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5 min read 10.09.2021 383
Ibrahim Busari
Ibrahim Busari
Ibrahim is a fintech writer at AskWallet
How to create a bank account for a business in the UK

How to create a bank account for a business in the UK

In this AskWallet Guide, we will cover any and everything that you have to kne about how to open a business account in the UK. We’ll cover types of accounts, pricing, online business accounts and many more! Let's get started on the step-by-step guide to opening a business account in the UK.

Does Your Business need a Business Account?

Not all businesses will opt for a business account regardless of whether it's a small or medium-sized business. However, we think that regardless of the size of your business operation, every business should opt for a business account.

The benefits that come with using a business account are enormous and help you separate your finances. Also, If you own a limited company in the United Kingdom and have it registered with Companies House. Because a limited business is a legally distinct entity from you, it must have its own bank account.

However, you might not need a business account if you are a sole trader or freelancer but there are business accounts online that are suited to these professions as well. While freelancers and sole traders do not have to get a business account, we still recommend getting one, especially from online banks with no monthly fees and tons of benefits.

Advantages of Having a Business Account

The major benefit of having a dedicated business bank account is that it allows you to separate personal and business funds. In other words, keeping your business profits away from your personal funds. Getting a business account also comes with other perks such as company debit cards, Free ATM withdrawals, Business API integration, Accepting payment online, and many more. A good business account will only be a catalyst to make your business run smoothly. 

More benefits of applying for a business account in the UK includes: 

  • Sub-accounts
  • Helping you build a healthy credit rating for your business
  • Easier tax returns and invoicing
  • Payroll payments in bulk
  • Loans and overdraft 
  • Makes your business appear professional to customers and clients

Types of business accounts to open in the UK 

As we have stated earlier, there are various types of business accounts to choose from. Depending on the bank you choose whether a traditional or online bank, most fall under the following categories: 

Startup business bank accounts

These are business bank accounts for new or small businesses, sometimes even freelancers might opt for this type of bank account. Startup business accounts usually offer no minimum balances and fee-free banking services over the introductory period.

Business banks account for growing and established companies

These types of business accounts are frequently classified by turnover, with restrictions and costs depending on the size of your company.

Community and Non-profit Business Accounts.

If you run a social enterprise, club, charity, or non-profit, Most Uk banks offer a dedicated business bank account for everyday use that comes with almost no banking fees.

Business Accounts For Sole Traders

As we said earlier, it is not necessary for sole traders and freelancers to have a business account. In fact, in the UK it is not legally required. However, we think it can be very useful. A sole trader's personal account can be used as a business account but when tax time comes it can be a hassle. So, having a separate business can help streamline your tax returns and invoicing. 

Many banks also offer multi-currency accounts, for businesses wanting to trade overseas. And if you’re worried about bad credit, you can find a number of digital/mobile banks that offer business bank accounts with no credit checks required.

How To Open A Business Bank Account Online

Applying for a business account online has become easier than ever before. You either apply for a new business bank account or in some cases, some online banks allow you to switch your current account into a business account. However, if you are looking to get a business bank account at a traditional bank, some of the banks might require you to visit their bank branch in person. At the branch your Identification will be verified and other documents. 

To apply for the business account you will need to provide some information and documents to the bank: 

  • Details on all partners, directors, and members of the business 
  • Complete detail of your business 
  • Information of your businesses’ cash flow 
  • Your Company House registration number 

Note: To apply for a UK business account, you must be at least 18 years old and the owner or director of the company.

Before settling on a bank in which to open a business account, you must first check the requirements the banks have provided for opening an account. To do that all you have to do is head over to the website of the bank that you have chosen and look through their list of document requirements for opening a business account. 

If for some reason you were unable to confirm the requirements for opening a bank account online. Then you can find the bank's phone number on their website and give them a call.

How Much Does It Cost To Open A Business Account?

Opening a business bank account should be free, but after you're up and running, there are generally monthly costs to pay. If you select a starter account, you may be eligible for a fee-free time. Before beginning the application process, it's usually a good idea to thoroughly research and compare the fees of different business bank accounts.

Quick to open a business account without borders

Wise (Formerly TransferWise)

Wise is the top peer-to-peer online foreign currency money transfer business in the United Kingdom. The service's website is available in ten different languages. Users may simply send money to over 59 different countries. Wise offers a great business account that allows you to do international commercial operations. Contractors, small and medium-sized business owners, and freelancers would benefit greatly from wise business accounts.

Wise Business Account Features

  • An account with several currencies
  • Invoice payments at a low cost
  • Employees' Debit Card
  • Cash Flow Planning
  • Integration with Xero
  • No monthly costs.

Revolut 

Revolut has introduced its business account, which includes a variety of services. Companies and lone traders in over 31 countries can open a Revolut business account. The United States, nations in the Economic Economic Area (EEA), and Switzerland are among those included. 

Revolut Business Account Features 

  • An account with several currencies
  • Integration with Business APIs
  • Mid-market exchange rates for over 150 currencies
  • Free international and local money transfers 
  • Loans and overdraft 
  • Debit Cards With Prepaid Balances for employees 
  • Fixed foreign exchange rate for the future
  • Payroll payments in bulk
  • Accept payments on your website