What’s The Best Bank Account for Freelancers?

Discover how business accounts for freelancers work and which ones are the most useful.

Updated: May 21, 2024
Matt Crabtree

Written By

Matt Crabtree

|
Rebecca Goodman

Edited By

Rebecca Goodman

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As a freelancer, certain aspects of your financial life — whether it's your income, expenses, or tax obligations — can vary significantly, so it's important to keep on top of them.

This is where business bank accounts can make a big difference, as they provide you with a structured and efficient way of managing your business finances.

There are plenty of business bank accounts out there for traditional business owners, but if you're a sole trader or freelancer, you'll typically find that they're not marketed to you as much.

So, throughout this article, we'll be covering all you need to know about the best business bank accounts for freelancers — providing you with insights into what they are, how they work, and the specific kinds of features they come with.

Later on in the article, we'll also compare business bank accounts to help you make an informed decision as to which one of these accounts would be best suited for you.

ProviderScoreDetails
1. Tide★★★★★Click Here
2. Starling Bank★★★★★Click Here
3. Anna Money★★★★★Click Here
4. Countingup★★★★Click Here
5. Royal Bank of Scotland★★★★Click Here
6. Monese★★★★Click Here
7. Wise★★★★★Click Here
8. Monzo★★★★★Click Here

What are business bank accounts for freelancers?

These are bank accounts that give freelancers a dedicated space for managing the income they generate from freelance work, along with all the associated expenses and monthly fees they might have.

The idea here is ultimately to separate your personal bank account from the bank account that you use for work, so business accounts generally offer a level of professionalism and financial structure that is crucial for managing your career as a freelancer.

If you're a freelancer, you'll often grapple with irregular income, varying expenses, and complex tax obligations in comparison to your average job.

So, with a business bank account, you'll have a clear separation between your personal life and some of your professional endeavours, making it a lot easier to navigate some of these challenges.

How does a business bank account work?

So that you have a clearer idea of how these kinds of bank accounts work, let's take a closer look at some of the features you can expect from them:

Separation of finances

One of the most fundamental advantages of a business bank account is the fact that you're able to separate personal and professional finances. This kind of division simplifies financial management in a few different ways:

Tax efficiency

Once tax season rolls around, you don't need to worry about sifting through a bunch of different personal and business transactions. Your income and expenses related to freelancing will already be neatly organised, so it's a lot easier to calculate things like deductions, so you can report your income accurately.

Financial clarity

Having separate accounts gives you a clear idea of how your freelance business's financial health is looking.

Now, you're able to readily assess your income, track expenses, and even determine how profitable your business is, all without interfering with any of your personal expenditures.

Legal protection

For any freelancers out there who are sole proprietors or in any other kind of business structure, having a separate business account also offers some form of legal protection for personal assets in case you ever have any financial liabilities or legal disputes.

Streamlined invoicing and payments

Business bank accounts often come with a few features that can streamline the process of invoicing and receiving payments from clients:

Professional invoices

Depending on the type of account that you've opted for (usually a feature that's common with paid accounts rather than free ones), some accounts might offer some built-in tools that let you create professional-looking invoices, complete with your business branding and payment details, too.

Payment integration

Often, you're able to integrate your business account with one of the many payment processors out there, too, like PayPal or Stripe.

This means you can accept various forms of payment securely, and your clients can pay invoices electronically, which ultimately reduces a lot of the hassle involved in chasing payments.

Expense management

As touched on earlier in the article, being able to manage your expenses in an efficient manner is essential for freelancers because it lets you stay profitable, and it also helps you claim deductions on certain business expenses you're eligible for.

Business bank accounts, in particular, offer several advantages regarding this topic:

Categorisation

The majority of business bank accounts, whether they're designed especially for freelancers or not, allow you to categorise some of your expenses directly within your business account.

Receipt attachment

Some accounts might even allow you to attach receipts or invoices to the transactions that you make, which helps simplify record keeping for any tax purposes.

Expense reports

Generating expense reports can be a breeze when you're working with the right account. Once you've separated personal accounts from your business ones, you'll have a much clearer breakdown of your spending, which makes it far easier to budget and identify areas where you might be able to cut costs.

Credit and financing options

You should also be able to access certain credit lines or even financing that's tailored towards freelancers, depending on your financial history and the bank you ultimately choose, of course.

When you've got a fairly unstable income, having these kinds of options at your disposal can be invaluable:

Cash flow support

During lean months, you may gain access to credit that'll help cover essential expenses, which means that your freelance business can continue to operate even when clients are slow to pay.

Investment in growth

Having access to various financing options and loans is going to enable you to take your business to the next level — whether it's by facilitating investments in equipment, professional development, or even marketing efforts, you'll be able to expand your freelancing business strategically with a bit of extra cash.

Tax preparedness

Unlike more traditional jobs where your employer might handle your taxes on your behalf, managing taxes can be quite a significant concern for freelancers.

Fortunately, though, business bank accounts can often simplify this process for you:

Automatic categorisation

Many business accounts will automatically categorise your transactions, which not only saves you the time and effort involved in manually sorting through your financial records each tax season but also helps you stay compliant with HMRC.

Integration with accounting software

In addition, certain business accounts are able to seamlessly integrate with different kinds of accounting software (like QuickBooks or Xero).

Profit insights

Obviously, you need to have some kind of understanding of how your business is performing if you want your freelance business to stay stable and grow.

By having one of these business bank accounts, you're able to receive valuable insights into how you're doing:

Cash flow forecasts

Some accounts can offer you cash flow forecasting tools, which give you an idea of the amount of income you'll make in the future based on how profitable you are at the moment.

It takes things like your expenses into account, too, so all in all you're able to make relatively informed financial decisions.

Income trends

You're able to track all your income trends over time fairly easily with one of these specialised accounts, so you can spot things like peak earning periods or other areas for improvement, too.

Expense patterns

You can also take an in-depth look at what's costing your business money by analysing your expense patterns. This can help reveal any opportunities you might have to reduce costs and ultimately increase your business's profitability.

Security

Like any kind of bank account, security is important and as modern banking is highly secure, most business bank accounts offer enhanced security measures:

Fraud protection

The majority of business accounts come with highly sophisticated fraud protection features, spanning from encryption tools to transaction monitoring and alerts so any suspicious activity can be detected.

Secure online banking

In regard to online banking, your business account is also fortified with various security layers, multifactor authentication, for instance, so your funds and personal information are always safeguarded.

Customer support

The level of customer help and support available will depend on which bank you decide to partner with, but you'll typically always have some form of dedicated customer support when you have a business account.

This means you'll always have access to assistance and guidance when you need it most. When looking at business accounts, always check out the customer service ratings and reviews so you know what kind of service will be on offer.

The pros and cons of business accounts for freelancers

Now that we've covered the type of features you can expect from a freelancer business bank account, it's time to weigh up a few of the pros and cons:

Pros

✔️ Enhanced financial organisation

The primary strength of a business bank account is that it keeps your freelance finances nicely organised and simple.

Having this kind of separation between your personal and professional funds makes it a lot easier to manage your finances, which ultimately helps out when you're trying to track income and expenses accurately.

✔️ Professional image

Whenever you send invoices with your business account details, it signals to a client that you take your freelance work seriously — the same way it might when you use a business email rather than a personal one.

✔️ Access to credit

The specific credit limit you're able to receive will depend on a few different factors — namely, your current credit rating and the bank that you choose — but with a business account you'll have access to some level of financing.

✔️ Time efficiency

Generally speaking, another one of the main reasons you'd opt for a business bank account rather than a personal account for your business income is because of how efficient they are.

While you'd typically have to sift through a range of personal records to find any of your business expenses, the convenience of things like streamlined invoicing, expense management tools, and even the ability to categorise expenses automatically can save you a substantial amount of time.

Cons

❌️ Account fees

One of the primary drawbacks of these accounts for freelancers is the potential to rack up account fees.

Obviously, this depends on who you bank with, but in general, the vast majority of banks charge some form of monthly account fee— whether that's transaction fees, fees for using out-of-network ATMs, or some other form of monthly fee.

❌️ Initial setup complexity

In comparison to a personal account, where the steps to open one are generally fairly streamlined, opening a business bank account, tends to involve a bit more paperwork and administrative steps.

❌️ Minimum balance

Some business accounts might require you to maintain a minimum account balance in order to avoid any fees or even just to access certain features.

❌️ Limited physical locations

Quite a lot of business banks tend to operate primarily online

The best business accounts for freelancers

Here we look at some of our top picks if you're looking for a business account as a freelancer:

1. Tide

Kicking things off, let's look at Tide, which is an online-based platform that mainly focuses on small businesses or start-ups rather than large corporations.

Of course, this includes freelancers, too and there are no monthly fees for its business account.

Like many of the accounts we'll be covering on this list, Tide handles a lot of the admin work on your behalf — whether that's tax reporting or following up on any unpaid invoices, for instance.

You'll also get your own MasterCard, and you can hold up to five accounts with it, even with the free version of the service.

Unfortunately, though, you can't make any foreign currency transactions on one of these accounts as they don't allow you to hold foreign currency. That's not to say you can't still receive international payments; you'll just need to pay various SWIFT fees, which are not exactly cheap when they begin stacking up.

As such, this is definitely an account that's more suited to domestic transactions, but for any small freelancers who aren't looking too heavily at international business propositions anyway, this might not be too big of a deal. 

Pros

✔️ Free invoicing features

✔️ There are no fees for card transactions that you make overseas, though there is a £1 fee for any ATM withdrawals

✔️ They don't check your credit score when applying

✔️ Up to five free business bank account options

✔️ Sync these accounts with any accounting software you like, Xero or QuickBooks, for instance

Cons

❌️ Can't hold foreign currency

❌️ The level of customer support is slightly poor with their free accounts but is vastly improved if you have a premium account

❌️ Unable to deposit cheques

2. Starling Bank

Next on our list, we have Starling, which, again, targets freelance and small businesses fairly exclusively.

Most importantly, for freelancers looking to save a few pounds by opting for the free versions of the business account, you'll receive more fee-free features than all of the other options on our list here.

Like Tide, there aren't any monthly fees here, unless you choose the paid-for option which includes features like tax reporting.

Primarily, though, Starling is geared more towards freelancers and small businesses that handle most of their business within the country — particularly for those who receive cash and cheque payments fairly frequently.

Pros

✔️ No fees for paying and receiving payments in GBP

✔️ No fees for ATMs or any other foreign card transactions

✔️ It can be used in tandem with accounting software like the options we listed for Tide

✔️ Ability to deposit cash and cheques

Cons

❌️ Multi-currency accounts come with a fee

❌️ Additional fees are attached for any international transfers

❌️ The ability to create and send invoices isn't available with their free plans

3. Anna Money

Anna Money is another kind of business account that’s geared towards sole traders, freelancers and other kinds of small businesses.

In essence, it offers a platform that’s incredibly intuitive to use and is ultimately going to handle a lot of the daily administrative work you’d normally need to do — all for an affordable price, too.

For anyone looking for an affordable platform to cover their basic business transactions and save some money, we recommend Anna Money — not to mention their customer support team is impressive, too, as they get back to you very quickly and cooperatively.

Lastly, though, it's worth mentioning that, unlike Tide, for instance, this specific account doesn't fall under FSCS protection, so that's something anyone making particularly large transactions should be aware of.

Pros

✔️ Can get PAYG for £14.90 for every feature, but there's no kind of monthly fee otherwise

✔️ The customer support team is quick

✔️ Intuitive mobile banking app — can perform all of your invoicing here, too

✔️ Set your accounts up in less than 10 minutes

✔️ Receive notifications for transactions instantly.

✔️ Mastercard debit card included

✔️ Can be used for standing orders or direct debits

Cons

❌️ No overdraft

❌️ You need to pay £1 for every ATM withdrawal

❌️ Can’t make deposits with cheques

❌️ Fee attached for any transactions in foreign currency

❌️ No FSCS protection

4. Countingup

Moving forward, we have Countingup, which is especially useful for anyone who needs something specifically for their accounting needs.

It's one of the more recently created platforms on this list, too, as it was created by a former CEO of Clear Books, the online accounting software, back in 2017.

Whether it's tax reporting, separating your business expenses from your personal ones, or simply covering your basic bank account needs, Countingup appeals to a range of different needs. However, it's worth pointing out that it's not covered by the FSCS.

Pros

✔️ Can be used for both accounting and banking services

✔️ Company setup for no additional charge

✔️ 2-in-1 banking and accounting

✔️ Can go to any Post Office for cash deposits

✔️ High Trustpilot rating

✔️ Caters to various kinds of businesses

✔️ They do not check your credit rating.

✔️ 3-month free trial

Cons

❌️ Single card per account

❌️ Can only email when making any inquiries

❌️ Not completely free like other options on this list

❌️ No desktop access and can only be used through their dedicated mobile app

❌️ Can’t access credit or go into an overdraft

❌️ Isn’t covered by the FSCS

5. Royal Bank of Scotland

RBS, unlike some of the strictly online business accounts we've covered thus far, is a bank with plenty of branches (approximately 700 throughout the United Kingdom). As the name suggests, though, most of these are located in Scotland.

Furthermore, and dissimilar from most small business accounts, any company that makes less than £2 million every year can receive an overdraft for up to £25,000.

Though their interest rates are still affordable at around 11.73%, it's worth mentioning that you'd also need to pay significant arrangement fees.

Pros

✔️ Business credit card and overdraft options

✔️ Can use their service for free for two years

✔️ Comes with both mobile and online banking access

✔️ There aren’t any minimum fees per month

Cons

❌️ Slightly below-average customer reviews

❌️ Can accumulate a decent amount of additional transactions when using daily as you might not be eligible to make cost-free transactions

6. Monese

Monese is another solid option to fall back on if you’re a freelancer, and it’s actually one of the most affordable options that we’ve covered so far due to how many different plans there are.

Having said that, the features you’ll gain access to are naturally all going to change depending on which plan you end up choosing, so let’s walk through the options you have at your disposal here:

Simple Plan: This is generally their most effortless option since there aren’t too many different bells and whistles attached to it, hence why there isn’t any monthly cost with this plan, either. 

Aside from being able to transfer funds in about 15 different currencies for no extra charges, this is an account so simple you can have it up and running on your phone within a matter of minutes — not to mention that it comes with a free debit Mastercard.

Classic: This one’s around £5.95 per month (cheaper than a lot of competitors), and it’s probably a bit better suited for everyday banking since you’re able to deposit and withdraw cash completely for free.

Premium: Obviously, the £14.95 per month price tag is a little less easy to justify with this plan, but you’re naturally going to be getting a lot more features — having higher limits for transactions, for instance.

Pros

✔️ Quite a good range of different accounts, so your needs are always being met

✔️ Very affordable plans

✔️ Great for freelancers

Cons

❌️ Fairly limited in terms of currencies it supports

❌️ Premium plan can be costly for small business owners

7. Wise

Wise seems to pride themselves on the speed of their transactions, and it’s fairly warranted given how half of the payments you’ll receive with them will arrive either within an hour or even immediately — not to mention how they don’t come at an extra cost (provided they’re sent in GBP, and you aren’t exchanging any currencies.

Aside from this, and similar to other options we’ve already discussed, this platform comes with a bunch of accounting services, too — things like being able to use templates for sending invoices, for instance.

Not every option has this, so it’s also worth mentioning that Wise comes with its own debit card, too, and you’re, of course, able to see notifications as soon as they arrive and even set a spending limit for every card you’re using.

Just in case you ever lose the card, you shouldn’t face any issues since you can just go onto the Wise app and freeze/unfreeze the card with just a couple of taps. 

Pros 

✔️ Extra bonuses like cashback (1%) are available

✔️ Fast service

✔️ Free plans are available for both businesses and individuals

Cons

❌️ No premium plans if you’d rather have something with a bit more features

❌️ Can’t receive loans with Wise

8. Monzo

Finally, let's look at Monzo, which is another quality option for freelancers or businesses with very few employees. Like the other two options we've covered, you're also able to integrate your account with most accounting software — not to mention how you can have multiple users access the same account and put various saving pots together (though you have to pay for these features). 

This option is an excellent choice for anyone looking to expand their operations overseas, too, as you'll receive a business debit card that has zero international fees attached whatsoever — all for free!

What's more, you can even use their app to generate payment links for any of your clients, giving them the option to pay with whatever digital wallet they please.

Pros

✔️ Quality customer support

✔️ Can accept physical cash or cheque payments

✔️ No transaction fees for overseas payments

Cons

❌️ Can't integrate your business bank account with accounting software with the free plan, same with invoicing

Final thoughts

To wrap things up, the advantages of opening a business bank account can far outweigh the disadvantages, and the biggest takeaway of all is the peace of mind you'll receive knowing your business and personal finances are divorced.

That's just describing business bank accounts in general, though; when it comes to the specific accounts that we've listed above, the benefits really make themselves known.

Whether it's free international transactions, cashback, or zero monthly fees, there are very few reasons why you wouldn't want to consider signing up for a business bank account as a freelancer.

Related Guides:

FAQs

Will a Business Bank Account Improve My Credit Score?

How Do I Choose the Right Business Bank Account for My Freelancing Needs?

Can I Use a Personal Account for My Freelance Business If I Keep Good Records?

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