Our Best Business Bank Accounts

What is a business bank account?

Business current accounts have similar features to personal current accounts: you can pay in, set up payments, use a debit card, and manage your account online. Many business accounts have extra features such as invoicing, payment cards for your co-workers, and integration with accounting software.

The main difference between a business bank account and personal bank account is that the bank (and HMRC) treat the money in the account as belonging to your business. This has important tax implications.

If you're a sole trader, you and your business are the same - your business income is your income so you're liable for income tax on it. But if you run a limited company, your company is legally separate from you and your company's income is taxed differently from the money you pay yourself as income or dividends.

There are business current accounts available for sole traders, limited companies, partnerships, charities and other organisations, although not all providers offer accounts to all types of businesses.

Do I need a business bank account?

Whether you're a sole trader, freelance, contracting or running a limited company, you’ll need to keep your finances organised. One way to make this easier is to open a separate bank account for your business.

With a business account, you'll keep work transactions separate from your personal money so it's much easier to do your accounting and tax returns. And by managing a business account, you'll build a business credit score for your business, which will be useful in future if you need to take out a loan or get a company credit card.

» MORE: Your business account options and obligations

How to choose a business bank account

In the past, anyone setting up a new business would have to choose between a high street bank or a private bank for their business bank account. Times have changed and although traditional banks are still popular, there are many newer options in the form of online-only ‘challenger banks’ and apps that offer business current accounts.

With so many similar business account providers out there, it can be difficult to decide which type of account is best for your business. Do you want face-to-face service in a branch or would you prefer 24-hour access to a smart money management app? Are you happy to pay a monthly fee or would you rather open a ‘free’ account that only charges you for certain transactions?

You can start by using our table above to compare some of the different types of business bank accounts. With our comparison service and this simple guide to how to choose a business bank account, we’ll help you narrow down your options to make a more confident decision.

High street banks vs apps and online business accounts

Would you prefer to open a business bank account at a traditional bank with branches on high streets around the UK? Or would you be happy with an online-only account?

There are advantages and disadvantages to each option. For example, some online business account providers offer useful extras such as tools to help you categorise your transactions, keep track of staff expenses and put money aside for your tax bill. However, if you want to deposit cash or cheques, or negotiate an overdraft, you might find it easier with a high street bank.

With so many options available, it’s important to take the time to decide what you need, use online research tools like our comparison service, and weigh up the pros and cons of the different accounts.

How to compare business account features and services

A good place to start when you’re comparing business bank accounts is to decide which features and services you need from the account.

Not sure what you need? Take a look at the list below of common bank account features and services to help you create your own ‘need to have’ list – features which are essential for your business. And then list any other features which would be ‘nice to have’.

You can then check our comparison table to find accounts which offer the features you need.

Next, compare the charges and fees for the accounts you’re interested in and decide what you’re happy to pay.

To find your ideal business account, you might want to learn more about the providers. For example, some people like to check the ethics and values of their bank – you can search for this on the bank’s website. And how important to you is customer service? You might want to read what existing customers have to say on review sites like Trustpilot.

Common business bank account features

• Deposits/withdrawals
• Cash withdrawals
• Bank transfers
• Standing orders
• Direct Debits
• Debit card
• Mobile app
• Online banking

Some business bank accounts also offer:

• Credit card
• Company expenses cards
• Overdraft
• Telephone banking
• Interest paid on positive balances
• Invoicing tool
• Accounting software
• Accounting software integration

Our comparison table above lists some of the account features and the eligibility criteria for each account, so it’s a useful starting point for your research.

‘Free’ business banking: monthly fee vs pay per transaction

Business bank accounts usually come at a cost. Some have introductory ‘fee-free’ offers, but at some point, almost all business bank account providers will charge you for services.

They do this in two different ways - it’s up to you to decide what suits you best.

Monthly or annual fee

Some business bank accounts charge a monthly or annual fee. Some transactions and services are usually included for ‘free’ as part of the account. You might have to pay extra for other features. If you’ll need to make lots of transactions, this way of paying for your account might be more cost-effective for you.

Fee-per-transaction

This type of business account is often promoted as ‘free’ or ‘no monthly fee’. But you’ll pay for the service through fees for certain transactions such as transfers or cash withdrawals. If you don’t expect to use your account much, for example if you won’t make many deposits or transfers, then this type of account could work out cheaper than paying a monthly fee.

» MORE: Explore free business accounts

How to open a business bank account

What you need to do to open a business bank account will vary depending on the account provider.

Many business bank accounts have strict eligibility criteria. You might need to make an appointment at a branch, and you might be asked to show evidence of your turnover or trading history, such as your annual accounts or previous tax return.

In contrast, with some account providers you can apply online and give only basic information.

To open a business account with any provider, you’ll always need to show proof of your identity and give the name and UK-based address of your business.

Business bank account FAQs