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Business bank accounts explained
A business bank account helps keep company finances separate, simplifies accounting and helps build a professional financial profile.
What is a business bank account?
A business bank account is designed specifically for managing company finances rather than personal money. You open your account in your business name and then use it to pay bills, staff wages and suppliers, as well as receive payments and send money abroad.
Many business accounts also come with features such as accounting integration and invoicing tools to help streamline your business finances and make life a little easier.
A business bank account is mandatory for limited companies and limited liability partnerships. Sole traders can use a personal bank account for their business transactions, but a separate business account is still highly advantageous.
Find the right bank account for your business
What are the features and benefits of a business bank account?
Some of the key features and benefits of a business bank account include:
Separation of finances – Keeping your personal and business finances in separate accounts makes life much easier when it comes to tracking expenses, managing tax returns and sticking to a budget
Management tools – Many business accounts come with tools you don’t get with a personal account. These can include accounting software integration, invoicing, expenses tracking and cash flow insights
Professionalism – Clients can make payments to your company name rather than your personal one, reinforcing credibility
Access to credit products – Opening a business account could give you access to business credit cards, overdrafts and business loans
Building business credit history – Having a dedicated business bank account helps you build a financial track record, which can improve your company’s credit score
Access to specialist support – Some accounts come with dedicated relationship managers and access to networking events
Important considerations
Before opening a business bank account, there are several considerations to keep in mind, including:
Account fees – Business bank accounts often come with monthly or annual fees, and may also charge for certain transactions. Some banks may waive the monthly fee for the first year, while others might offer a set number of fee-free transactions each month
Eligibility – Different providers have different eligibility criteria, so it’s crucial to check. You may need to have been trading for a set length of time or meet a minimum annual turnover requirement. Some banks only offer accounts to limited companies and partnerships, while others may turn you away for a business bank account if you have poor credit
Accessibility – You can open and manage some accounts online or in-app only, while others might offer branch access. Think about what works best for you
FAQs
How do I choose the right bank account for my business?
When choosing a business bank account, think about the features that are most useful to you and your business, as well as how you wish to manage your account. Then compare options carefully, checking for account and transaction fees, and whether you meet the eligibility criteria.
Are there any free business bank accounts?
Yes, some business bank accounts have no monthly fee and may not charge for everyday transactions. However, these usually have limited account features and may be better suited to sole traders and small businesses, rather than larger limited companies.