How to open a business bank account in the UK

Wise
28.06.21
3 minute read

If you’re setting up a new business, one of the first things to look into is getting a business bank account.

In this guide, we’ll cover everything you need to know on how to open a business bank account in the UK. This includes types of accounts, costs to consider and a step-by-step guide to the process. So let’s get started.

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Does my business need a business account?

Not every type of business needs a dedicated business account. Although there are benefits to having one, which we’ll look at in just a moment.

The one key exception is if you run a limited company in the UK and have registered it at Companies House. A limited company is a legally separate entity from you, so you’re required to have a separate bank account¹.

You don’t need a business bank account if you are:

  • A sole trader
  • A freelancer
  • Doing gig work.

What are the benefits of having a business account?

One of the main advantages of having a dedicated business bank account is that it allows you to keep your personal and business finances separate. Your bank may also place limitations on what you can do with a personal account, so upgrading to a company account can give you more options and allow your business to grow.

Further benefits of setting up a business bank account include:

  • Saving on admin time when it comes to submitting tax returns to HMRC
  • Helping you build a credit rating for your business
  • Giving you access to business tools, resources and support, along with finance and credit
  • Making your business appear more professional to clients and customers.

Can I open a business bank account in the UK with a foreign corporate entity?

It can be quite tricky to open a bank account in the UK for a foreign corporate entity. But if you already bank with a large global institution in your home country, you may find that they can help you set up an account with their UK business.

Your first port of call should be some of the UK’s major banks, such as HSBC, Lloyds, Barclays and Natwest. These are more likely to offer international accounts, along with specialist UK business bank accounts for non-residents.

If you need a more flexible and quick to open business account, you could benefit from a Wise Multi-currency Account.

Types of business accounts to open

There are a variety of different business bank accounts to choose from, depending which bank you go for. Most fall under the following categories:

  • Startup business bank accounts. These are usually for new or small businesses, or for freelancers and sole traders. Some come with a fee-free period and business support tools, to help you get your venture off the ground.
  • Business bank accounts for growing and established companies. These accounts are often categorised by turnover, with limits and charges based on the size of your business.
  • Community and not-for-profit accounts. If you run a charity, social enterprise, club, school or other non-profit, most UK banks offer a dedicated everyday account with low or no fee banking.

Many banks also offer multi-currency accounts, for businesses wanting to trade overseas. And if you’re worried about bad credit, you can find a number of digital/mobile banks that offer business bank accounts with no credit checks required.

How to open a business account online

You can apply for a business account online in most cases², either starting your application from scratch or using the Current Account Switch Service. This has the benefit of guaranteeing that the switch will be complete within 7 days². Some banks may require you to visit the branch in person to verify your ID or provide further information.

To apply for a business account online, you’ll usually need to provide²:

  • The details of all partners, directors or members of the business - including recent home addresses
  • Full details of your business, including contact details and trading/registration addresses in the UK
  • Details of your company’s cash flow or forecasts
  • Your registered company number with Companies House (limited companies only).

You’ll also need to be 18 or over, and the owner or director of the business, in order to apply for a UK business account.

It’s a good idea to check the requirements to open a business bank account from your particular bank before starting the process. So, head to your chosen bank’s website for details of the documentation and details you’ll need, or give the bank a call. You can find information about the Current Account Switch Service here.

So, how long does it take to open a business bank account? It can take as little as 7 days if you use the Current Account Switch Service, but it could take anywhere from 4 weeks to 3 months otherwise³.

How much does it cost to open a business account?

Opening a business bank account shouldn’t cost you anything, but there are usually monthly fees to pay once you’re up and running. If you’ve chosen a startup account, you may benefit from a fee-free period. It’s always worth checking and comparing the fees between business bank accounts very carefully before starting the application process.

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wise-multi-currency-account

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Summary

So, that’s pretty much it - all the essentials you need to know on how to open a business bank account in the UK.

If you’ve got your paperwork in order and the right details to hand, it should be relatively straightforward. Good luck!


Sources used for this article:

  1. gov.uk - limited company formation
  2. Natwest landing page
  3. great.gov.uk - Opening a business bank account

Sources checked on 28-June-2021.


This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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