Opening a Business Bank Account

If you are working as a sole trader or you have opened a limited company, it is highly advisable (though not a legal requirement) to open a commercial bank account to separate business transactions from personal ones. This will make your life much simpler when it comes to your bookkeeping.

The question of which bank to go to is a tricky one, as rates, offers and fees can vary frequently. It also depends on the level and type of service you require, and whether you prioritise being able to phone up to ask a question or walk into a branch.

High street bank or ‘challenger’

business piggy bank

The main question, however, is whether you go with a traditional high street bank or a so-called ‘challenger’ bank generally managed online. With a high street bank, such as Barclays, HSBC, Santander or Natwest, you can expect a fairly similar service regardless of which one you choose, and it makes sense to research specific options. Some branches perform better than others and, if you have an issue, you may be waiting a while on the phone to resolve it, unless you have a premium account. Most high-street banks offer free commercial banking for 12 -24 months, depending on the bank and charge relatively low monthly fees thereafter. A slight outlier here is Metro Bank, who have branches but more of a start-up mentality, with overall feedback in our experience being largely positive.

In the last few years, there has been a huge increase in the use of online ‘challenger’ banks (many of which are not in fact banks, but ‘electronic money institutions’ holding funds in accordance with Electronic Money Regulations 2011). They vary significantly amongst themselves, with some taking a commission on each transaction and others offering free initial banking with tiered levels of paid service. Generally speaking, customers are protected from the organisation’s insolvency, but it is definitely worth checking this before making a decision.

Banks of this kind include Revolut, Starling Bank, Coconut and Tide and in general, accounts with them can be opened online with minimal hassle, especially compared to high-street banks. While there is some skepticism about the reliability of these start-ups, in our experience clients are very happy with the services they provide. Unlike high-street banks, they are also much faster to respond to customer demands, introducing new features such as invoicing directly from an app or interfacing with other accounting platforms regularly.

What do I need to provide to open an account and how long does it take?

Generally, a bank will go into quite a bit of detail regarding your business, either in a meeting or remotely, before they open your account. You are likely to be asked for:

  • Information about the business, i.e. Have you starting trading? What type of service/product do you provide/offer? What kind of customers will you work with? How do you advertise? Will you trade internationally? etc.
  • Anticipated number of transactions/turnover
  • Beneficial owners and company officials
  • Authorised signatories and nominated persons
  • Identity and proof of address (in the UK)

As you might imagine, just collecting this information and arranging meetings can take some time, so adding to that the amount of time it actually takes to open the account, how long opening an account takes can vary hugely depending on your circumstances. In our experience, it can take from 1 week to 3 months.

If you are not a UK resident, it is very difficult to open a commercial bank account (though we do have relationships with banks that can), and if you have recently moved to the country, or are from what they consider to be a ‘high-risk’ country, the bank might do enhanced checks.

Ultimately, the main thing is to choose a business account that aligns with your business goals and growth strategy. Do your research and ensure that it is the right fit. If you would like any advice on opening a business bank account, or you would like us to open one for you, please don’t hesitate to contact us.