The best UK business bank account

Common business bank account questions

1. Does my limited company need a separate business bank account?
2. How do I choose a business bank account?
3. How do I open a business bank account?
4. What information will I need to apply for a business bank account?
5. What are the main alternatives to the high street banks?
6. What fees and charges will my business bank account incur?
7. How can I switch business bank account provider?
8. What can I do if I am refused a business bank account?
9. What do I need to know about foreign currency and international bank accounts?

1. Does my limited company need a separate business bank account?

Opening a separate business bank account can make managing your cash flow and budgeting simpler. Opening a business bank account may also be a legal requirement.

• If you are a self-employed, sole trader, you're not legally required to have a separate business bank account.
• If your business is a limited company or a limited liability partnership, you must open its own company bank account.

2. How do I choose a business bank account?

When choosing a business bank account, start by establishing what type of bank account you want and which services you will need. There is a growing number of traditional, high-street and online-only providers to choose from. To help you narrow down the options, you should ask yourself some key questions:

• Do they offer the services you need?
• Is it possible to link the bank account with your accounting system?
• How easy is it to make routine transactions?
• What will it cost make the transactions you need?
• Does the provider have a good reputation for dealing with problems?

You may find it helpful to ask business contacts which accounts they use and how satisfied they are. You can also compare business bank accounts using Nerdwallet. 

Remember, you don't have to consolidate all your financial services with one provider. For example, you might have:

• a day-to-day account with your main bank account provider
• a savings account offering a higher interest rate with another bank
• a specialist provider for international payments
• separately negotiated borrowing facilities as required

Find out more about the different business bank accounts on offer:

• Check NerdWallet's business bank account comparison tool.
• Read Which? business bank account guidance, basic information and recommendation for the largest providers.
• Compare customer satisfaction levels in the business banking service quality survey, which covers the 14 largest business bank account providers.

3. How do I open a business bank account?

Opening a bank account for your business is usually quite straightforward, but is sometimes complex and time-consuming. You can make the process as simple and quick as possible by getting organised in advance with all the information the bank will want. You may find it takes longer to open an account if:

• your business is in what banks consider a high-risk sector – for example, financial services, gambling or a business that involves a high level of cash transactions
• your business trades internationally, particularly if you deal with countries that have a questionable reputation
• you have external investors that the bank will want to understand
• your business has a complicated structure – for example, if it is part of an international group of companies

For many small businesses, the easiest option is to apply online. You may want to discuss your requirements over the phone or visit a branch if you are a larger business or have more complex needs. For example, you might need help deciding which type of account best suits you, or to ask about different financing options.

4. What information will I need to apply for a business bank account?

Banks need a variety of information before they will open an account for you. They use the information to help them understand your business, check your identity and meet their legal obligations to prevent money-laundering. This information typically includes:

• business basics – name and any other trading name, address, legal form
• details of any existing business bank accounts
• details of key individuals associated with the business, possibly including their bank account details
• an overview of the business – what it does, when it started
• financial details – for example, how much you are investing (in a start up), financial track record (for an existing business), cash flow forecasts

You may be able to provide much of the information needed electronically – for example, by supplying your company's registration number.

If your business is a limited company, the bank is likely to want copies of or access to:

• the company's certificate of incorporation, confirming that the company has been properly registered with Companies House
• the company's articles of association
• any recent appointments of directors (or company secretary)
• documentation proving the identity and address of every individual with significant control over the company or who you want to be allowed to operate the account

You will also need to prove the identity and address of every individual with significant control over the company, and of anyone else who you want to be allowed to operate the account. Be prepared to provide this information for all the directors and anyone else who is a significant shareholder.

Many of the UK's leading banks have cooperated to agree what basic information they will need from you. But each bank has its own particular application process and requirements, so check with the bank where you want to open an account.

5. What are the main alternatives to the high street banks?

The main alternative bank account providers are the new wave of digital 'challenger' banks. There are also smaller banks, sometimes specialising in a particular type of customer or product (for example, lending to the property sector or fixed-term savings) or aiming to provide ethical finance.

Challenger banks tend to be online-only. In some cases, they may be less convenient for businesses that use cash (or cheques). Some challengers have arrangements with other organisations to accept cash or cheque deposits, or allow cash withdrawals.

Challenger banks can offer several advantages:

• Because they don’t have the costs of maintaining physical branches, challengers may offer lower costs and/or higher interest rates than high street banks.
• Challenger banks tend to have well-designed, user-friendly websites and smartphone apps.
• Some challengers have a reputation for superior, friendly customer service (but online only).

Relatively few challenger banks offer business accounts, though the number has been increasing. Well-known business account providers include Monzo, Tide and Starling.

Other new types of account providers, such as 'electronic money institutions' (EMIs), are not directly licensed as banks. This means they are not covered by the Financial Services Compensation Scheme, so money held with them is not protected in quite the same way.

6. What fees and charges will my business bank account incur?

Most business bank accounts tend to have charges, though most providers offer new small business customers free banking for the first year or 18 months.

Costs can include:

• a flat-rate, monthly account maintenance fee
• monthly charges for additional account services – for example, if you also have a foreign currency account
• charges for each deposit or withdrawal – charges for electronic transactions are generally lower than for cheques
• additional charges for depositing or withdrawing cash, often as a percentage of the amount
• higher charges for international transactions
• a range of possible one-off charges – for example, for one-off enquiries or copies of bank statements

There will be separate charges for any borrowing, such as an overdraft facility.

If your business has high transaction volumes costs can mount up. There may also be an 'opportunity cost' from receiving zero or low interest on money held in the account, which could earn more elsewhere.

7. How can I switch business bank account provider?

If you're a small business and you want to switch from an existing business account to another bank, you may be able to use the Current Account Switch Service to make the process easier. The service is open to small businesses with fewer than 50 employees and an annual turnover of less than £6.5 million. The service can automatically move your balance and any existing payments to your new account before closing the old account.

8. What can I do if I am refused a business bank account?

You should check first whether your chosen bank has any restrictions on opening a new business bank account. For example, a bank may not accept applications from certain types of business, or may prefer to offer small business accounts only to new businesses rather than those switching from another bank.

Even if the bank hasn’t said that they are not accepting applications from your type of business, they may still reject your application. This may be because they consider your business too high risk, because you couldn’t provide adequate documentation, or because you (or someone else associated with the business) has a poor credit record.

It may be worth checking your credit records with the major credit report providers and checking any inaccurate information that could be harming your application:

• Equifax
• Experian
• TransUnion

You may also want to ensure that you are on the electoral register. If you are a sole trader (or in a partnership), make sure you have registered your business with HM Revenue & Customs. The easier you make it for the bank to check your credentials, the less likely you are to have your bank account application declined.

If a high street bank rejects you because of your poor credit record, it may be worth applying for an online account. Many of the new digital account providers process applications without carrying out a full credit check.

9. What do I need to know about foreign currency and international bank accounts?

Costs can be significant if you need to make international transactions. These extra costs can include:

• the service fee for a foreign currency account (for example, in Euros or US dollars)
• significantly higher transaction costs for international payments
•  the costs of converting money between UK sterling and other currencies, including both explicit fees and the extra costs of being given a poor exchange rate

If you just need a foreign currency account for a small number of transactions, you may find that your main bank account offers a suitable service. If you make a significant number of transactions, you may want to look at the new generation of online multi-currency accounts such as Revolut or Wise.

If you want to be able to arrange import or export finance at the same time, you may find it easier to deal with a bank that offers the services you need.