A Guide to Business Banking in 2024

Everything you need to know about the best business bank accounts.

Updated: May 20, 2024
Matt Crabtree

Written By

Matt Crabtree

|
Rachel Wait

Edited By

Rachel Wait

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So, you are ready to launch your new business, but have you thought about everything you need? 

Business bank accounts can become overlooked once you start to focus on product development, marketing, and start-up costs. 

However, opening a business bank account can offer a range of benefits and help you keep track of your business finances.

In this article, we’ll outline some of the best business bank accounts on the market and why it can pay to open one.

ProviderScoreDetails
1. Tide★★★★★Click Here
2. Revolut Business★★★★★Click Here
3. Barclays★★★★★Click Here
4. Tide (Pro)★★★★Click Here
5. Metro Bank★★★★Click Here

What Is Business Banking?

Business banking is a business’s financial relationship with a bank.

Business banking can offer companies a range of services including business bank accounts, business savings accounts, business loans, and business credit cards.

These services can help to meet the unique needs of businesses.

Do I Need a Business Bank Account?

If you're a limited company, you will need to open a business bank account because your business is legally separate from you. By contrast, if you're a sole trader, there's no requirement to have a business bank account as you and your business are one and the same.

However, be warned that not all banks will agree to you using a personal bank account for business purposes. What's more, opening a business bank account can come with a host of benefits, including making it much easier to track your business expenditure and helping you file your tax return.

What Are the Benefits of a Business Account?

A business bank account can help you create and send invoices, organise and pay your taxes, and integrate simple accountancy functions. 

By keeping your business and personal finances separate, it'll be a lot easier to complete tax returns and ensure you're staying within budget. Many business accounts will sync with accounting software to make your life even easier.

You could also apply for a business overdraft for your business bank account to help manage your cash flow. If you manage your overdraft carefully, this will help you to build a business credit score, which could give you access to competitive business loans and credit cards in the future.

Additionally, having a business bank account can make your business look more professional. Clients might prefer to pay invoices into a business bank account than one in your personal name, for instance.

However, there are usually charges to consider when using a business account. Some banks will charge monthly fees to open and use a business bank account, while others might not have a monthly fee but will charge for certain banking transactions, such as fees to transfer funds or withdraw cash from an ATM.

What Is Business Banking vs Commercial Banking?

Business banking refers to financial services used by small-medium businesses. Commercial banking, or corporate banking, is the term given to financial services used by large enterprises with six-figure turnovers, or higher.

What Services Do Business Banks Offer?

Business banks offer a range of business bank account and savings account options, which can suit every type of business. 

They also offer financing solutions, such as overdrafts, business credit cards, business loans, payroll assistance and expense solutions to help manage your money better.

The services that a business account can offer you will depend on your credit history and your business performance. New businesses may have fewer options available until they begin to generate revenue and build a business credit score.

What Makes a Good Business Bank Account?

A good business bank account is one that suits your style of business. So, if your business deals in cash often, free ATM withdrawals and cash deposits could be beneficial.

If you transfer money internationally every month, choosing a business bank account with free international payments would be a good choice.

How Do I Open a Business Bank Account in the UK?

You could open a business current account online within a few minutes, provided you have the necessary documentation and excellent credit history.

open business bank account
Image: CHACC

Follow these simple steps to open a business account in the UK:

1. Choose Your Account Type

Decide what type of account would suit your business. Do you plan to mostly use your bank account for online transfers or will you regularly need to deposit cash or cheques? Do you want to regularly send money overseas or will you only be sending money to clients in the UK? Identify what is important for you and your business at this stage.

2. Find a Bank

Once you know what it is you want from a business bank account, identify the bank you want to use. Check whether the bank offers an account with the features that you need most and that you meet the eligibility criteria. Some banks might ask that you've been trading for a set time or you meet a minimum turnover requirement.

3. Check Costs

Make sure you understand exactly what you'll be charged and when. Is there a monthly fee to pay or will you pay a fee for certain transactions?

4. Application and Documentation

Next, make a formal application for your chosen business account. You can often do this online, or you might be able to complete it over the phone or in branch.

You will need proof of your identity and UK address to open a business account in the UK. You'll need to provide this for all company directors.

You'll also need to provide details about your business, including your Companies House registration if you're a limited company.

5. Open Your Account

If you are successful with your application, your account could be up and running the same day.

Many banks allow you to switch your current account to them if you value the features offered by another bank. Simply provide your existing account number, sort code, and transfer date.

6. Deposit Funds

Once your account is open, deposit your cash and start to take advantage of the great features of your new business account.

What Is FSCS Protection?

The Financial Services Compensation Scheme – or FSCS – protects your cash if a bank goes bust. 

Most UK current accounts and savings accounts are protected by the Financial Services Compensation Scheme up to £85,000 per financial institution.

Business Banking Pros and Cons

To find the best business bank account, you need to be aware of the pros and cons of this type of financial product.

Pros

✔️ Financial security — Business bank accounts provide you with FSCS protection, protecting your cash if the bank should fail. 

✔️ Ease of use — Business accounts typically come with online banking features so you can transfer money and check payments easily from any location. 

Real-time updates help you to manage your business finances so you can spend money wisely.

✔️ Business features — A business account may include software to help you invoice clients and pay your bills and taxes. 

Standard accountancy and cash flow management features help you to manage your finances professionally.

✔️ Makes your business look more trustworthy – Customers will likely feel happier paying money into a business account rather than a personal one.

Cons

❌️ Fees — Most business bank accounts will charge you a fee. Some business bank accounts may charge a monthly fee, or you may be charged separate fees per withdrawal or transaction. 

❌️ Eligibility criteria — Some business bank accounts will ask that you meet certain trading and turnover requirements.

❌️ More admin — Having a business bank account on top of a personal one means you'll have more paperwork and more bank cards to deal with, as well as more passwords to remember.

Best Business Bank Account — Reviews

Below is a list of the best business bank accounts currently available.

1. Tide — Free Business Bank Account — Great Overall

  • Free business bank account
  • Free Tide business card included
  • Expense cards: £5 per month
  • Transfers in and out: 20p per transfer
  • ATM withdrawals: £1 each time
  • Create and send invoices
  • Integrate accounting applications
  • Online banking

The Tide Free Business Bank Account is a great choice for new businesses that need to find their feet in business banking. There is no monthly charge with this business account and you can create and send invoices with ease. 

You can also integrate accounting applications such as QuickBooks into your business account for easy-use features.

However, you will be charged for certain transactions when using this account. For example, ATM withdrawals are charged at £1 a time, and transfers will cost you 20p each. 

Optional expense cards are available to use in your business at a cost of £5 each per month.

2. Revolut Business — Grow Business Account — Great for International Payments

  • Monthly cost: From £19
  • Online-only account
  • 1 free metal Revolut card included
  • Free plastic company cards for employees
  • Free virtual cards for your employees
  • Fee-free international payments: 5 per month
  • Fee-free local payments: 100 per month
  • Spend in 150 currencies

The Revolut Grow Business Account is ideal for businesses that need to make a limited number of international payments per month and spend in a range of currencies.

You will need to pay a monthly fee of £19 which includes 5 free international payments each month and 100 free local payments each month. You will receive an exclusive metal card for you to use, in addition to free plastic cards and virtual cards for your employees to use.

You can set up and manage recurring transfers so you can easily handle your business dealings.

3. Barclays — Startup Business Bank Account — Great for New Businesses

  • Monthly cost: £0 for 12 months for new Barclays customers
  • Cost after 12 months: £8.50 per month
  • Electronic payments: 500 free per month
  • Additional electronic payments: 35p each
  • Debit card payments: free
  • ATM withdrawals: free
  • Cash deposits: 60p per £100 deposited
  • Cheques deposited: 60p each

The Barclays Startup Business Bank Account offers free digital banking for 12 months if you are a new customer. Monthly fees will be £8.50 after this period.

You can send 500 electronic payments free of charge each month, with any further electronic payments charged at 35p each. 

However, you can withdraw cash from ATMs and make debit card payments completely free of charge.

If you want to deposit cash into your account, you will need to pay 60p per £100, while depositing cheques into your account will carry a 60p charge.

4. Tide — Pro Business Bank Account — Great for Experienced Businesses

  • Monthly cost: £18.99 + VAT
  • Free Tide business card included
  • Expense cards: 2 free expense cards for co-workers included
  • Unlimited transfers in and out
  • ATM withdrawals: £1 each time
  • Create and send invoices
  • Integrate accounting applications
  • Priority in-app and phone support
  • 24/7 legal helpline
  • Exclusive member perks
  • Online banking

The Tide Pro Business Bank Account is the perfect choice for established and experienced businesses.

The account has a monthly fee of £18.99 (plus VAT) and you will receive 2 free expense cards for yourself and your employees.  

You can integrate accounting applications such as QuickBooks into your business account for easy-use features whilst also creating and sending invoices at no extra cost.

With the Tide Pro account for business, you can enjoy free unlimited transfers in and out of your account, but ATM withdrawals are charged at £1 a time.

You can also enjoy 24/7 legal support and priority in-app and phone support should you ever need any help. Additionally, you can benefit from exclusive member perks.

5. Metro Bank — Commercial Current Account — Great for Large Enterprises

  • Monthly fees: £0
  • Minimum annual turnover: £2 million
  • Funding options to ease cash flow
  • Dedicated relationship manager
  • 24/7 support
  • Easy-to-use platform
  • European card purchases: free
  • European cash withdrawals: free
  • Outside Europe card purchases: 2.99% fee
  • Outside Europe cash withdrawal: 2.99% + £1.50
  • Unarranged overdraft rate: 25% EAR (variable)
  • £25 unpaid item charge

The Metro Commercial Current Account is a solid business account for large enterprises that have an annual turnover of over £2 million.

With this commercial current account, you can access funding options to manage and ease your cash flow and working capital when required.

You will receive 24/7 support when you need it and anytime access to an easy-to-use platform. You will be provided with a dedicated relationship manager who will understand your business thoroughly. 

Furthermore, you can make unlimited free cash withdrawals and card purchases throughout Europe. However, outside Europe, you will face a charge of 2.99%. Cash withdrawals outside Europe also attract a £1.50 fee on top.

Further charges include a £25 charge for unpaid items and a £15 charge for a paid item when you do not have enough funds and an unarranged overdraft is used. This will also attract interest at 25% EAR.

A Guide to Business Banking in 2024: Summary

A business bank account can help you to better manage your business finances, stay on track with your budget and make your life a lot easier when it comes to filing tax returns – all of which can help ensure your business is a success.

Many business bank accounts will sync with accounting software and invoicing tools which can make bookkeeping much simpler.

However, almost all business bank accounts will either charge a monthly fee or fees per transaction, so it's important to compare the best business bank accounts carefully to find the right one for you.

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