How to Open a Business Bank Account in the UK

How to Open a Business Bank Account in the UK

Business banking is just a simple way to manage your business finances, expenses and claims to HMRC. The easier the better when it comes to paying fair taxes and that’s why the UK has a range of offers on the market for businesses who want to open an account in the UK.

If you have a limited company trading in the UK, you’re obliged under the law to have a UK bank account. Sole traders on the other hand, can still benefit from opening a business bank account in the UK even if they don’t have to. Let’s dive into more details on opening a UK business bank account.

What is a Business Bank Account and What Are the Advantages of Having a Business Bank Account?

A business bank account is simply a separate account for all of your business finances and accounting. According to a study by Intuit Quickbooks, three quarters of the UK self-employed workforce use a business account for their business finances. Why do they do this?

The simple answer is that business banks provide a simple and easy way to separate business and personal finances. It’s thought that business owners save time sorting through company expenses and they find it more efficient to do their finances.

This really means that you’re able to simplify your accounting processes and ensure that you’re paying the right business tax each month because you’re always paying out expenses from your business account.

Additionally, having a business bank account will allow you to access business finance that you’re bank may not allow you to access from a personal account. Things like a business loan, for example. You can also access other features such as a personal business banking manager who works with you to support your business growth. Business accounts access online can also provide additional tools to help you manage your business finance that a personal account would not provide.

How to Choose a Business Bank Account

When looking to open a business bank account you should be considering a number of factors.

Standing Charges

What monthly or quarterly fees is the bank charging for opening an account.

Transaction Charges

Some business bank accounts will charge for paying in cash, cheques and standing orders or direct debits.

Internet Banking

Most banks provide access to internet banking but some don’t so it’s worth checking the provider first. It’s also worth checking the features of the online banking options and how easily they help you manage finances.

Interest Rates

Higher interest rates are always good.

Introductory Offers

Many banks have introductory offers that are appealing enough. A short term reward might not always stack up against long term goals like interest rates but these are nevertheless worth looking at as it could be the difference between two very similar offers.

Branches

Information like how many physical branches exist and how close one is to where you work may be useful to the ease at which you find your banking experience.

Mobile Only Branches

Mobile only banks are said to be a bit risky but they also provide an option for people who are looking for less costly solutions to their business banking needs. Often business banks have a much nicer mobile banking experience than traditional banks and they are said to be much better at helping you manage your finances. Some examples include; Monzo, Tide and Staling.

Benefits include:

  1. instant notifications on your phone,
  2. integration with online accounting software,
  3. ability to freeze card if its misplaced or stolen,
  4. lower fees.

These banks are said to be better for start-ups but if you prefer face-to-face interaction then they’re probably not for you!

What Do I Need to Open a Business Bank Account UK?

Opening a business bank account will require certain documentations that banks use to do Know Your Customer and Anti-Money Laundering checks.

These required documents are often:

  1. Proof of identification – a passport or driving license.
  2. Proof of address in the UK – such as a bank statement or utility bill.
  3. Business details – registered address, contact details, companies house registration (only for limited companies or partnerships). You may also be asked for some financial statements.
  4. If relevant, details of all directors or partners, including name, date of birth, address and National Insurance numbers.

You can see a full list of what will be asked for when you open a business bank account in the UK, here.

It can take 1-16 weeks to open a business bank account but the process can be sped up if you’re already a personal account holder with the bank you’re applying to, if you’re a sole trader or if you’ve applied to a certain bank with faster opening times.

It’s important to note that a sole trader can use a personal account to do business but if you have a registered business you should have a separate bank account. If a bank recognises that many business transactions are occurring on a personal account they may ask you to open a business account or threaten to close your account.

What If I Am Not a UK Resident

It’s not always necessary to be a UK resident when opening a business bank account in the UK. Banks like Lloyds, Barclays and HSBC will be better at dealing with non-UK residents. Otherwise, it is advisable to gain a UK residency before opening a bank account or have a company director listed as a resident in the UK.

If you are already have a good relationship with your business bank at home, they may also be able to help you open an account in the UK. You may be asked for notarised translations of your ID card and documents to prove your address.

If you’re still unsure then opening an International Business Account may be a more suitable option but these often come with a steep deposits so may not suit everyone.

Whatever option you chose, you will need to be physically present in the UK to meet a representative at a bank. Doing this all online from a country abroad will leave you with limited options and a very difficult process.

If you’d like a full comparison of business bank options, Which? Has provided a full review on this page.