Although it’s only compulsory if you operate as a limited company, having a separate bank account is a useful way for any type of business to manage the money it sends and receives.

Any business that registers as a UK limited company is required to have its own bank account. The company is a separate entity to you as the owner or person who runs it, so you’re not allowed to use your personal account for the business.

It isn’t mandatory to use a separate account if you run your business as a sole trader or partnership, but it can make it easier to track what’s happening in your finances – especially if you have a high volume of transactions.

Business bank accounts work more or less in the same way as personal bank accounts. Some providers charge fees for certain transactions or facilities, so it’s worth shopping around for the best deal based on your needs.

It’s also useful to consider what else you might need from a business bank account, such as streamlined currency exchanges and transfers if you work overseas.
 

If you operate as a sole trader, then you can often just use your personal account or another type of current account for work. That said, some banks prefer you to open a specific business account if they spot lots of business-related transactions. Most providers will offer some sort of free consultation service to help you choose if you want to.

Limited companies and trusts are a bit more restricted, and must have a business bank account. You’ll need a separate account for each one if you run multiple companies.

Should I get one anyway?

It can certainly come in handy for keeping your financial affairs as simple as possible.

• It can look more professional: A dedicated business bank account suggests that you’re more established, and some customers may feel more comfortable paying into it
• Easier to track expenses: It’s a lot easier to stay on top of claims for allowable expenses if you know any payments leaving your account relate to the business, rather than your weekly shop!
• Use software integrations: Managing your bookkeeping (and therefore your tax return) is much simpler if you can connect your account to your bookkeeping software without accidentally recording personal transactions as business ones
• Manage who you work with: Some business bank accounts allow you to carry out checks on businesses and suppliers, helping to reduce the risk of fraud or financial loss

Consider what you and your business need from a bank account in order to be as efficient as possible, and go from there, such as:

• Transaction fees, such as moving money to and from overseas, or receiving money from clients
• Interest rates and charges
• Special offers (if you want to open a business account with your current account provider, for example)
• Access to online and mobile bank facilities, or in-branch support
• Withdrawal fees
• Overseas transfers and charges
• Overdraft or other credit facilities

You’ll need to provide proof of your identity and address to open any UK bank account. To open an account for your business you’ll also need to confirm its name, registered address, and contact details (limited companies must also supply their registration number).

Some providers will ask about what type of business activity you’ll be carrying out, and the source of any funds you put into the account.

You might need to supply additional information if you’re opening a UK account as a non-resident, although these requirements can change from one provider to the next.

Learn more about our online accounting services for businesses. Call 020 3355 4047 to chat to the team, and get an instant online quote.