Best bank accounts for start-ups

Key takeaways

• The right business bank account helps start-ups manage cash flow, simplify bookkeeping, and maintain a professional image.

• App features, accounting software integration, and access to credit facilities can save time and support business growth from day one.

• Watch out for fees including monthly charges, transactions, international payments, and account closure costs to avoid surprises.

What makes a bank account good for start-ups?

When starting a new business, the right bank account can make managing finances easier, support growth, and help you stay on top of your cash flow. Key features to look for include:

• Low or transparent fees: Avoid surprises with clear monthly charges and transaction costs

• Online and mobile banking: Manage payments, check balances, and track cash flow on the go

• Accounting software integration: Connects seamlessly with tools like Xero or QuickBooks for easier bookkeeping

• Overdraft or credit facilities: Flexible borrowing to cover short-term cash flow gaps

• Multi-user access: Allows your accountant or business partners limited access to manage finances

• Merchant services: Accept card payments easily, either integrated or via third-party providers

• International payment support: Useful if you trade overseas, with competitive rates and low fees

What bank account fees should start-ups watch out for?

When choosing a business bank account, start-ups should keep an eye on the following fees to avoid unexpected costs:

• Monthly account fees: Regular charges for maintaining the account, which can vary depending on the provider and account type

• Transaction fees: Costs for each payment, transfer, or withdrawal, especially if volumes are high

• ATM withdrawal fees: Charges for taking cash out, particularly from other banks’ machines

• Cash and cheque deposit fees: Some accounts charge for deposits or have limits on free deposits

• International payment fees: Costs for sending or receiving money abroad, including poor exchange rates

• Overdraft or borrowing interest: Interest and fees on overdrafts, loans, or credit facilities linked to the account

• Account closure or switching fees: Some banks may charge if you close the account or move to a different account type.

Are free business bank accounts worth it for start-ups?

Business bank accounts that don’t charge a monthly or annual fee can be appealing for start-ups and sole traders looking to minimise costs.

They cover basic banking needs but there are still likely to be charges for other services such as international payments and using an arranged overdraft.

However, as long as it covers the essentials a free account can be a good place to start, and you can always upgrade as the business grows.

Do start-ups need overdrafts or credit facilities?

Whether a start-up needs an overdraft or credit depends on the type of business and its cash flow requirements.

Some new businesses can operate without borrowing, while others may need short-term funding to cover expenses.

Even if you don’t need it immediately, having access to a credit facility can be useful as your start-up grows and cash flow needs evolve.

How important are app features and integrations for start-up businesses?

App features and integrations can be valuable for start-ups, helping save time and simplify banking tasks.

Mobile and online access makes managing payments and checking balances easier, while compatibility with accounting software like Xero or QuickBooks ensures transactions sync automatically.

This can streamline bookkeeping, reduce manual work, and give a clearer view of your start-up’s finances.

Can start-ups switch accounts easily later?

Start-ups can switch business bank accounts, but the Current Account Switch Service (CASS) doesn’t apply to business accounts, so the process isn’t automatic.

You’ll usually need to move payments, direct debits, and standing orders manually, which can take time and careful tracking.

Some banks offer support to make the transition smoother, but it’s important to plan the switch carefully to avoid missed payments and ensure your start-up’s cash flow isn’t disrupted.

What documents do new businesses need to open a business bank account?

To open a business bank account in the UK, new businesses typically need to provide documents that confirm their identity, business details, and legal status. Requirements can vary by provider, but most banks will ask for the following:

• Proof of identity: Valid passport or UK photocard driving licence for all directors or owners

• Proof of address: Recent utility bill or bank statement (usually within the last three months)

• Business details: Registered business name, trading address, and contact information

• Company registration documents: For limited companies, a Companies House certificate of incorporation and registration number

• Details of directors and shareholders: Including anyone owning 25% or more of the business

• Nature of business activities: A brief description of what the business does and expected turnover

• Initial deposit: Some banks may require a minimum opening balance

Compare business accounts with MoneySuperMarket

MoneySuperMarket makes it easy to review business accounts side by side. Some accounts come with accounting tools built in, while others work seamlessly with popular external software.

By comparing fees, features and software integrations in one place, you can quickly find an account that suits your business needs and the way you manage your finances.