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.
Is a business account different to other bank accounts?
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.
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Can I use any account as a business account?
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.
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
How do I choose a business bank account?
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
Overseas transfers and charges
Overdraft or other credit facilities
What do I need to open a business account?
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.
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A creative content writer specialising across business, finance and software topics. I have a love for all things writing, and creating engaging, easy to understand content that helps everyday people! Learn more about Rachael.