How to open a business bank account

Key takeaways

• To open a business bank account, you'll need to choose a provider, prepare your documents and complete its checks

• Limited companies must keep business and personal finances separate, while sole traders aren't legally required to have a business account

• You should look at fees, features and your business’s eligibility before applying, as requirements and overall costs can vary between providers

How do I open a business bank account?

You can open a business bank account by choosing a suitable provider, gathering your documents and completing an application. Many providers let you apply online, although the process depends on your business and the account you choose.

1. Compare business bank accounts: Look at fees, features and eligibility requirements to find an account that suits your business

2. Check your eligibility: Make sure the provider accepts your business structure, whether you're a sole trader, partnership or limited company

3. Gather your documents: Prepare identification, proof of address and any business information the provider requests

4. Complete your application: Submit your details online or through the provider's application process

5. Wait for approval: The provider will check your information and may request additional documents before opening your account

Once approved, you'll receive your account details and can start setting up payments.

When do I need a business bank account?

Whether you need a business bank account depends on how your business is structured:

• Sole traders: You aren't legally required to have a separate business bank account, but it can make bookkeeping and tax returns easier

• Ordinary partnerships: You generally don't need a separate account by law, although it can help you manage shared business finances

• Limited companies: You must keep company money separate from your personal finances because the company is a separate legal entity

• Limited liability partnerships (LLPs): As separate legal entities, LLPs must keep their finances separate from those of their members

Even if you aren't legally required to open one, your personal bank's terms may prevent you from using your existing account for business transactions. Read our guide on whether you need a business bank account for more information.

What do I need to open a business bank account?

You'll usually need proof of identity, personal and business details, and information about your business activities. Exact requirements depend on the provider and your business structure, but common requirements include:

• Proof of identity: You can use a valid passport, driving licence or other accepted identification

• Proof of address: Such as a recent utility bill, bank statement or another document accepted by the provider

• Business details: Usually this means your business name, address, contact information and trading activity

• Financial information: You may need to provide your estimated turnover, income or existing business finances

• Tax and registration details: Finally, you’ll need your Unique Taxpayer Reference (UTR) or company registration number, if applicable and requested by the provider

Some providers may also ask for a business plan, contracts or evidence of trading - however, you won't necessarily need all these documents, particularly if your business is new.

What if I run a limited company or partnership?

You might need to provide additional information about the people who own, manage or control your business. For a limited company, this could include your Companies House registration number, certificate of incorporation and details of directors and shareholders.

Providers may also request information about beneficial owners - these are people who ultimately own or control the business, even if they don't manage its day-to-day operations. Partnerships may need to provide details of each partner and information about who is authorised to operate the account.

How do I choose a business bank account?

The right business bank account depends on your business's size, how you receive payments and which banking services you use. It's worth comparing more than the advertised monthly fee, as transaction charges and additional services can affect your overall costs.

For example, an account charging £5 a month plus 20p for each of 30 transfers would cost £11 a month, while an account with no monthly fee but a 40p charge for each transfer would cost £12. These figures are hypothetical, but they show why it's worth comparing your likely total costs rather than focusing on monthly fees alone.

If you receive payments from abroad, you should also look at international transfer fees, exchange rates and whether the provider supports multiple currencies. You can compare business bank accounts with MoneySuperMarket to explore available options, review their features and find an account that suits your needs.

What happens after I apply?

After submitting your application, the provider will check your identity and business information before deciding whether to open your account. These checks may include verifying your business registration, reviewing ownership details and confirming where your money comes from.

Some providers may also carry out credit checks, particularly if you're applying for borrowing facilities.

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

Some accounts can be opened quickly online, while others take longer if the provider needs additional information. Approval times can vary, so check with your chosen provider.

What if my application is delayed or declined?

If your application is delayed, the provider may need more information or documents - make sure that the details you've submitted match your identification and business records.

If you're declined, ask the provider whether it can explain why - limited trading history, difficulties verifying your identity or address, and credit concerns can all affect your eligibility. You could consider another provider with different requirements, but you should look into its eligibility criteria before submitting a new application.

How is money in a business bank account protected?

Eligible deposits held with UK-authorised banks are protected by the Financial Services Compensation Scheme (FSCS), up to £120,000 per eligible depositor, per authorised firm.

For limited companies, business funds can be protected separately from the owner's personal savings.

Sole traders are treated differently, with personal and business deposits held under the same banking authorisation generally counting towards one protection limit.

Some business accounts are provided by payment or e-money firms rather than banks, but money held with these non-bank providers isn't covered by the FSCS. Authorised payment and e-money institutions generally have to safeguard customer funds instead, but recovering your money could take longer and you might not receive it all if the provider fails.

Before opening an account, check which company holds your money and what protection applies. You can find out more from the FSCS and the Financial Conduct Authority (FCA).

What should I do once my account is open?

Once your account is open, there are a few things to set up before you start using it:

• Arrange payments: Set up Direct Debits, standing orders and other regular business payments

• Share your details: Give customers, clients and suppliers your new account information where needed

• Connect your accounts: Link accounting or bookkeeping software if your provider supports it

• Keep track of transactions: Check your statements regularly and organise your records for tax and accounting purposes

If you're moving from another business account, check which payments and services need updating before closing the old one. Some providers offer switching support, but what transfers automatically depends on the switching arrangement.