current Account Switching Service can help you move your affairs from one bank to another. In fact, because business banking is a competitive market, many banks offer a broad range of specific switching services which make the process as painless as possible. Check with your preferred provider if this is an option, before you complete the application for your new account.

Types of business accounts in the UK

Different banks and providers offer a range of different business accounts in the UK. Products tend to be split by the type and size of your business - for example:

  • Startup and freelancer accounts

  • Small business accounts

  • Established business accounts

  • Corporate accounts and services

You may also find that there are different account types based on the type of transactions you’ll need to make - including:

  • Business current accounts for day to day use

  • International and multi-currency accounts for paying overseas staff and suppliers - and getting paid by customers abroad

  • Savings accounts including fixed deposit accounts

  • Accounts with linked financing and credit services

When it comes to opening a business account in the UK, there’s plenty of choice on the market - finding the right provider and account type for you will require a bit of thinking about your needs, preferences and how you expect your business to evolve over time.

Conclusion

The UK has a developed financial services sector, with plenty of providers offering business banking services, including both traditional banks and modern specialist alternatives. Traditional high street banks might be a good option if you prefer face to face service, or if you need to deposit cash or cheques regularly. However, they may also come with higher fixed fees and transaction costs compared to specialist options.

For many businesses, having a specialist business account which is opened and operated online or through an app can give a convenient, low cost way to manage day to day finances. You’ll often also find specialist providers have specific features which can help businesses save time and money, like low cost currency conversion, multi-currency functionality, batch payment options and accounting integrations. Compare a few different business accounts to find the right options for your specific needs, so you can cut costs and administration.

FAQ

Is it easy to open a business bank account in the UK?

You’ll be able to select a UK business account from either a traditional bank or an online provider, with a broad range of products to pick from. As long as you have all the right paperwork required by the provider - including business registration information, and proof of your identity and address - opening a business bank account is fairly straightforward. Take a look at online and digital providers for the fastest opening processes.

Do I need a business bank account if I am a sole trader?

UK sole traders don’t legally need a business bank account. However, it’s often helpful to have one to keep your personal and business finances separate. Picking a business account which has no monthly maintenance fees and no minimum balance means you’ll only pay for the services you actually require, with no obligation or ongoing charges.

How much does a business account cost?

When you open a business account you may need to pay a one off or monthly fee, plus transaction costs for the services you use. The costs of a UK business bank account can vary widely, from accounts with no monthly charges through to more complex products which have high maintenance and transaction fees. Compare a few to make sure you get the best one for your needs.

Does a UK company need a UK bank account?

If you run a UK registered limited company it’s mandatory to open a business bank account. Sole traders and freelancers may not be obliged to open a business account - but it’s still often a good idea to get one to keep your finances organised and make it easier to track your company’s progress.

By Ileana Ionescu
Updated 17 June 2022