How to Open a Business Bank Account

Learn how to set up a business bank account for your limited company or side hustle.

Updated: March 27, 2024
Mark Tovey

Written By

Mark Tovey

|
Rebecca Goodman

Edited By

Rebecca Goodman

 

Opening a business bank account can be crucial for managing your business finances and is a legal requirement for limited companies.  

Whether you're a startup or an established business, we’ve got you covered. Keep reading to find out the eligibility requirements, how long it will all take, and the factors you should bear in mind before choosing a bank.

Do I need a business bank account?

If your business is a limited company in the UK, it's essential to have a separate business bank account because your company is considered a separate legal entity. This separation helps manage finances more clearly and meets legal requirements.

On the other hand, if you're a sole trader or doing freelance work, there's no legal obligation for a business account. However, once your business grows, you might find having one helpful for better financial management and organisation.

Who can open a business bank account in the UK?

To open a business bank account, you must

  • Be at least 18 years old
  • Be a sole trader, partner or company director
  • Be registered in the UK

Some banks only accept businesses that have been up and running for a specified period of time. For example, if your company has turnover of less than £1m, to open a NatWest business account you’ll need to have been trading for at least a year.

Your company’s turnover also comes into play. Lloyds only offers its business account to companies with annual revenue below £25m, for instance. 

What documents do I need?

  • Proof of your identity (e.g., passport, driving licence)
  • Evidence of your trading address (e.g., a commercial lease, a letter from HMRC from the current tax year, a commercial utility bill from the past three months)
  • Business documents, such as incorporation certificates
  • Financial forecasts or business plans may be require
  • Your Companies House registration number, if applicable

Choosing the right bank

Lloyds is the most popular in the UK, commanding 14.7% of the entire market. In second place is NatWest with 11% followed by HSBC with 7.1%.

image 1
How to Open a Business Bank Account 1

Source: NZTE Europe Market Research, June 2023

But don’t be a sheep (baaaaaah): instead, decide for yourself after weighing up the pros and cons.

Looking at just the five major banks in the UK, we created the below comparison table as an example of the differences you’ll find:

 SantanderHSBCLloydsBarclaysNatWest
Fee-free introductory period18 months12 months12 months12 monthsN/A
Monthly fee after£7.50£8£8.50£8.50No account maintenance fee
Source: CompareBanks research, data correct at 17 March 2024

There are plenty more charges to consider. These include foreign-exchange fees, overdraft interest charges, and electronic payment fees. For a comparative analysis of the Business Accounts on offer, check out our comprehensive review here.

You can explore review platforms like TrustPilot to gauge opinions on business bank accounts. Here’s a summary of the TrustPilot ratings for the five major banks’ business accounts.

 SantanderHSBCLloydsBarclaysNatWest
TrustPilot review1.7 out of 51.2 out of 51.7 out of 51.4 out of 51.7 out of 5
Source: CompareBanks research, data correct at 17 March 2024

Bear in mind that satisfied customers are often less inclined to leave detailed reviews. Therefore, you will likely encounter more negative feedback than praise, which doesn't always provide a balanced view.

How to apply

Online applications are commonly offered for efficiency and convenience but some banks may require an in-person appointment to finalise the account setup.

Be prepared to provide detailed business information and plans.

How long does it take to open an account?

Opening a business bank account typically takes 5-10 days, but the process can extend depending on several factors.

If your application involves more than two owners or officials, handles cash transactions, involves international dealings, or is for specific entities like clubs or charities (except personal trusts), additional information might be needed, delaying the process.

In addition, complex business structures or high application volumes at the bank can also lead to longer wait times.

Our conclusion

If your company is a limited company, it is mandatory under UK law that you set up a business account. Although freelancers and sole traders don’t technically need a business bank account, they might prefer to set one up to better organise their finances.

The entire process is simple and can be completed in just a couple of weeks. You’ll need to provide proof of identity and address, as well as basic details and documents relating to your business.

Be sure to compare the fees and services on offer before deciding on a bank, and check out our guide on the best business accounts to learn more.

FAQs

Do I absolutely need a business bank account?

If your business is a limited company, UK law requires you to have a separate business bank account. While sole traders and freelancers aren't legally obligated, a business account can still offer financial clarity and organisation.

What are the age and registration requirements to open a business bank account in the UK?

You need to be at least 18 years old and either a sole trader, partner, or company director. Your business should also be registered in the UK.

What documents are essential when opening a business bank account?

You'll need to present valid ID, proof of your business address, incorporation certificates if you have a limited company, and possibly financial forecasts or business plans.

How long does it typically take to open a business bank account?

The process usually takes between 5-10 days. However, it can vary depending on your business's complexity, the number of owners or officials, and the specific bank's processing times.

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Mentioned Banks

About Lloyds Bank Lloyds Bank is a British retail and commercial bank. One of the ‘Big Four’ clearing banks, it was founded in Birmingham in 1765. It is the largest retail bank...
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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...
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About HSBC Bank HSBC is a British banking and financial services company. It is the largest bank in Europe and the seventh largest bank in the world. The bank originated in Hong Kong...
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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...
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