Compare Sole Trader Bank Accounts

Sole traders can open a business bank account to keep personal and commercial finances separate
Many business bank account providers offer products to sole traders in all types of industry
Compare the latest deals, features and costs of sole trader business bank accounts

Tide Business Bank Account

Sign up in minutes - get a sort code and account number instantly
Instant invoicing directly from your Tide app
FSCS protected
Variety of business credit options available (eligibility criteria applies)

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Information written by Kristina Fox Last updated on 06 May 2022.

What is a sole trader bank account?

A sole trader bank account is a business account for sole traders. 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 a sole trader. And 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, with 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.

Do I need a business account as a sole trader?

No, but it may be advisable.

You do not need a business bank account as a sole trader – you are legally allowed to run your business finances through your personal account. This is because you, as a taxpayer, and your business, are considered the same legal entity.

That said, you may want to consider opening a separate business bank account. Although HMRC treats your finances and your business’s finances as the same, your bank may not see it that way. Using your personal account for business purposes is often against the terms and conditions. Banks can ask for you to open a separate business account or close your personal account if they suspect that you are using it for business transactions.

What is more, it is easier to keep your business’s finances organised and easy to read – one of your obligations while self-employed – if you use separate accounts for your sole trader transactions and your personal finances.

» MORE: Self-employed bank accounts: do I need one?

How to set up a sole trader bank account

You can set up a sole trader bank account in the same way as 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: What do I need to open a business bank account?

Depending on the provider, your sole trader bank account may be opened on the same day that you apply. This is most common among challenger banks where you apply online or on 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 might take a little longer to open your sole trader bank account. But a high street bank might offer a better fit for your individual circumstances overall. It is a good idea to compare both types to help you find what works for your situation.

» MORE: Business banking: high street vs challenger banks

How to choose the best deal for my sole trader bank account

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? A challenger bank might offer the right solution for you.
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?
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.

You should consider how often you will use your 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 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 actually 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.

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.

» MORE: How to make the most of your business bank account

Sole Trader Business Bank Account FAQs

Do I need a separate bank account as a sole trader?

You do not legally need a business bank account as a sole trader, but you may want to consider opening a separate account regardless. Separating your business’s finances from your own can help you see your income and expenses more clearly, making things easier when it comes to submitting your self-assessment return.

Another reason to have a separate business bank account as a sole trader is to keep in line with your bank’s rules. Some banks prohibit you from using a personal account for your business, and they can close your account if you think you are doing so. To avoid this risk, you may want to open a separate account for your business transactions.

How much do sole trader business bank accounts cost?

The cost of a business bank account varies between providers, so it pays to do some research by comparing sole trader accounts before you decide which one to open – or whether to open one at all.

Some business bank accounts charge a monthly fee. Others will charge you for each transaction, including bank transfers, ATM withdrawals and cash deposits. It is important to work out the expected cost of different accounts to help decide which fee structure best suits you as a sole trader.

You may be asking yourself: does a free business bank account exist? It is true that some providers do not charge a monthly fee for having an account. However, the account might only be free for a limited promotional period, or may charge you for every transfer, withdrawal or cash deposit.

If you only work for yourself part-time and don’t make many transactions, you may find paying per transaction works out cheaper than paying a monthly fee. On the other hand, if you are a full-time sole trader who makes many cash deposits, choosing an account with a monthly fee could turn out to be the most cost-effective option.

In any case, it is a good idea to compare different accounts against your expected usage to help find the cheapest sole trader bank account for your needs.

» MORE: Common business bank account charges

What services do sole trader business bank accounts offer?

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 bank accounts:

cash deposits
ATM withdrawals
bank transfers
bill payment through direct debit
standing orders
accounting software
invoice tools
cheque facilities
debit cards
online payments

What are the alternatives to sole trader bank accounts?

As a sole trader, you are eligible for standard business bank accounts as well as those specifically designed for the self-employed. Considering these in your comparison may give you more options to choose from.

What is more, many banks offer specific business accounts for start-ups. To be eligible for a start-up account, your business will likely include the following criteria:

have a turnover of less than £1 million
be less than a year old

On the other hand, you may find that you can do without a separate business account. For example, if you want help with your self-assessment tax return, using standalone accounting software or hiring an accountant may be enough, without you needing to open a separate bank account.

What if I change how I trade?

As a sole trader, you are not obliged to have a separate business bank account, though it might help you manage your business’s finances.

However, if you decide to run your small business as a limited company rather than as a sole trader, you will have to change your business account to a limited company account to keep your personal finances separate from your business finances. You will also have to register your business with Companies House and HMRC.

» MORE: Should I register as a sole trader or a limited company?

About the author:

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

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- Tide Business Bank Account
  
  Monthly Fee
  Free
  
  Card
  Purchases
  Free
  
  Bank Transfers
  20p*
  
  Overdraft
  
  Access
  App & Online
  See Deal + More info
  Product Features
  
  Contactless MasterCard - with unlimited free purchases in any currency, plus add up to 35 team cards for free
  
  Instant invoicing directly from your Tide app
  
  FSCS protected
  Eligibility Criteria
  
  For registered business account: you must be registered with UK Companies House as a director of that company or partnership
  
  For sole trader account: you must be a UK based sole trader/freelancer
  
  For all accounts: you must be aged 18+, have a valid UK phone number and address, and hold compatible device registered to a UK App or Google Play store
  See Deal
  Exclusive
  *6 months free bank transfers Use code 6FREENERD on signup and get 6 months of free transfers. Offer ends 31/05/22.
- Tide Plus Business Bank Account
  
  Monthly Fee
  £9.99
  
  Card
  Purchases
  Free
  
  Bank Transfers
  Free
  
  Overdraft
  
  Access
  App & Online
  See Deal + More info
  Product Features
  
  Priority business support
  
  Free transfers
  
  Free legal advice
  Eligibility Criteria
  
  For registered business account: you must be registered with UK Companies House as a director of that company or partnership
  
  For sole trader account: you must be a UK based sole trader/freelancer
  
  For all accounts: you must be aged 18+, have a valid UK phone number and address, and hold compatible device registered to a UK App or Google Play store
  See Deal
- Cashplus Business Bank Account
  
  Monthly Fee
  Free
  
  Card
  Purchases
  Free
  
  Bank Transfers
  30p
  
  Overdraft
  
  Access
  App & Online
  See Deal + More info
  Product Features
  
  Instant Account Number and Sort Code
  
  No credit checks to open an account
  
  Business cash advance facility available to eligible customers
  Eligibility Criteria
  
  UK Businesses
  
  Application to be made by UK Director over age of 18
  
  Overdraft available subject to eligibility
  See Deal
- Cashplus Business Bank Account with Cashback
  
  Monthly Fee
  £69 per year
  
  Card
  Purchases
  Free
  
  Bank Transfers
  99p
  
  Overdraft
  
  Access
  App & Online
  See Deal + More info
  Product Features
  
  Instant Account Number and Sort Code
  
  No credit checks to open an account
  
  Earn 1% Cashback on the first £100,000 of eligible card purchases each calendar month
  Eligibility Criteria
  
  UK Businesses
  
  Application to be made by UK Director over age of 18
  
  Overdraft available subject to eligibility
  See Deal
  Offer
  No annual fee for the first year First years annual fee of £69 refunded.
Mettle by NatWest
- Monthly Fee
  Free
- Card
  Purchases
  Free
- Bank Transfers
  Free
- Overdraft
- Access
  App only
See Deal + More info
Product Features
- Mettle is 100% free - no hidden charges
- Get paid faster - create and send invoices on the go
- Sync with accounting software like FreeAgent, Xero and Quickbooks
Eligibility Criteria
- For sole traders or limited companies with up to two owners
- Maximum balance of £100k for limited companies and £50k for sole traders
- For UK-based companies with owners that are UK residents
See Deal
Offer
FreeAgent for Free To get FreeAgent for free you'll need to make at least one transaction a month from your Mettle account. A saving of £114 a year (based on FreeAgent's lowest tariff).
Card One Money Business Account
- Monthly Fee
  £12.50*
- Card
  Purchases
  Free
- Bank Transfers
  30p
- Overdraft
- Access
  App & Online
See Deal + More info
Product Features
- No credit checks to open an account
- Pay in cash and cheques
- IBAN and SWIFT codes for international payments
Eligibility Criteria
- Limited companies
- Sole traders
- Partnerships
See Deal
Offer
*No monthly fee for the first 3 months
- Countingup Business Account (Starter)
  
  Monthly Fee
  £3
  
  Card
  Purchases
  Free
  
  Bank Transfers
  30p
  
  Overdraft
  
  Access
  App only
  See Deal + More info
  Product Features
  
  Open an account in 5 minutes - instant account number, sort code and Mastercard in days
  
  Business account and accounting software in one app - instant automated bookkeeping, receipt tracker and invoice management
  
  £750 maximum monthly deposit on this plan
  Eligibility Criteria
  
  To open an account you must be a UK resident, at least 18 years old and running a small business (Sole Trader/Director of a limited company)
  
  If your maximum monthly deposit is exceeded, then your account will automatically upgrade to the appropriate subscription plan. You will not be able to downgrade from this plan.
  See Deal
  Offer
  0.3% cashback on purchases for new and existing customers Offer available until the 31/5/2022
- Countingup Business Account (Standard)
  
  Monthly Fee
  £9
  
  Card
  Purchases
  Free
  
  Bank Transfers
  30p
  
  Overdraft
  
  Access
  App only
  See Deal + More info
  Product Features
  
  Open an account in 5 minutes - instant account number, sort code and Mastercard in days
  
  Business account and accounting software in one app - instant automated bookkeeping, receipt tracker and invoice management
  
  £7,500 maximum monthly deposit on this plan
  Eligibility Criteria
  
  To open an account you must be a UK resident, at least 18 years old and running a small business (Sole Trader/Director of a limited company)
  
  If your maximum monthly deposit is exceeded, then your account will automatically upgrade to the appropriate subscription plan. You will not be able to downgrade from this plan.
  See Deal
  Offer
  0.3% cashback on purchases for new and existing customers Offer available until the 31/5/2022
- Countingup Business Account (Premium)
  
  Monthly Fee
  £18
  
  Card
  Purchases
  Free
  
  Bank Transfers
  30p
  
  Overdraft
  
  Access
  App only
  See Deal + More info
  Product Features
  
  Open an account in 5 minutes - instant account number, sort code and Mastercard in days
  
  Business account and accounting software in one app - instant automated bookkeeping, receipt tracker and invoice management
  
  Unlimited deposit on this plan subject to maximum balance and daily transaction limits
  Eligibility Criteria
  
  To open an account you must be a UK resident, at least 18 years old and running a small business (Sole Trader/Director of a limited company)
  See Deal
  Offer
  No monthly charges or bank transfer fees for your first 3 months Offer available until the 31/5/2022
Acorn Business Account
- Monthly Fee
  £12.50
- Card
  Purchases
  Free
- Bank Transfers
  30p
- Overdraft
- Access
  App & Online
See Deal + More info
Product Features
- No credit checks to open an account
- Pay in cash and cheques
- IBAN and SWIFT codes for international payments
Eligibility Criteria
- Available to Limited companies, sole traders and Partnerships
- Maximum turnover £2m per year
See Deal

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