Open a business account in the UK

Are you considering expanding your business to the United Kingdom?

Maybe you want to receive payments in the local currency or establish yourself in the UK's vibrant market? Whether you're planning a move or simply want to tap into the UK's business opportunities, opening a business account is a crucial first step.

Whether or not you're legally required to have a business bank account in the UK depends on your business structure.

Limited Companies and Business Partnerships:

Limited companies are legally required to have a business account, even if you're the sole employee.

As a limited company is a separate legal entity, keeping your company's finances separate from your personal funds is mandatory.

By transferring all company income into a business account, you can easily track and manage expenses and pay yourself and any employees you may have.

Maintaining separate accounts also allows you to complete tax returns efficiently while helping you build a good business credit score, which can prove valuable for future loan applications or obtaining a business credit card.

For business partnerships like limited liability partnerships (LLPs), each partner must maintain separate personal finances. Therefore, a separate LLP account is necessary. On the other hand, general business partnerships, while not legally required to have a specific business account, can still benefit from setting one up to streamline financial management and keep business transactions organised.

Charities, Community Groups, Sole Traders, and Freelancers:

While charities and community organisations aren’t legally required to maintain a business bank account, doing so can provide numerous advantages, including improved financial management and greater transparency.

Similarly, sole traders and freelancers also aren't legally required to separate their personal and business transactions. However, choosing a dedicated account offers several benefits, such as a clear separation of personal and business finances, simplified bookkeeping, and a more professional image.

A separate account also helps when engaging with accountants or undergoing HM Revenue & Customs (HMRC) tax inspections.

A separate business account could also improve your chances of accessing financing options, as lenders often prefer to see well-organised financial records and a clear separation of personal and business funds.

When opening a business account in the UK, you’ll need to have all the required documents on hand to ensure a quick and smooth opening process.

However, it’s always good to remember that exact documents may differ slightly among various banks and financial institutions, so you should always check with them for their specific requirements first.

Here's a general list of what you’ll need to be prepared:

• Proof of ID: You'll need a valid passport or driver's licence to verify your identity.

• Proof of UK address: Both your personal and business address might be required. You can provide utility bills, bank statements, or official letters addressed to you or your business to prove residency in the UK.

• Business verification documents: If you operate as a limited company, you may be asked to provide business registration documents such as a Companies House registration number or a certificate of incorporation. In some cases, banks might also request a business plan outlining the purpose of the account and the ownership structure, especially if there are shareholders with ownership stakes exceeding 10%.

• Tax information: Banks often require tax-related information for identification and compliance purposes. Be prepared to provide your National Insurance Number and Unique Taxpayer Reference (UTR).

While you don’t need to be a UK passport holder to open a business account in the UK, traditional banks may ask for ID and proof of address. As long as you can provide the required documents, you can successfully open a bank account and enjoy all the benefits of managing your business finances without a British passport.

Do I need to be a resident of the UK to open an account?

Not only do you not need to be a UK passport holder to open a business account, but you also don't need to be a UK resident. Anyone of any nationality can start a business in the UK, and non-resident business owners have no legal requirement to have a business account as long as they don't own a limited company.

As a non-resident, you’ll have to provide identification documents like your passport or a driver's licence, and banks might also request additional documents, such as three months' worth of utility bills as proof of address.

No UK address? Online accounts like Wise may accept your application even without a UK address, provided it is available in your home country. You’ll still get access to GBP account details, such as an account number and sort code.

These digital banking alternatives provide flexibility and are a great option for non-residents looking to open a UK bank account.

The good news is that you don’t need to have a registered office to open a business account in the UK. However, you will need a UK business address. Additionally, someone will need to be present in the UK when opening the account to sign a bank mandate in person. Some providers may also require all directors or individuals with significant control to be UK residents. The same applies to sole traders.

For foreigners looking to open a traditional bank account in the UK, having proof of address can sometimes be challenging. However, companies such as Monzo offer UK bank accounts that foreigners can access, even without proof of address, providing flexibility and convenience for those without a UK-based address.

How long will it take to open a UK business account?

The time it takes to open a UK business account will vary depending on the provider and the type of account you're applying for. Thanks to quick and efficient digital alternatives like Wise, Airwallex, or Revolut, the process can be completed even within a matter of hours or a few days, thanks to their streamlined online platforms.

On the other hand, the approval process typically takes longer for full-business account solutions offered by traditional banks, ranging from weeks to sometimes even months. This allows the bank to thoroughly review your application, perform any necessary checks, and ensure compliance with their internal processes and regulatory requirements.

If you need a more accurate estimate of how long it will take, contact your chosen bank. They can provide you with a more specific timeframe as well as information regarding their opening process.

The time it takes to open a UK business account will vary depending on the provider and the type of account you're applying for. Thanks to quick and efficient digital alternatives like Wise, Airwallex, or Revolut, the process can be completed even within a matter of hours or a few days, thanks to their streamlined online platforms.

On the other hand, the approval process typically takes longer for full-business account solutions offered by traditional banks, ranging from weeks to sometimes even months. This allows the bank to thoroughly review your application, perform any necessary checks, and ensure compliance with their internal processes and regulatory requirements.

If you need a more accurate estimate of how long it will take, contact your chosen bank. They can provide you with a more specific timeframe as well as information regarding their opening process.

When it comes to UK business banking, there are various fees and charges to consider. While there’s now a new breed of digital accounts that offer fee-free options, it's important to note that many business accounts still involve costs. Here are some common fees that you might come across in the UK:

• Monthly fees: Most business accounts charge a monthly fee, typically around £5 to £10. This fee covers the maintenance and administration of the account.

• Transaction fees: Business accounts often include charges for every credit card transaction made and can vary depending on the bank and account.

• International payment fees: Fees will usually apply for international services, including business deals with currency exchange or international transactions.

• Cash deposit and withdrawal fees: Banks may charge fees for cash deposits and withdrawals, particularly for larger amounts or exceeding specified limits. Consider these fees if your business deals with significant cash transactions.

• Wire transfer fees: If you need to send money from your business account to another bank, wire transfer fees may apply.

It's worth noting that different banks will have varying fee structures and may offer different packages based on your business needs. Some online banks provide fee-free business checking accounts, while others provide fee waivers based on meeting certain balance requirements or transaction volumes. Assessing your specific business requirements and conducting thorough research will help you find an account that aligns with your needs and minimises costs.

Are there companies that can help me set up a business account in the UK?

We won’t sugarcoat it - setting up a business account in the UK can be complicated, especially if you're unfamiliar with UK legal structures and business practices. If you're a foreign national or simply need some help opening a business account in the UK, hiring a company formations expert could be invaluable.

Not only do these experts have experience with Companies House and can guide you through the registration process, but some even offer account setup services or business bank accounts that come as part of their service packages. For example:

• The Formations Company: If you open a business account with Barclays within 90 days of forming a company with The Formations Company, you can receive £50 cashback in your new business bank account.

• Rapid Formations: With Rapid Formations, you can choose from up to 8 different business bank accounts as part of their company registration package. They offer the convenience of selecting a free bank account that suits your business needs and includes options like Barclays, NatWest, Mettle, Tide, Monzo, Cardone, Cashplus, and Anna.

• Tide: Tide offers a two-in-one solution where they not only register your company but also open your business account in just a few simple steps. They provide a free business bank account, making it a convenient choice for entrepreneurs looking to streamline the process.

Another option to consider is Xolo, which specialises in providing business setup, contracting, invoicing, accounting, taxation, and compliance solutions. Xolo services also include business bank account setup, and their Xolo Leap plan sets you up with a Wise, Revolut or LHV account.

Protecting your hard-earned money is one of the biggest priorities for business owners. When protecting your business account deposits in the UK, the Financial Services Compensation Scheme (FSCS) compensates customers of authorised financial services firms in the event of their failure. Here's what you need to know:

• Individual Protection: The FSCS protects your deposits, whether you're an individual or a company. For individuals, the scheme can pay back any money you hold with a failed bank or building society, up to the compensation limit of £85,000 per person across all accounts held within the bank or banking group.

• Business Entity Protection: If your business is a separate legal entity, such as a limited company or LLP, it's eligible for protection under the FSCS, which also safeguards the business’ deposits up to £85,000. In this situation, the business itself is considered the protected entity, not each individual associated with the business.

• Sole Trader Protection: If you operate as a sole trader, your personal and business accounts aren’t treated separately. However, the FSCS can still protect all personal and business accounts you hold with the bank.

It's important to note that FSCS protection applies to accounts held within the same bank or banking group. If you have multiple businesses that are separate legal entities, each business can receive protection up to £85,000 across all accounts within the bank or banking group. However, if your businesses are branches of the same legal entity, FSCS treats them as one business. This results in protection for a single amount of £85,000 across all accounts within the same bank or banking group.

HSBC

• HSBC Kinetic Current Account: Designed for small businesses with features such as app-based banking, quick account opening, in-app customer support, and cash flow breakdown.

• Small Business Banking Account: Suitable for various legal entities, with 12 months of free banking, access to funding solutions up to £100,000, online and mobile banking, live chat support, and access to business specialists.

• Business Banking Account: Designed for small and medium-sized enterprises, it offers 12 months of free banking, funding solutions over £100,000, online banking, live chat support, and support from a dedicated relationship manager.

• Corporate Bank Account: Available for Corporate Banking Customers, providing day-to-day banking services and specialised support for long-term financial planning.

Lloyds

• Lloyds offers award-winning business bank accounts for businesses of any size, and has a history of supporting British businesses for over 250 years.

• Small businesses and start-ups with an annual turnover under £3 million can enjoy free day-to-day business banking for a year alongside access to business management experts.

• Larger businesses with an annual turnover between £3 million and £25 million have the flexibility to choose from different tariffs and benefit from a dedicated Relationship Manager.

• Professional practices holding client money can benefit from instant access to accounts and the availability of segregated accounts.

• Lloyds also offers a range of community bank accounts, including school accounts, credit union accounts, and treasurer's accounts.

Natwest

• Start-ups: Extra support and free banking on everyday transactions for 24 months for businesses trading less than a year with a turnover below £1 million.

• Existing businesses: No minimum monthly charge, tailored to companies with a turnover above £1 million trading under or over a year or a turnover below £1 million trading for over a year.

• Self-employed: Free mobile business bank account for sole traders or limited companies with up to two owners, with no hidden costs or transaction fees.

• Charity or non-profit: The NatWest Community account is available for eligible customers with an annual credit turnover below £100,000.

So far, we’ve focused on opening a business account with traditional high-street banks.

However, there are also digital alternatives like Wise that offer innovative solutions for businesses. With Wise, you can open multi-currency accounts from outside the UK and receive a set of UK account details, effectively giving you a UK account.

These digital accounts provide the flexibility to receive and make payments in multiple currencies, making them a convenient alternative for businesses with international operations.

Let's explore their features and benefits.

Wise offers a wide range of features and benefits for businesses.

• Send and receive GBP: With Wise, you can easily send and receive GBP payments. You'll get your own UK account details, including a sort code and account number, making it convenient for domestic transactions.

• Multi-currency account: Wise allows you to hold and manage over 50 currencies in your account. You can convert money between these currencies at the real exchange rate, saving on unnecessary fees.

• Add and receive money in various currencies: Add money to your account in 20 currencies and receive money from customers and clients worldwide using your Wise account details. This includes AUD from Australia, CAD from Canada, EUR from European accounts worldwide, GBP from UK accounts, NZD from New Zealand, and more.

• Low fees: Wise offers transparent and competitive fees for receiving GBP via different transfer methods. You can refer to their website for more detailed information.

• International bank details: Unlock local account details in 10 different countries, allowing you to set up your account with international bank details for greater convenience and flexibility.

• Interest on GBP balances:* With Wise, you can earn 4.22% interest on GBP balances, allowing your money to work for you.

Airwallex offers a comprehensive GBP Global Account for businesses seeking efficient and cost-effective international banking solutions. Here are some of their main features:

• Open a GBP account online: Easily set up a British Pound Sterling account online.

• Zero sign-up and monthly fees: No fees to open or maintain the account.

• Instant account activation: Open new accounts instantly upon verification.

• Integration with global marketplaces: Seamlessly connect with platforms like eBay, Shopify, and Paypal.

• Hold and transact in multiple currencies: Access foreign currency accounts in 11 different currencies.

• Virtual payment cards: Issue virtual cards in various currencies for convenient payments.

• Receive and make payments in GBP: Receive direct bank transfers in GBP with provided account details.

• Withdraw in local currency: Convert other currencies to GBP at favourable exchange rates.

• Pay suppliers and staff in GBP: Make direct deposit payments in GBP without conversion fees.

Revolut Business account

Revolut offers a range of business account plans with the following features:

• Free-tier Business Account: Get GBP account details with basic features.

• Grow Plan (£25 per month): Save up to 24% on the annual plan, with additional benefits.

• Scale Plan (£100 per month): Save up to 21% on the annual plan, with enhanced features.

• Enterprise Plan (custom price): Tailored for larger businesses with custom pricing.

• Free transfers to Revolut accounts and IBANs for global transfers.

• Invite unlimited team members and set team member permissions.

• Fee-free international payments within the monthly Grow, Scale, and Enterprise plan allowance.

• Fee-free local payments within the monthly allowance, with a £0.20 fee for transfers that go over this.

Things to consider when weighing up business accounts

When comparing different business accounts, there are several factors to consider. Here are some key points to keep in mind:

• Deposit protection: Ensure the bank provides deposit protection to safeguard your funds.

• Fees and charges: Compare the fee structures of different banks, including monthly service and transaction fees, to find one that aligns with your budget and banking needs.

• Customer support: Look for a bank that offers excellent customer service through various channels, such as phone, email, website or app chat, or in-person assistance.

• Loans, overdraft, and financing: Consider whether the bank offers loan options, overdraft facilities, or financing solutions to support your business's financial requirements.

• Interest rates on deposits: If earning interest on your account balance is important to you, compare the interest rates offered by different banks.

• Integrations: Assess whether the bank's digital platforms and technology integrate well with your business's accounting or financial management software.

• Reviews: Check customer reviews and the bank's reputation for reliability, trustworthiness, and overall customer satisfaction.

Account features: Look for features that are essential to your business, such as debit or credit cards, invoicing tools, or access to business advisors.

When opening a business account in the UK, the choice is ultimately yours. While traditional high-street banks are a popular option, digital platforms like Wise, Revolut, or similar alternatives are worth considering and, you’ll often be able to open an account from within your home country.

These digital providers offer convenience alongside useful features that can streamline your business banking experience. Remember, each provider will have their own set of requirements, so it’s always best to contact them directly if you need any extra information. After all, whether you opt for a traditional bank or a digital alternative, selecting the right account is crucial for supporting your business's growth.