Key Takeaways:
- Compare sole trader business bank accounts with NerdWallet
- As a sole trader, your bank may not let you use your personal account for business transactions
- Sole trader business bank accounts can streamline your finances and save you time
Sole trader bank accounts are designed to make life easier for the self-employed. If you work for yourself, either part-time or full-time, and are not a director of a registered limited company, you are probably classed as a sole trader. Finding the best sole trader bank account can help you to save time, save money and focus on growth.
Top Sole Trader Bank Accounts
Best Sole Trader Account Providers
This list is from 23 business bank accounts that NerdWallet evaluated and reviewed. Others are available. Find out how we use ‘best’ and our guide to ratings.
Monzo Lite Business Account
Free
Free
Free
n/a
- Available to sole traders, or the director of a registered limited company by shares (Ltd)
- Must be based in the UK
NerdWallet's Review Summary
With its simple and well-received offering Monzo Business, is a great option for anyone just starting out.
Monzo offers an array of business banking services that are useful to sole traders, including accounting software integration and its ‘tax pots’ feature. However, some features are only available to customers who pay the £9 monthly fee for Monzo’s Pro account, or the £25 charge for its Team account.
For further details, read NerdWallet’s Monzo Business Account Review.
Monzo key features:
- Speedy account opening: Most accounts are up and running on the same day as an application is made.
- FSCS protection: Deposits of up to £85,000 are protected by the Financial Services Compensation Scheme.
- Free UK transfers: Business banking customers can make unlimited free electronic payments in the UK.
- 24/7 customer support: Monzo’s in-app customer support is available at all hours for customers with urgent concerns.
NerdWallet's Pros & Cons
Pros:
- Monzo’s Business Lite account has no monthly fees and free bank transfers in the UK.
- Customers can manage their money online or via Monzo’s well-reviewed mobile app.
- Most customers receive access to online banking on the same day as they apply.
Cons:
- Customers cannot manage their accounts in-person, as Monzo does not offer telephone banking and has no branches.
- There are no Monzo accounts available to charities or partnerships.
This product may be one of a range offered by this provider. Always check terms & conditions for suitability before applying.
Virgin Money M Account for Business
- Available for eligible businesses with up to £1m annual turnover
- Must be based and operated in the UK (excluding Channel Islands, Isle of Man and Northern Ireland)
- All owners, directors, senior managers and account signatories must be over 18 years old
NerdWallet's Review Summary
Virgin Money’s M Account for Business does not charge a monthly fee and is designed for start ups and small businesses with an annual turnover of less than £1 million. Account extras include cashback on debit card purchases, while customers can also apply for an overdraft.
For further details, read NerdWallet’s Virgin Money Business Account Review.
Virgin Money key features:
- Account extras: Perks include cashback when using the business debit card and discounts with selected retailers and merchants.
- FSCS protection: Deposits of up to £85,000 are protected by the Financial Services Compensation Scheme.
- Free everyday banking: Basic electronic transactions are free for customers with an M Account for Business.
NerdWallet's Pros & Cons
Pros:
- Virgin Money’s M Account for Business has no monthly fee.
- Cashback of 0.25% on business debit card purchases.
- Over a third of Virgin Money business customers have their account open on the same day as they apply, though the average account opening time is three days.
Cons:
- Virgin Money does not offer 24/7 customer support.
- The free M Account can only be opened by businesses with annual turnover of less than £1 million.
- Customers in the South of England, Wales or Northern Ireland do not have access to nearby branches.
This product may be one of a range offered by this provider. Always check terms & conditions for suitability before applying.
The Co-operative Bank Business Bank Account
NerdWallet's Review Summary
With ethical and sustainable practices at the forefront of the Co-operative Bank’s ethos, the provider could be attractive to business owners who prioritise social responsibility. There are also many different accounts to choose from, meaning there are options for a variety of businesses and charities.
For further details, read NerdWallet’s The Co-operative Bank Business Account Review.
The Co-operative Bank key features:
- FSCS protection: Your eligible deposits, up to £85,000 across all of your accounts, are protected by the Financial Services Compensation Scheme (FSCS).
- Borrowing: Borrowing options include an arranged overdraft, a charge card for expenses, a credit card, and a variable rate business loan.
- Account management: Customers can manage their money online, over the phone, via the app and at a branch.
NerdWallet's Pros & Cons
Pros:
- Some accounts with the Co-operative Bank have no monthly service fee, including a small business account developed specifically for members of the Federation of Small Businesses.
- There are no transaction fees for basic electronic transactions, such as direct debits, standing orders, card purchases and ATM withdrawals.
- Borrowing options include a business overdraft, credit card, charge card and loan.
Cons:
- With an average account opening time of 10 days, the Co-operative Bank is slower off the mark than many of its competitors.
- There is no 24/7 customer service available.
- Customers in Northern Ireland have no access to branches.
This product may be one of a range offered by this provider. Always check terms & conditions for suitability before applying.
Barclays Business Account
NerdWallet's Review Summary
This British high-street bank has specific accounts for startups, established businesses and charities or community groups. With branches all across the UK and considerable borrowing options, Barclays could be a great option if you prefer a traditional bank.
For more details, read NerdWallet’s Barclay’s Business Account review.
Barclays key features:
- Account access: Accounts can be managed online, via the app, over the phone, or at the wide range of Barclays branches.
- Credit facilities: Barclays offers a wealth of borrowing options, including loans, mortgages and overdrafts.
- FSCS Protection: Eligible deposits up to £85,000 are protected by the Financial Services Compensation Scheme (FSCS).
NerdWallet's Pros & Cons
Pros:
- There are a variety of different accounts for those in different circumstances, with accounts for start ups or more established businesses, as well as charities and community groups.
- Customers can enjoy free access to Freshbooks accounting software.
- Customers do not need to pay for basic transactions, such as direct debits and standing orders.
Cons:
- Barclays business accounts carry an £8.50 per month maintenance fee after the end of the introductory offer period.
- Only businesses that have been trading for less than a year can apply for a Barclays start-up account.
This product may be one of a range offered by this provider. Always check terms & conditions for suitability before applying.
Tide Business Account – Free
- For registered business accounts: Must be a director of a UK company registered with Companies House.
- For sole trader accounts: Must be a UK-based sole trader or freelancer with a valid UK home address and be registered with HMRC
- For all accounts: you must be aged 18+, have a valid UK phone number and address, and hold a compatible device registered to a UK App or Google Play store
NerdWallet's Review Summary
Tide offers four different business bank accounts, including an account with no monthly fee and 20p basic transactions. With accounting tools and POS functionality, Tide accounts might particularly appeal to merchants and other businesses with a need to take a lot of payments.
For more information, see NerdWallet’s Tide business account review.
Tide key features:
- FSCS protection: Your eligible deposits of up to £85,000 are protected by the Financial Services Compensation Scheme with a new Tide business account.
- Point of sale: Tide provides point of sale (POS) tools, including card reading machines, payment links and the ability to accept contactless payments via your iPhone.
- Business lending: Tide offers business loans of up to £20 million, as well as startup loans, asset finance and more.
NerdWallet's Pros & Cons
Pros:
- There is a free account available.
- Tide offers a wide variety of POS tools, which could help your business to quickly and easily take payments.
- Most accounts are set up in just minutes, though some more complex accounts can take a few days to open.
Cons:
- All transfers to or from your account cost 20p with Tide’s free account.
- Tide does not offer a business overdraft.
This product may be one of a range offered by this provider. Always check terms & conditions for suitability before applying.
This list only contains business account providers reviewed by NerdWallet UK.
The pros and cons featured here are chosen by us based on a combination of our expert, research-based opinions and an exclusive survey of UK business owners and decision makers. The survey was conducted on behalf of NerdWallet UK in December 2022 to identify the business bank account features that people feel are most important. This was subsequently reinforced by an additional survey in 2024. They are unlikely to be the only product features and restrictions that you should consider. Pros and cons are subjective and you should align them to your own personal and business circumstances. Information was correct at the time of publication but may have changed since.
What is a sole trader business bank account?
Sole trader bank accounts are business bank accounts designed with sole traders in mind. If you are a freelancer or self-employed – meaning you’re solely responsible for your business’s success and haven’t set up a limited company for your work – then you’re probably a sole trader. That means you could benefit from a sole trader bank account.
Many banking providers allow sole traders to open standard business bank accounts, which offer features such as:
- bank transfers
- cash deposits
- overdraft facilities
- accounting software integration
- dedicated help and support
But some banks may also offer accounts specifically designed for sole traders. These may have additional helpful tools if you’re going it alone, including bookkeeping services and automatic invoice creation.
Certain accounts will also help you estimate the tax you will have to pay when you file your self-assessment return. All of this means you could save yourself time, effort and headaches by using a sole trader bank account – provided you compare your options and choose an account which works for your business.
Why sole traders need a business bank account
No law says sole traders can’t use their personal bank account for business transactions. But there are many reasons why you might need a business bank account.
First off, it’s just the simple fact that it can be a good idea to separate your personal and business finances by opening a sole trader bank account.
Using a sole trader bank account to streamline your finances could also save you time and hassle. It means you’ll be able to see, at a glance, the exact financial state of your business, and you won’t be at risk of blurring the lines between personal and business transactions. All this, in turn, means you should have an easier time when it comes to preparing your tax return at the end of the financial year.
Plus, using a sole trader bank account could give your business a more professional image, since your customers will likely be able to see whether they’re paying into a personal or business bank account.
For some banks, using your personal account for business purposes could violate their terms and conditions, so it is always worth checking.
Sole trader bank account features
To get the best deal for your sole trader bank account, it’s worth shopping around. But before you look at everything on offer, you should pin down what you need from your business account.
You may want to ask yourself a few questions about how you bank, including:
- Do you prefer banking in person? You may want to pick a high street bank with a branch nearby.
- Do you like banking digitally? An online-only business bank account might offer the right solution for you.
- Can you afford to pay for a business bank account? If you don’t have the cash to spare, you can always consider a free business bank account.
- How many transfers or cash deposits do you usually make each month? If you make lots of transactions or cash deposits, you’ll want to look for an account where these are free or available for a low fee.
- Do you want extra features such as accounting software integration? Some sole trader bank accounts are designed to work seamlessly with your small business accounting software.
- Will you need an overdraft in future? Not all banking providers offer these, so it is a good idea to check in case you want to use one in future.
Duncan Ferris, Lead Writer and Business Expert at NerdWallet
What our Nerds say…
“Handling a self-assessment tax return can be a major challenge for sole traders, and it can be especially daunting if you are new to being self-employed. Simply having a business bank account will make filing your return easier. But, an account with integrated or even free accounting software can make your taxes as simple as possible.”
How to open a sole trader bank account
You can set up a sole trader bank account like a standard business bank account. As a sole trader, you will usually need the following documents:
- Photo ID: A passport or your driving licence, for example
- Proof of address: Such as a utility bill or a recent bank statement
- Proof of business: Documents that prove your business is trading, such as social media pages, invoices, or your Unique Taxpayer Reference (UTR).
» MORE: How do I open a business bank account in the UK?
Depending on the provider, your sole trader bank account may be opened on the same day that you apply. This is more common among challenger banks, where you apply online or using a mobile app. If you’re accepted, you may receive your sort code and account number almost straight away.
On the other hand, traditional high street banks may take a little longer to open this type of bank account. Even so, a high street bank might better fit your needs. It is a good idea to compare both types to help you find what works for your situation.
Pros and cons of a sole trader account
Pros:
- Look professional: Having a dedicated business account will make you appear more professional to customers, suppliers and business partners, boosting your business’s credibility
- Simplify your taxes: Your business account will ensure any personal and business transactions are clearly separated, making your tax return much easier.
- Tools and features: Business accounts can include accounting software, invoicing tools and much more besides. Having access to tools like these will make working life easier for many sole traders.
Cons:
- Costs: Unlike personal bank accounts, lots of business bank accounts carry a monthly fee or charges for basic transactions.
- Admin: The process of opening and managing your business account could increase your admin workload, particularly in the short term.
What to consider when choosing a sole trader bank account
Before choosing a sole trader bank account, make sure to compare accounts to find the best fit for your business. Consider how often you will use your sole trader account and which types of transactions you are likely to make most.
If you are self-employed part-time – say you work on your business as a side hustle in the evenings – you may not make many transactions in a month. In this case, you might want to look for a business account which charges per transaction, so you only pay for the features you use.
On the other hand, if you’re self-employed full-time, you may want to look for an account which does not charge for transfers or deposits, especially if you take cash. A business bank account that includes all features under a flat monthly rate could be more suited to your needs.
If you have customers overseas, then think about whether your chosen bank account will make it easy to accept international payments. Weigh up any potential fees for international transactions to make sure you’re getting a deal that makes sense for your business.
Once you know what you want from your sole trader account, you can compare what different providers offer and choose the account that best fits your needs.
One last word of warning: read the small print closely and keep an eye out for hidden fees. Even if a bank charges no monthly service charge for holding the account, your business could end up forking out for transaction charges or deposit fees. And if the cost of a business bank account is putting you off, then consider taking a look at the best free business bank accounts.
Now that you’ve learned more about sole trader business bank accounts, you might already be thinking about how the right business bank account could solve your admin problems and save you time and hassle.
Before you commit to anything, remember to thoroughly compare your options. And if you’re not convinced that a sole trader bank account is right for you – or if you’d like a broader look at what’s out there – then we can help you compare the best business bank accounts.
NerdWallet’s Other Business Bank Account Roundups
Sole Trader Business Bank Accounts FAQs
A sole trader business bank account is a relatively straightforward business bank account aimed at people operating as a self-employed sole trader. These are often freelancers who have not set up their own limited company but who do want to keep their business finances separate from their personal finances.
They may also want access to some accounting tools that will help them to keep track of their income and outgoings related to their work, and help them to do things like raise invoices and complete their self-assessment tax return.
A sole trader is a type of business structure, and becoming a sole trader is just about the simplest way to start your own business. Sole traders are normally self-employed individuals who run their own business or work as some form of freelancer.
Unlike limited company owners, there is no legal distinction between a sole trader and the business they own. If you are a sole trader, all post-tax profits belong to you rather than your company, but you are personally liable for your business’s debts and financial obligations.
If you are self-employed but have not registered a limited company with Companies House, you are likely operating as a ‘sole trader.’ Just like with any business, you will have business income and business expenses and you will want to keep track of these so that you can complete your self-assessment tax return at the end of the year. Opening a sole trader business bank account can be helpful, as it will separate all of your business finances from your personal finances.
No. You are legally allowed to run your business finances through your personal account if you are a sole trader. This is because you, as a taxpayer, and your business, are considered the same legal entity.
This varies from provider to provider, so it pays to do some research by comparing sole trader business bank accounts before you decide which one to open – or whether to open one at all. Sole trader business bank accounts are also often aimed at people with small limited companies and usually charge you in some shape or form.
Some will charge you a monthly fee, or maybe an annual fee. They may also charge you for transactions, such as a percentage of deposits made, or for using your debit card. Some sole trader business accounts will offer a free initial period, but will start to charge you after that period ends.
Again, this depends on the type of sole trader business bank account you open. Make sure you check that the account you are interested in offers all the services you need. Here are some of the services regularly offered by sole trader business bank accounts:
- accepting deposits
- ATM withdrawals
- bank transfers
- bill payment through direct debit
- standing orders
- accounting tools
- apps to track spending and balances
- invoice tools
- cheques
- debit cards
- online payments
Sole trader business bank accounts that are based online and do not offer credit cards or overdrafts are usually very quick and easy to open and you will often be able to do so with no credit checks. However, regardless of how simple the account is, you will always need a business address and will usually need to be able to give some simple information about your business activities to the provider.
The amount of time it takes to open a sole trader bank account varies across providers. Generally, online-only providers are quicker than their traditional high-street competition, which can take days or even weeks. Some online providers with speedy application processes suggest they can open a new sole trader account in less than 10 minutes.
Just as with regular business bank accounts, many accounts for sole traders will allow you to take advantage of an overdraft. However, this is not universal and some providers that allow sole traders to apply for bank accounts will only allow limited companies and partnerships to use an overdraft. If you want the option of an overdraft, make sure you carefully check the terms of any account you wish to open.
As long as your business has fewer than 50 employees and annual turnover below £6.5 million, you can switch your business bank account using the Current Account Switch Service. This service transfers your balances, regular payments and incoming transactions across to a new account.
Find out more by reading our guide to switching business bank accounts.
Image source: Getty Images
Dive even deeper
Sole Trader vs. Self-Employed: What’s the Difference?
by Kristina Fox
by Nic Redfern