If you’re setting up a new limited company, one of the first things you’ll need is a business bank account.
It’s a legal requirement for limited companies to have their own dedicated business current account, separate from personal finances. In this guide, we’ll cover everything you need to know about finding and opening a limited company bank account. This includes a roundup of the best business bank accounts out there, and any fees and charges you need to know about.
Plus, we’ll take a quick look at a great alternative for businesses which trade overseas - Wise for Business. International payments through your bank can be super expensive, but you’ll only pay tiny fees and get the real, mid-market exchange rate using your Wise account. But more on that later.
There are lots of business bank accounts out there, available from traditional banks and an increasing number of digital and mobile-only banks.
So that you can easily compare business bank accounts and find the right option for you, here are just a few of the best options for limited companies:
Starling is a digital bank designed for small businesses, including those using a limited company for contracting. Eligible deposits are FSCS-protected¹ boasts no monthly fees and no charges for international spending, along with 24/7 UK support and automated accounting. It also has an award-winning business banking app, which you can also access from your desktop browser.²
Revolut is another digital bank used by businesses, with a current account that you’ll primarily manage via the Revolut mobile app. Its current account offers smart company prepaid debit cards, integration with accounting software and 24/7 support. You’ll also have the option to streamline expenses by capturing receipts in-app.
Have a shaky credit history? Cashplus is one of the best bank accounts for people and businesses with a poor credit score, as it does no credit checks.
Its Business Current Account offers faster payments, integration with accounting software and the option to deposit and withdraw cash at the Post Office. You’ll also get business expense cards and 24/7 access to your account using the Cashplus mobile app.³
Tide, another digital banking service, offers a simple yet powerful account for UK businesses. It offers easy transfers in and out, integration with accounting software and the option to have sub accounts for things like wages, bills and expenses.
Your money is FSCS protected,⁴ and there are a choice of memberships depending on your business type. It’s a great option if you’re just starting out, as Tide will even pay the incorporation fee for your new limited company.
The CardOneMoney business account is another that doesn’t require a credit check for new applicants, so don’t worry if you have a poor credit history. This everyday account offers all the usual current account features, plus a bill payment service, free text alerts and up to 4 prepaid Corporate Mastercards.⁵
You can access your account online, by phone or using the CardOneMoney app, and contact a UK-based call centre if you need help with anything.
Clydesdale has two business accounts, the Business Current Account and the Business Choice Account. Both offer a full range of current account features, including flexible payment options, contactless debit card, access to digital tools and an optional overdraft.
Eligible businesses will get 25 months free business banking⁶ with the standard account, while the Business Choice account offers credit interest on your balance.
The Royal Bank of Scotland has a choice of current accounts for different types of business, including a Startup Account for brand new businesses.
RBS also offers a generous 24-month free business banking period⁷, along with features including free accounting software and 24/7 mobile, online and telephone banking. You’ll also get a debit card, and the option to apply for a business credit card if you need one.
If you’d like to use a bank with ethical values, you can open a business bank account with The Cooperative Bank. It’s Business Directplus account offers a whopping 30 months of fee-free everyday banking⁸ for new limited companies.
You’ll also get access to merchant services, online banking and a business savings account if you need it.
If your business trades globally, you might find your local bank lacking some features that will not only simplify your international payments but also cut the cost. This is where Wise for Business shines.
Open a Wise multi-currency account - no monthly fees, just a small set-up fee and you take advantage of cheap international transfers all over the world with conversions at the real exchange rate. Receive money for free, and only pay a tiny fee to convert currencies - cheaper than most high street banks and up to 19x cheaper than PayPal.
With Wise, there are no monthly fees or transaction charges to worry about. You can invoice like a local, pay invoices in 70+ currencies and use the powerful open API to automate hundreds of payments at once - making it much easier to pay staff, suppliers and freelancers.
When it comes to spending, use your Wise multi-currency debit card or direct debit to make online and in-person purchases in any currency, with no foreign transaction fees.
In most cases, you can apply for a business bank account online. Alternatively, you can head into a branch or open your account by telephone if you’d prefer.
You’ll need to complete an application form, including lots of details about your business - such as its turnover, number of employees, estimated income, number of sites and much more. So, make sure you look up what’s required at your chosen bank and have everything ready.
To open a business bank account for a limited company, you’ll need the following paperwork:
- Proof of ID, such as a passport or driving licence
- Proof of your address, such as a recent utility bill or council tax statement
- Proof of the registered business address
- Certificate of Incorporation, plus tax and VAT registration details
- Details of signatories on the account.
Unlike personal accounts, nearly all business bank accounts come with some level of fees and charges. Here are the main costs to watch out for:
- Monthly account fees - however, many banks will offer generous free business banking periods for new companies earning under a certain amount.
- Transaction fees - these are charges for Direct Debits, Standing Orders, paying in cash and other automatic and manual transactions
- Card fees - these are charges for making purchases or withdrawing money from an ATM using your linked business debit card.
- International transaction fees - if you send money abroad or use your card to make payments in another country or currency, you’re likely to pay a fee. This is usually a percentage of the total transaction. It’s also important to factor in the exchange rate when working out how much international transactions will cost you, as banks tend to add a mark-up onto their rates.
After reading this guide, you should be all set to open a bank account for your brand new limited company.
Just make sure to check the details and compare before choosing an account. There are lots of options available, and it’s crucial to make the right decision for your business.
Sources used for this article:
- Starling Bank legal page - FSCS Protection
- Starling Website
- Cashplus Website
- Tide Website
- Cardonemoney Website
- Clydesdale Bank Website
- RBS Website
- Co-operative Bank Website
Sources checked on 7-March-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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