Best Sole Trader Bank Accounts

Use this review from CompareBanks to get the best sole trader bank accounts.

Updated: April 11, 2024
Matt Crabtree

Written By

Matt Crabtree

|
Rachel Wait

Edited By

Rachel Wait

 

If you're a sole trader, your business isn't legally separate from you, which means there's no requirement for you to have a business bank account.

But there are a number of reasons why opening a business bank account can be beneficial.

Perhaps most importantly, separating your company and personal finances allows you to better track your income and expenses. And that means it can be much easier to file your tax return.

We've researched and put together a list of the best sole trader bank accounts in the market today based on fees, features along with pros and cons for each account.

ServiceScoreRegister
1. Revolut Business★★★★★Click Here
2. Cashplus Bank★★★★★Click Here
3. Starling Bank★★★★★Click Here
4. Monzo★★★★★Click Here
5. Tide★★★★★Click Here
6. Metro Bank★★★★Click Here
7. Co-operative Bank★★★★Click Here
8. Barclays★★★★Click Here
9. TSB★★★★★Click Here
10. Santander★★★★★Click Here
11. NatWest★★★★★Click Here

What is a sole trader bank account?

If you are a sole trader, such as a freelancer or you're self-employed, and you're the person responsible for your business, you can open a sole trader bank account. As the name suggests, they are for sole traders – not for businesses with a limited company.

Several banks provider sole trader accounts and they often include the following services:

  • Accountancy software to help with tax returns
  • Cash deposits
  • Overdraft and credit facilities
  • Help and support specifically for sole traders, if you need it

The pros and cons of a sole trader accounts

Before I get into the detail of how the accounts work and what you need to apply for one, here’s a quick summary of the pros and cons of sole trader bank accounts.

Pros

✔️ It can help you to look more professional — Customers might prefer paying into a bank account that is in your business name rather than your personal name. It can make you appear more trustworthy.

✔️ Some banks won't let you use a personal bank account for business expenses —  Not all banks will be happy about you using a personal bank account for business purposes. You probably won't need to worry about this if, for example, you are a freelance writer who has their earnings paid into the account. But if you're a business that conducts a high volume of cash transactions, the bank may shut your personal account or insist that you create a business account with them instead.

✔️ It's much easier to manage — When filing your tax return with HMRC, it will be easier if you have kept accurate records of your business' revenue and spending. Instead of digging through your personal finances to determine what's what, you'll easily be able to find your business expenses. This is also useful in case HMRC conducts an audit of your company's accounts. If it does, everything is in one place and easily accessible without having through your personal finances as well.

Cons

❌️ More expensive at times — Many business accounts have a monthly fee and you could also be charged for certain transactions such as cash withdrawals or cash deposits.

❌️ Your two accounts mean double the admin — You'll have to cope with more passwords and more bank statements and more cards.

Best sole trader bank accounts — a buying guide

Let's take a more detailed look at how sole trader bank accounts work.

How does a sole trader account work?

A sole trader bank account is simply a business bank account that sole traders can apply for. It works in a similar way to a personal bank account but can enable you to separate your business and personal finances and make it easier for you to file your tax return.

Having a business bank account might also give you access to perks such as cashback, as well as free accounting software and invoicing tools that can make it easier for you to manage your business finances.

Before you look at the providers, it's worth asking yourself the following questions to help you decide which type of sole trader account might be best for you:

  • Would you like to bank online or via an app?
  • Will you be making lots of foreign transactions?
  • If you need branch access, is there a bank branch near to you?
  • Do you need postal or phone banking?
  • Will you need an overdraft or credit facilities?

What are the costs?

Exact costs will depend on the account, but you might have to pay a monthly account fee, or there might be fees for certain banking transactions such as money transfers. Monthly fees can vary from £5 to £20, or sometimes more.

Some business bank accounts might waive these fees for the first year or so, while others might not charge a monthly account fee at all. Always check carefully so you don't get caught out.

If you're paying a fee for a sole trader account, you may be able to access extra benefits such as accountancy software or programmes to automatically create and send invoices. If you're paying for this anyway, using it through the sole trader count may be a better idea.

How to open a sole trader bank account

You can usually open a business bank account online, though you might also be able to do this in your bank's branch or over the phone. Many online providers will have your account up and running in a day or two, while some accounts with high street banks can take longer to set up.

You will usually need to provide a few personal details, such as your name, date of birth and address, as well as a few details about your business. You will usually need to provide proof of ID such as a passport or driving licence, and proof of address, such as a recent utility bill.

Best sole trader bank accounts — Reviews

The best account for you will depend on things like how you want to do your banking and your annual income. It's important to shop around to find the right account, here I've picked out some of the best to choose from.

Bank NameMonthly FeeOverdraft FacilityAccess
1. Revolut BusinessFrom £0NoApp
2. Cashplus BankFrom £0Yes (conditions apply)App and Online
3. Starling BankFrom £0No (Limited Companies and LLPs only)App
4. MonzoFrom £0YesApp and Online
5. TideFrom £0NoApp and Online
6. Metro BankFrom £0YesApp and Online
7. Co-operative BankFreeYesApp and Online
8. BarclaysFree for 12 monthsYesApp and Online
9. TSBFree for 30 monthsYesApp and Online
10. SantanderFree for 18 monthsYesApp and Online
11. NatWestFree for 24 monthsYesApp and Online

1. Revolut Business — Tailor-made business account for sole traders

Revolut are top of this list because of the range of different accounts they have to offer, but as a sole trader, it’s not worth the bother — nor the monthly fees — of opting for anything other than their basic business account given that the volume of sales you likely take in each month doesn’t compare to enterprises or larger companies.

In addition, this is an account that’s focused on small local businesses, so it’s not really an issue that there are fees attached to international transactions.

What you are getting, though, is an account that supports multiple different currencies, so even if you do need to make a foreign transaction for whatever reason, you don’t need to go around opening multiple different accounts to store your cash — just be prepared to pay around £5 every time you make or receive an international payment.

Aside from this, you’ll also be given a free debit card — and a virtual card if that floats your boat — that you make as many ATM withdrawals from as you please. 

Oh, and if you need some support with anything inside the app or with your account in general, there’s a support team on standby 24/7 to give you a hand — you don’t even need one of the paid accounts for this.

2. Cashplus Bank — Popular alternative UK sole trader bank accounts for those with poor credit

Cashplus is an alternative to standard business bank accounts. It's a digital-only challenger bank in the UK and it's fully regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). This means deposits will be protected up to £85,000 under the Financial Services Compensation Scheme (FSCS).

Business Go (no monthly fee) and Business Extra (£9 a month) are the two types of accounts provided by Cashplus for business use. Both may be synced with popular bookkeeping software like Xero, QuickBooks, and Sage to automatically classify your expenditure and provide reports. You'll also be able to create invoices with ease and ringfence money into different pots.

The Cashplus business account is useful for every company, regardless of its credit history, since opening an account does not require a credit check. Business Creditbuilder is a feature of the premium Business Extra plan and can help you improve your credit score.

You must meet these requirements to create a Cashplus business account: (1) be a UK resident; (2) have a UK-based company; and (3) be above the age of 18.

Cashplus accounts may be opened by sole traders, partnerships, limited liability companies, trustees, and other recognised company structures.

3. Starling Bank — Award-winning UK sole trader bank accounts

Starling Bank offers a safe, free sole trader account, which is designed to help those who are self-employed or operate a business on the side save time and money. Deposits of up to £85,000 are protected under the FSCS.

You can apply for a free digital business account through the app, link it to your accounting software, capture receipts and set money aside to pay bills. You can also choose to pay £7 a month and add the Business Toolkit feature to your account. This looks after your bookkeeping and helps to manage your invoices and VAT.

You can open the free account in a matter of minutes thanks to the bank's streamlined application process. When you need help, Starling Bank's UK team is available around the clock.

What's more, there are no fees for spending on your card abroad and you can also set up USD and EUR accounts. Business overdrafts and loans are also available if needed.

4. Monzo — Next-best sole trader bank account

Monzo is a fully regulated UK bank that offers both personal accounts and business bank accounts. Deposits of up to £85,000 are protected by the FSCS.

This popular challenger bank has a lot to offer in terms of business banking services, including connectivity with accounting software and Tax Pots. There are two plans to choose from – the free Lite account and the Pro account that offers more in the way of features and has a £5 monthly fee.

Monzo's free account can be a good option for new businesses. It comes with a business debit card, free UK bank transfers, pots to separate your money and budgeting tools. If you're happy to pay a small monthly fee, the Pro account gives you access to Tax Pots to help you save for your tax bills, integrated accounting, invoicing tools and six months free of Xero.

Monzo also offers sole trader overdrafts and loans.

5. Tide — Established British sole trader bank accounts

Online financial management is made easier with a Tide Business Account.

Tide is a mobile app that enables you to pay bills, submit invoices, and monitor your spending all from the convenience of your own pocket.

Business owners can start with a free account and then upgrade to a premium plan with additional features as their needs change.

Alongside the free account, the Plus account costs £9.99 plus VAT a month, the Pro account £18.99 a month plus VAT, and the Cashback account costs £49.99 a month plus VAT.

If you choose the free account, you'll need to pay 20p per bank transfer made, while the Plus account gives you 20 free transfers a month and the Pro and Cashback accounts have no limits. ATM withdrawals cost £1. All plans offer accounting software integration and the option to create and send invoices for free.

To create a Tide business account, download the app, enter your business and personal information, upload identification documentation, and wait for approval.

6. Metro Bank — Trustworthy sole trader bank account that UK people love

Metro Bank's business account is designed for small businesses, including sole traders, with up to £2 million turnover a year.

There's no monthly account fee if you keep your balance above £6,000 for the whole month, and you'll also get 30 free UK transactions for that month.

If you have less than £6,000 in your account one month, you will be charged £6 in addition to a fee of £0.30 for each transaction, including ATM withdrawals, direct debit and standing orders, and automated credits.

Businesses that deal heavily with cash will appreciate the availability of banking services seven days a week. You can do all your banking online, through the app or in branch and you can also use the Business Insights feature to help you analyse your financial flow.

Deposits of up to £85,000 are protected by the FSCS.

7. Co-operative Bank — A business bank account with no monthly account fee for Sole Traders and Single Directors

Co-operative Bank Business Current Account has no monthly account fee for the period which you hold your account and no fees on digital transactions, making this account a great option for people who prefer to bank online.

During your account application, you can also apply for an arranged overdraft for cash flow and short term borrowing.

The account offers free accounting integration with software such as Xero, Sage or Quickbooks, as well as free support tools to help your business get off the ground. You'll also have access to partnership offerings, including insurance, HR and tech support.

The Co-operative Bank has a strict moral code and will not engage in activities that are harmful to the environment or the community. It's easy to open an account online, but you can also manage your account via your mobile app, online, over the phone or in branch.

8. Barclays — Top sole trader bank accounts provider for new startups

The “Start-up business account” from Barclays is designed for new companies that have been operating for less than a year.

There is no monthly account fee for the first 12 months, then you pay £8.50 each month.

Electronic payments, debit card payments and cash withdrawals are free of charge. But you will pay a fee to pay cash and cheques into the account.

Opening an account gives you access to free invoicing and accounting software from FreshBooks as well as Barclays Eagle Labs. This is a network of business expertise, with education resources, events and key business connections.

It's easy to apply for the account in-app or online.

9. TSB — Top sole trader bank account with free banking for 30 months

With the Business Plus account from TSB, you can enjoy 30 months of free day-to-day banking. After this time, a £5 monthly fee applies and fees will apply to certain transactions, including cheque and cash payments.

You can also benefit from 12 months of free specialist business advice from Enterprise Nation to help your business flourish.

You can add a business debit card to your account to help you make purchases, as well as deposit cash and cheques at any TSB branch or Post Office branch.

10. Santander — Top business sole trader bank account with good fees

If your business is in its first year of trading, you'll benefit from 18 months of free business banking with the Santander Business Account. After this, you'll pay a £7.50 monthly fee. The account offers standard everyday banking and access to an overdraft.

Alternatively, the Santander 1|2|3 Business Current Account is also available for sole traders. If you've been trading for less than 12 months, you'll pay a fee of £5 per month for the first 18 months. This then rises to £12.50 a month.

On top of this, businesses can get cashback based on their annual credit turnover.

You'll get 1% cashback on turnover of less than £200,000 (up to £100 per year), 2% on turnover of £200,000 or more (up to £200 per year), and 3% on annual credit turnover of £300,000 (up to £300 a year).

11. NatWest — Well-recognised sole trader bank accounts

There are two types of business account to choose from with NatWest. Which one you go for will depend on how long you've been trading.

The Start-up account is designed for businesses that have been trading for less than a year and have a turnover of less than £1 million. There are no banking fees for the first two years, and then fees will apply to everyday banking transactions, including cash payments and automated payments.

Alternatively, the NatWest business account is designed for businesses that have a turnover of more than £1 million and have been trading for under or over a year, or businesses with a turnover of below £1 million and have been trading for over a year. There's no monthly fee, but you'll pay a fee for everyday banking transactions.

Each account gives you access to free accounting software from FreeAgent and you can bank online, via the app or in branch.

Leading sole trader bank accounts for small businesses: The Verdict

Opening a business bank account as a sole trader will help to make your business look more professional as well as help you to keep track of what you've spent where. Some accounts will also come with an overdraft which gives you funding to fall back on in an emergency — just be aware interest rates can be high.

Most high street banks offer business bank accounts, but if you're happy to bank online or via an app, you can also look at digital-only providers such as Revolut and Tide, Monzo and Starling Bank.

When you choose a sole trader account, look at what extras are included. If they're things you know you'll make use of, or that you're already paying out for, it may be more cost effective to use them through the account.

It's also a good idea to look at the customer service ratings of any account you choose. You can look on websites like Trustpilot to get an idea of what existing customers think of a provider and an account.

Related guides:

FAQs

What should I look for when choosing a sole trader business account?

Can I open a different bank account for my company?

Can I pay cash into my business bank account?

Is my money safe in a business bank account?

Related Articles

Allica Bank Review: Features, Pros & Cons
As a business bank account user, you need a reliable banking service with modern...
Best Virtual Office Services
Whether it's Artificial Intelligence being implemented into your daily operations...
How to Open a Business Bank Account
Opening a business bank account can be crucial for managing your business finances...
Best Business Bank Accounts for eCommerce
If you have an eCommerce business or want to start one, you must open a business...

Mentioned Banks

About Barclays Bank Barclays is a British multinational investment bank and financial services company. It was founded in 1690 and is headquartered in London. Barclays originated...
Learn More
About The Co-operative Bank Based in Manchester, United Kingdom, the Co-operative Bank is a large retail and commercial bank. It is the seventh biggest lender in Britain and the majority...
Learn More
About Havin Bank Havin Bank, formerly known as Havana International Bank, or HIB, was founded in the United Kingdom in 1972. It received its banking authorisation the following...
Learn More
About Metro Bank Metro Bank is a retail bank based in the United Kingdom. Founded in 2010 by Vernon Hill and Anthony Thomson, it is the first new high street bank to open in the...
Learn More
NatWest, or National Westminster, is a retail and commercial bank based in the United Kingdom. It is one of the ‘Big Four’ UK clearing banks and has more than 7.5million personal banking...
Learn More
About Santander Santander UK is a British bank. Though it is a British company and autonomously managed, it is entirely owned by the Spanish Santander Group. Santander is one...
Learn More
About TSB TSB is a UK-based retail and commercial bank. It is a subsidiary of the Sabadell Group. The TSB we know today came to be in 2013, formed from Lloyds TSB Scotland PLC...
Learn More
First Glance An official UK bank with a speedy sign-up process, Cashplus is designed for modern life. Is it everything you need from a UK-based current account? Read on for our...
Learn More