Business Bank Accounts

A business account is required by law if you are forming a limited company, but they are also available for other forms of enterprises, such as charities, partnerships, and sole traders.

A business bank account works similarly to a personal bank account, except that instead of being used for personal purposes, it is set up in the name of the firm and lets you keep track of your business’s incomings and outgoings. It may be easier to acquire business financing if you have a business bank account and you may also be able to apply for a business credit card.

What are the different types of business bank accounts?

When looking into business bank accounts, it’s imperative to be informed of the various options available. The ideal account for your company will be determined by the type of business you have. We have listed some examples below to help guide you in the right direction.

A free business bank account is exactly that: it’s free. Ideal for start-ups, sole traders, and enterprises looking to save money. While some banks provide a ‘free forever’ bank account, the ‘free’ period typically only last for a certain duration.

Following that, you’ll be moved to a premium version of your account, which will still be inexpensive. You will find free business bank accounts out there with no charges, you’ll just need to look a little deeper.

Bank accounts for bad credit

Bank accounts for bad credit

A bad credit business bank account is tailored to the needs of companies with poor credit. If you've filed for bankruptcy in the last five years or have a county court judgement (CCJ) against your company, opening a conventional business bank account will be difficult. That is why there are adverse credit business accounts you can look to open.

Contractor business bank accounts

Contractor business bank accounts

You'll need a business bank account to receive income if you're a contractor working for a limited company. It is a legal obligation for a limited company to have a business account. You can receive money from clients, pay yourself a salary and profits, pay corporation tax, and set up company direct debits with a contractor business bank account.

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Start-up business bank accounts

A start-up business bank account is exactly what the name suggests, a business bank account for new start-up companies. This would be your very first account link to your new business venture so if you’ve just started a new business, this would be the ideal banking choice. 

Switching business bank account

Switching business bank account

A switch business bank account is specifically designed for companies looking to switch from their current bank account provider to an alternative one.  Perhaps you’ve expanded at an exponential rate, looking for better pricing or you’ve simply had a poor experience. You’ll find switching business bank accounts typically free and easy. 

Business savings accounts

Business savings accounts

Any cash you have on hand that isn't in a savings account could be earning your business money. You can store all your funds in a business savings bank account, ready for emergencies, new market investments or expansion. A business savings account typically pays better interest rates than a company's current account which is why it's a product worth considering.

Frequently asked questions

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The documents needed to open a business bank account will depend on the type of account you chose and the bank account provider. To open any business bank account, you will need at least the following:

Proof of ID – This can be a valid passport, driving license or national identity card (EEA or equivalent

Proof of address – acceptable forms will consist of a driving license, utility bill (council tax, gas or electric) or a personal bank statement. If you’re using a utility bill or a bank statement, these must be in your name and dated within the last 3 months.

If you’re setting up a limited company, business account providers will need further information before they can open an account which could include:

  • Companies House registration forms 
  • Certification of incorporation 
  • Business registration forms 
  • Proof of business address

All this information is a necessity as your bank account provider will need to correctly identify you, confirm your address and potential carry out a credit check.

Opening a business bank account in the United Kingdom is quick and easy. After you’ve done your comparisons, go ahead and fill out the provider’s application form. To complete your application, you will need to give both company and personal information, however, the criteria will vary depending on the sort of business you have.

Spending some time knowing what is available to you and which business account best meets your needs is essential. Each bank account will have differing advantages, it’s up to you to determine which are most relevant to your company.

You might see more benefits in opening a bank account that has a local branch as opposed to an online only provider. Comparing what’s available to you is the best way to find a business bank account most suitable for you.

This will depend on the type of business you run. If you have a limited company, you are legally required to open a business bank account. However, if you’re a sole trader or self-employed, it’s a good idea to keep your business and personal funds separate.

The biggest advantage of separating your accounts is that you can finish your tax return accurately and promptly at the end of the year.

This is a question asked quite often and it relates to every type of business, even sole traders and self-employed. Find a few reasons below as to why you should consider separating your business and personal finances:

Helps build a business credit

You can apply for a business credit card

Save time splitting business and personal transactions

Leaves a paper trail for business expenses

Complete your tax return quickly

Integrate accountancy software

Helps lenders with their underwriting when it comes to business loans

Some providers will open a business bank account for you within 24 hours, some even with minutes if you have the required information to hand. Others will take a little longer due to the documentation required and due diligence.

Can I open a business bank account online?

Absolutely, this is becoming the way forward when it comes to opening a new business bank account. You can be set up within minutes with some providers and send and receive money within hours. Some bank account providers don’t have a high street presence, so it’s important to factor this into your decision if you prefer to pop into a branch to speak to someone.

Business owners are often turning to online bank accounts for their everyday banking due to the speed at which you can open an account. Popular providers such as Starling Bank and Monzo business are often go-to providers but we've provided a link where you can compare several providers and make your own informed choice.

When looking at which provider you'd like to open a business bank account with, it's important to weigh up all options, we'd listed some questions below that might help with your decision:

Can I get a business bank account if I have adverse credit?

The short answer is yes, absolutely you can. You will need to compare the market to find business current account providers that specialise in offering a business bank account for poor credit. These providers tend to only offer an online business bank account as opposed to having a branch. You'll be given access to online banking where you can carry out all your normal banking activities, from online payment, bank transfers and reporting lost debit cards. 

The good news is, that once you’ve found a suitable provider for your business account in the UK, you’re typically set up within 24 hours. If you're an existing customer with a personal account, you'll have a higher chance of successfully becoming a business customer.  Smart Funding Solutions are authorised and regulated by the financial conduct authority, FRN: 972740

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