How to Open a Business Bank Account in the UK [2024]

If you are starting a business or expanding your company into the UK, opening a business bank account is one of the essential steps you need to take. 

This article will walk you through the step-by-step process of setting up a business bank account in the UK, including what documents you must prepare, how to choose the right bank, how long it takes, and the best banking options. 

Why Do You Need a Business Account in the UK?

Although sole traders and freelancers are not obligated to have a separate business account, limited companies are legally required to have one. 

For start-ups and small businesses, having a separate bank account dedicated to business expenses can streamline your business operations, allowing you to make transactions under your company name and enabling easier financial tracking for more efficient budgeting. 

Here are some reasons why your company needs a business account: 

• Separation of Finances: Keep personal and business finances separate, simplifying tax preparation.
• Professionalism: Accepting and making payments in the business's name enhances credibility with customers and suppliers.
• Credit History: Having a dedicated business account helps build a credit history, which can be beneficial for securing business loans or credit in the future.
• Banking Services: Some business banking services like overdrafts, business loans, and merchant services may be unavailable to personal account holders.
• Financial Insights: Many business accounts offer analytics and insights into your finances, helping you efficiently track business expenses and income. 

What Do You Need to Open a Business Bank Account in the UK?

Typically, the supporting documents you must provide differ depending on the type of business bank account and the bank or financial service provider of your choice. 

The following are the common information and documents you should prepare when applying for a business account in the UK:

• Business Details: Such as company name and address, a brief description of your business activities or industry, business plan, your expected annual turnover, and ownership structure
• ID Documents: Government-issued photo ID such as a driving licence or passport
• UK-Based Company Representative: A director or an employee who is a UK resident and who will be an account signatory
• Proof of Address: Recent utility bills, lease agreements, council tax bills, or bank statements that prove your registered address in the UK
• Financial Documents: Documents about your company’s finances, such as cash flow forecasts and historical financial statements
• Companies House Registration Number (CRN): A unique registration number for limited companies and LLPs
• Certificate of Incorporation: A legal document relating to the formation of the company, which includes the company name, date of formation, and registered number
• Unique Taxpayer Reference (UTR): A 10-digit number provided by HMRC that identifies you or your business

5 Steps to Open a Business Bank Account in the UK

Step 1: Evaluate Your Business Needs

To ensure you choose the right business account type, you should evaluate your business needs first. Some questions to consider include:

• What is the nature of my business? Many banks offer specific business accounts for sole traders, partnerships, limited companies, and non-profit charities. If you have customers or suppliers in other countries, consider business accounts supporting multiple currencies.
• What volume of transactions do I expect? Estimate the number of transactions you will have, which can influence the fees you must pay and the service you need, such as transaction charges for SEPA and SWIFT transfer or batch payment features. 
• Do I need other services beyond a business account? Identify any additional financial products you might need, such as accounting software integration, loans, overdraft facilities, or credit cards. Keep in mind that challenger banks and fintech solutions typically only provide debit cards for business spending. 

Step 2: Choose the Account Type and Provider

The next step is choosing the business account type and provider that best fits your needs. 

The following are the types of accounts that UK banks typically offer for business customers:

• Sole Trader Account: Ideal for freelancers or self-employed, this account type simplifies separating personal and business finances with essential tax and invoicing tools.
• Startup Accounts: Offers introductory benefits and essential banking services for new businesses, with added support for growth, often at lower fees.
• Business Current Account: Essential for daily transactions, often comes with debit card access and online banking.
• Business Savings Account: Best for earning interest on business savings, with flexible rates and terms for managing reserves.
• Accounts for Charities: Tailored for non-profit organisations, with features suited for charity operations and potential for reduced fees.

Moreover, eligibility criteria are crucial when selecting a bank for your business account. Some banks require you to be an existing customer to open business and corporate accounts, and many do not offer services to companies in certain restricted industries.

Most banking institutions in the UK are also part of the Current Account Switch Service, which facilitates switching your business current account from one bank to another. 

💡 Tip: Looking for business banking options? Explore the 5 best banks in the UK in 2024.

Step 3: Submit Your Application

After choosing where to open an account for your business, the next step is to apply for a business account.

Most banks like Barclays, Lloyds Bank, and Starling Bank allow you to submit your account application and supporting documents online on their website or from your mobile phone. However, some banks like HSBC will require you to contact them first. 

Step 4: Wait for the Bank’s Approval

The next step is to wait for the bank or fintech firm to review your application, which could take days or months.

During this process, the bank may contact you via the email or mobile number you provided for additional information or documents.

Step 5: Set up Your Account

Once your application is approved, you will get your account details and will likely be contacted for the next step to set up your new account. This includes adding funds to your business account or setting up your cards. 

How Much Does It Cost to Open a Business Bank Account in the UK?

Typically, you can get a business account in the UK with minimal to zero fees. Most banks and providers do not charge an account set-up fee, but some banks may require you to make an initial deposit or maintain a certain account balance to waive additional charges.

Here are the average fees and tariffs associated with business accounts in the UK.

• Account Setup Fee: Generally free
• Account Monthly Fee: Free to GBP 10 (or waived for the first 12 months)
• ATM and Post Office Cash Deposit: GBP 0.60 to 1.50 for every GBP 100
• ATM and Post Office Cash Withdrawal: Free to GBP 1.50 for every GBP 100
• CHAPS Payments: GBP 15 to 30 per transaction
• Cheques Processing: GBP 0.60 to 1.00

⚠️ Important: The above fees are only an average price based on several banks. We recommend checking the fees of each specific bank or provider for accuracy. 

How Long Does It Take to Open a Business Bank Account in the UK?

Depending on the complexity of your business and the provider of your choice, it can take as quick as 24 hours or up to 3 months to get your business account application approved. 

Typically, fintech firms and challenger banks tend to approve your application within 24 hours if you fit the eligibility criteria and submit all the required documents. On the other hand, traditional banks may take longer to verify your business or perform a credit check.

Some banks or providers may also contact you for additional information or documents, which could extend the review process. 

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