Compare Free Business Bank Accounts

  • Many business banking providers offer free banking deals to new customers
  • Free banking durations and details vary between products and providers
  • Compare free banking deals from various types of business banking specialists

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Information written by Rhiannon Philps Last updated on 25 May 2022.

What is a free business bank account?

A free business bank account is exactly what it sounds like – a bank account for your business that doesn’t cost you any money to open. These free accounts may be targeted at smaller businesses in particular.

Many standard business bank accounts will charge you in some way. For example, you might need to pay a monthly or annual fee to use the account, or pay for certain functions, such as depositing cash or making payments.

However, some business accounts don’t carry any charges, and these may be called free or no-fee bank accounts.

Some of these free business accounts may be permanently free, but others may only be free for a limited introductory period. This could be six months, 12 months, or even longer, but once the promotional offer expires, you may have to pay to continue using the account.

You should always check the small print of any business bank account, so you know how long the fee-free period lasts and what charges, if any, you could expect to face after that time ends.

Bear in mind that even if a business bank account markets itself as ‘free’, you may still need to pay a small charge for some services. There may also be some limits, such as on the balance you can keep in your account and on the number of transfers you can make.

What features do free business bank accounts offer?

Free business bank accounts will offer the basic services and functions you would expect. For example, you can:

  • make and receive payments
  • pay bills
  • set up direct debits and standing orders
  • withdraw and deposit cash
  • access your account through mobile and online banking
  • offer at least one debit card for your business to use

Some free business bank accounts may allow you to make international transfers, access an overdraft, receive payment notifications, save digital receipts, and track your finances with online banking tools.

Even with a so-called free business account, you may need to pay a small fee for some of these activities.

Free business bank accounts are likely to offer more limited functions than paid accounts. For example, paid accounts may offer more integration with accounting software and help you to manage your business finances and taxes more effectively.

How to open a free business bank account

You can open a free business account online or, with some providers, over the phone or in person. This depends whether you choose an online-only bank or a bank with physical branches.

When you apply for a business bank account, you will need to provide information such as:

  • Your Companies House registration number (if applicable).
  • Details of company owners and directors, including their names, addresses, and National Insurance numbers.
  • Information about your business, including evidence of what your business does, its turnover, and its trading history.

After you apply, banking providers will carry out checks on you and your business. They may look at your personal credit score as well as the credit score for your business.

If your application is approved, you can then open and start using your account. How long it takes to open your account depends on the bank. Some will be able to open an account in minutes, while others may take days.

» MORE: What you need to open a business bank account

What are the pros and cons of a free business bank account?

Even if your business doesn’t need a separate business bank account by law, having one can make it easier to track your business finances and also make you appear more professional.

It’s important to make sure you choose the best business bank account for your business, and consider the pros and cons of each option.

Some of the benefits of a free business bank account are:

  • It’s free. Every business wants to save money wherever they can, so a free bank account can help save on some costs. Be aware that some accounts may still charge you for certain services.
  • Many will pay interest. However, you should bear in mind that interest rates can change.

However, there are some potential disadvantages of a free business bank account, including:

  • It may only be free for a limited period. After this, you may need to pay a fee.
  • It may offer limited services compared to a paid account. Make sure your business account allows you to do everything you want to do.
  • There may still be some charges. Even though it is called a free account, you may need to pay for certain functions, and the cost of these can add up.

Are there any fees and charges involved in a free business account?

This depends. Some free business bank accounts will be completely free and won’t have any fees or charges, while others may have small fees for certain services.

For example, if you want to withdraw or deposit cash, send money abroad, or make a bank transfer, you may face a charge. Also, if you use your business account’s overdraft, you may need to pay charges.

Even if an account is completely free to start with, you should check if this is part of a limited introductory offer. Some accounts will be free for a number of months, but may start charging fees once the offer has ended.

With other accounts, you may get a certain number of free transactions before needing to pay a fee for example, while others will be free as long as you have a certain balance in your account.

» MORE: Business bank account charges

How to choose the best free business bank account for me

To choose the best free business bank account for your business, you’ll need to work out what features and services you would use the most.

For example, will you need to regularly deposit cash, transfer money online, or send international payments?

As some business bank accounts will charge for certain services, by working out what features you will use most often you can find an account that offers the best value for you.

If your business makes numerous bank transfers a day, choosing a free bank account that charges a small fee for every transfer may not be the best choice for you. A business bank account with a monthly fee but no charges for individual services could work out cheaper.

Bear in mind that if you need to make cash deposits it would probably be more convenient to choose an account with a bank that has physical branches nearby.

You can use our comparison table below to see some free business banking options and their key features. Each account states how long the account is free for and what charges could apply, so you can easily see what accounts might be best for your business.

What are the alternatives to a free business bank account?

If you’re a sole trader, you could use your personal current account for your business finances. You don’t legally need a separate business account, although it may still be useful to have.

New businesses may find some banks offer startup business bank accounts, which could offer some benefits and helpful features.

Instead of a free business bank account, you can also choose a standard business bank account with a monthly or annual fee. These may work out to be better value for some businesses than so-called free business accounts, and they often come with more comprehensive features and services.

Free Business Bank Account FAQs

Do I need a business bank account?

If you are a limited company, you legally need a separate business bank account. If you’re a sole trader or freelancer, you don’t legally need one, but it can be useful to have one to keep your business finances separate from your personal finances.

Learn more about when you need a business bank account.

What banks offer free business banking?

A range of banks offer free business bank accounts, including online-only banks and high street banks. They may offer free business banking on a permanent basis or for a limited number of months.

Can I open a business account with bad credit?

Yes, if you or your business have bad credit, you can still open a business account. Some banks offer business accounts with no credit checks, which could be helpful if your business credit rating isn’t perfect. However, check with individual providers as some banks may not be able to help.

How long will it take to set up a free business bank account?

This depends on the provider and your business. Some banks may take several days to open your account, while others may be quicker. Online-only banks may be faster than traditional high street providers.

Do free business bank accounts pay interest on balances?

Yes, most business bank accounts will pay interest. However, the interest rates will vary between accounts and these are subject to change.

If you have a large balance in your business bank account, it may be worth opening a business savings account as these are likely to pay more in interest.

Are free business account funds FSCS protected?

Not always, funds in your business bank account may be protected by the Financial Services Compensation Scheme (FSCS) if your banking provider is protected and goes bust. If your business is a separate legal entity, such as a limited company, then you could be eligible to receive up to £85,000 from your business account. If FSCS protection is important to you, you may want to choose a business bank account that offers it.

However, if you are a sole trader there is no legal separation between your business and personal finances. This means, if you have a business and personal account with the same provider, you can only reclaim up to £85,000 through the FSCS in total for both accounts.

Can I use a personal account for my small business?

If you are a sole trader or a freelancer, you can use a personal account for your business finances, as long as it doesn’t break any terms and conditions. However, if your business is a separate legal entity – for example, a limited company, a partnership, or a limited partnership – you cannot use a personal account. You will need to open a separate business account instead.

Will my no-fee business account always stay free?

This depends on the bank account you choose. Some business accounts are permanently free, while others will only offer free banking for a limited period. The provider should always make it clear if the free account is part of a promotional offer and, if it is, they should say when charges will start applying.

Can you switch business accounts?

You can switch business accounts if you think a different account is a better option for your business. First, you should check with your current bank that you can leave. Once you have found an account you like, contact the new provider to see if you can switch and it should help you move over.

You can also check whether your new provider has signed up to the Current Account Switch Service, which will switch your account within seven working days and offers guarantees if something goes wrong with the switch.

Providers may have certain restrictions so make sure you qualify for a business account before starting the switching process.

About the author:

Rhiannon is a financial writer for NerdWallet, with a particular interest in personal finance and insurance guides for consumers. Read more

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