How to Open a Business Bank Account in the UK
If you run a small business, you need to keep on top of your finances. You may want to open a business bank account. We cover the steps you need to follow to open an account for your business.
If you’re just starting out, a sole trader with a growing business, or you’re looking to hire employees, you may need to open a dedicated business bank account.
Below, we explain how to open a business bank account. We explore the documents you’ll need to provide before your account can be set up and how long it can take to open an account.
What is a business bank account?
A business bank account is used to keep a business’s financial activity separate from an individual’s personal finances. Whether you are required to have one depends on whether you are registered as a sole trader or a limited company.
If you run a limited company, you are legally required to have a business bank account to keep your business transactions separate from your personal account.
Similarly, if you have a limited liability partnership (LLP), you need to open a separate account for your business because you and your business are distinct legal entities.
If you’re a sole trader, you don’t legally need a separate bank account – you can use your personal account. However, you may want to consider opening a dedicated business account to manage your business finances.
How to open a business account in the UK
If you want to open a business bank account, you’ll need to provide some information about what your business does, as well as details about the people who run it. There are usually also eligibility criteria to meet before you will be considered for an account. For example, you may need to be at least 18 years old with a UK address.
Below, we look at who is eligible to open a business account and what you need to tell your bank when you apply.
Documents you need to open a business bank account
Here are some of the documents and information you may need to provide when applying for a business bank account:
- Proof of ID, such as a driver’s licence, passport, or ID card
- Proof of personal address in the UK, such as a bank statement or council tax statement
- Proof of a business address in the UK, such as a utility bill, rental agreement, or HMRC correspondence
- Contact details, such as your phone number and email address, both personal and business (if applicable)
- Projected annual turnover
- Companies House registration number or certificate of incorporation if you run a limited company
- The number of employees you have, if applicable
- Your business’s tax status – you may need to provide your Unique Taxpayer Reference (UTR) if you’re a sole trader
Your bank could ask for verification of identity and address for anyone who will have access to the account, or anyone who owns a part of the business (normally at least 25%).
You may also be asked to provide proof that your business is up and running. For example, evidence that your business has a website or social media presence or that you are registered with an official industry body. The provider you choose will be able to give more details about what they can accept as proof.
Am I eligible to open a business bank account?
To open a business bank account, you must be a sole trader or limited liability partnership, or run a limited company that is registered with Companies House.
There may be other requirements depending on your provider, such as minimum or maximum turnover limits or prohibited industries. You should check whether you’re eligible before applying.
Some providers offer accounts designed specifically for sole traders. It’s important to know how your business is structured so that you can find an account that best matches your needs.
How long does it take to open a business bank account?
The length of time it will take to set up your business bank account depends on several factors.
The process could be delayed if the information and documents you provide as part of the application process are incomplete or invalid.If your business structure is complex, it could also take longer to open your account.
A business bank account can take anywhere from a matter of minutes to a few days or even weeks to set up, depending on the provider you choose and your personal circumstances. That’s why businesses should factor in the length of time it takes to open an account into their overall business plan, just in case it takes a little bit longer than planned.
Digital banks may offer speedy application processes and even same-day opening in some cases. However, this depends on the provider, how quickly your documents can be processed, and whether the provider needs more information from you.
What if I want to switch business banks?
You may wish to switch your business bank account to a different provider if you are unhappy with the quality of service provided by your current provider. Alternatively, you might have found a better deal elsewhere altogether.
In other cases, your business circumstances might have changed, meaning you have different requirements for your business bank account.
Whatever your reason for switching, if you’re in the market for a new business account, you can compare new providers with NerdWallet.
Additionally, you may be able to use the Current Account Switch Service. It’s free to use and guarantees a simple switch between providers.
Businesses that employ fewer than 50 people with an annual turnover of less than £6.5 million are eligible to use the service. Both your old bank and the one you wish to switch to must be signed up.
Can I open a business bank account from overseas?
Banks are often cautious when providing accounts to companies from overseas, due to concerns of potential money laundering and fraud.
It can be possible to open a UK business bank account from overseas, but it will depend on your provider.
Some providers will allow you to open a business bank account from overseas, as long as you are the director of a company registered with Companies House and can prove you have a UK residential address.
Other providers may need you to be physically in the UK when you apply, or will need to meet a company representative in person before you can open the account.
Can I open a UK business bank account as a non-resident?
Yes, you don’t need to be a UK resident to open a business bank account. However, it can be more difficult if you don’t live in the UK.
According to the Department for International Trade, you will usually need a signatory on your account to be resident in the UK (this can be a director or an employee). Your company must also have a UK business address.
You’ll also need someone to be present in the UK when the account is opened so that a bank mandate can be signed in person.
Some providers will ask that all directors or persons with significant control are resident in the UK.
It’s similar for sole traders. You may need to prove you are ordinarily resident in the UK and that you pay taxes through self-assessment before you can open a business bank account here.
Again, the process and requirements to open an account in this manner will differ from provider to provider. You should check directly with your chosen bank to find the most accurate and up-to-date information on their policies.
If you’re ready to open a bank account for your business, you may want to use a price comparison website to help find an account that fits your needs.
Peter reports on a number of areas in the personal finance sector, with a particular interest in supporting businesses and individuals in the UK services industry. Read more
Kristina is a writer at NerdWallet. A recent graduate trading French for finance, she has experience creating content for student newspaper Cherwell and an edtech company. Read more