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Business bank accounts explained
A business bank account helps keep company finances separate, simplifies accounting and helps build a professional financial profile.
What is a business bank account?
A business bank account is designed specifically for managing company finances rather than personal money. You open your account in your business name and then use it to:
Pay bills
Pay staff wages
Pay suppliers
Receive payments from customers and clients
Send money abroad
Many business accounts also come with features such as accounting software integration and invoicing tools to help streamline your business finances and make life a little easier when it comes to taxes.
A business bank account is mandatory for limited companies and limited liability partnerships. Sole traders can use a personal bank account for their business transactions if the bank allows it, but a separate business account is still highly advantageous.
Find the right bank account for your business
What are the features and benefits of a business bank account?
Some of the key features and benefits of a business bank account include:
Separation of finances – Keeping your personal and business finances in separate accounts makes life much easier when it comes to tracking expenses, managing tax returns and sticking to a budget
Management tools – Many business accounts come with tools you don’t get with a personal account. These can include accounting software integration, invoicing, expenses tracking and cash flow insights
Professionalism – Clients can make payments to your company name rather than your personal one, reinforcing credibility
Access to credit products – Opening a business account could give you access to business credit cards, overdrafts and business loans
Building business credit history – Having a dedicated business bank account helps you build a financial track record, which can improve your company’s credit score
Access to specialist support – Some accounts come with dedicated relationship managers and access to networking events
Important considerations
Before opening a business bank account, there are several considerations to keep in mind, including:
Account fees
Business bank accounts often come with monthly or annual fees, and may also charge for certain transactions.
Some banks may waive the monthly fee for the first year, while others might offer a set number of fee-free transactions each month
Eligibility
Different providers have different eligibility criteria, so it’s crucial to check.
You may need to have been trading for a set length of time or meet a minimum annual turnover requirement. Some banks only offer accounts to limited companies and partnerships, while others may turn you away for a business bank account if you have poor credit
Accessibility
You can open and manage some accounts online or in-app only, while others might offer branch access. Think about what works best for you
FAQs
How do I choose the right bank account for my business?
When choosing a business bank account, think about the features that are most useful to you and your business, as well as how you wish to manage your account. Then compare options carefully, checking for account and transaction fees, and whether you meet the eligibility criteria.
Are there any free business bank accounts?
Yes, some business bank accounts have no monthly fee and may not charge for everyday transactions. However, these usually have limited account features and may be better suited to sole traders and small businesses, rather than larger limited companies.
Do I need a business bank account if I’m a sole trader?
You don’t legally need a business bank account as a sole trader, but it can make life a lot easier. A separate account helps you keep business income and personal spending separate, which can save time when you do your tax return, track expenses or need to check how much your business makes.
Some personal current accounts also ban business use, so check your account provider’s terms before using one for work.
Can I switch business bank accounts?
Yes, you can switch business bank accounts. Most banks these days take part in the Current Account Switch Service (CASS), which moves your payments and closes your old account for you. Others may ask you to move everything manually so double check before you start anything formally.
Also be sure to check any fees, download your old statements and tell customers or payment providers if your account details change to minimise disruption.
How long does it take to open a business bank account?
Some business bank accounts can open within minutes - especially online-only banks. Others may take several days or longer.
The timescale depends on:
The provider
Your business type
the checks the bank needs to complete
Your application may take longer if the bank asks for extra documents or more details about your business and you take a while to provide what it needs.
You can speed things up by checking your business details are correct and having any documents ready before you apply.