Business bank accounts – A comprehensive guide

UK Finance has collaborated with UK banking providers to provide a list of requirements before applying for a small business bank account.

These regulations apply only to established enterprises with a revenue of less than £6.5 million, a clearly defined ownership structure, and all owners residing in the United Kingdom.

UK Finance recommended that you prepare the necessary paperwork in advance. The majority of current company accounts suppliers will be seeking a few crucial pieces of information.

A single document establishing your identity:

• Your complete and valid the United Kingdom or foreign passport
• Your picture identification card for national identification
• Your complete paper driving licence in the United Kingdom
• Your entire UK or foreign photo card driver’s licence, issued by a member state of the European Union or the European Economic Area.

One document establishing your residence in the United Kingdom:

• Your complete UK driver’s licence; Your full UK or foreign driver’s licence photocard issued by an EU or EEU member state;
• Bank or credit card statement from the United Kingdom or a foreign country (must be less than three months old and not printed from the internet);
• Mortgage statement from the United Kingdom (less than 12 months old and not printed off the internet);
• The council tax bill, payment book, or certificate of exemption (must be less than 12 months old);
• A utility company’s letter or bill (less than six months old, avoid mobile phone bill).

You will need the following:

• Your registration number with Companies House (if you have one)
• Information about your firm includes revenue, tax information, and other capital.
• All company directors or partners’ personal information, including their name, date of birth, address, and National Insurance number.
• You may work your way through this guide on UK Finance to ensure that you fulfil all of the criteria.
• After assembling your papers, it’s time to choose an account. We’ve compiled a list of some of the most popular options on the market.

Standard Banks

To give you a sense of what to anticipate, we’ve compiled a list of the finest business bank accounts available in the UK, including each provider’s core small company features.

Best bank accounts for small businesses in 2022

Barclays

Barclays provides business accounts for start-ups and established businesses.

With the Start-up Business Account, you’ll get 12 months of free banking. Additionally, get professional coaching from Barclays’ Business Direct team throughout the first months to assist you in growing. They’ll assist you in developing your company plan, determining your cash flow management and forecasts, and guiding you through the process of financing and trading internationally.

Accounts for more established firms are offered to those with £400,000 in annual revenue or between £400,000 and £6.5 million in annual revenue. You’ll get a monthly loyalty award — a percentage of the charges incurred on your account will be reimbursed depending on your yearly credit turnover.

In terms of payment plans, both provide a mixed payment option that is ideal for firms that make and receive payments by cash, checks, or a combination of these methods – this plan is £8 per month. There is also e-payment, which costs £8.50 per month, for customers who get electronic payments and make payments using online banking and debit cards.

The Co-Operative Bank

Business Directplus

The Co-Operative Bank provides all conventional high street banking services, including branch and online help, a UK-based telephone support staff, and a mobile app. However, its primary distinction is its ethical business practices and carbon-neutral certification.

Plus, Business Directplus provides access to the Co-proprietary Op’s invoicing and payment application Incoming and merchant payment services provided by Fiserv.

New Business Directplus clients who maintain a balance of at least £1,000 qualify for 30 months of free banking with no monthly fee. At any moment, if your balance goes below £1,000, you will be charged £7 each month.

HSBC

HSBC offers two choices for lone traders and limited company directors.

Kinetic HSBC

HSBC Kinetic is a mobile business banking application targeted at limited companies with a solitary director shareholder registered with Companies House and lone traders.

This business account is accessible through Android or iPhone users through a smartphone app.

Features

• Debit Card
• Fixed or unfixed your card if you misplace it.
• Make in-app payments of up to £25,000 every day.
• Transactions are automatically classified to assist with budgeting.
• Establish and manage Direct Debits, standing orders, and recurring payments.
• Mobile or desktop access
• Accounts de crédit et d’epargne (subject to eligibility and application)
• A snapshot of your HSBC Kinetic account’s monthly cash flow
• Insights that may assist you in managing your money more effectively
• In-app application for an overdraft of up to £30,000

HSBC Small Business Banking

A more typical small business bank account from HSBC, designed for single traders and limited firms with up to £2 million in annual revenue.

Features:

• 12 months of no-cost banking
• Debit Visa card
• Loans between £1,000 and £25,000
• Commercial Visa card with overdraft protection – no yearly charge for the first year
• Secure online banking, including the ability to scan and deposit your checks, is available via Business Banking. App for mobile
• Banking available 24 hours a day, seven days a week Syncs with Sage accounting software
• Payments in over 60 currencies

After the original 12-month free banking term ends, the HSBC Small Business Banking Account costs £1.50 more per month than its smartphone-friendly sister account, the HSBC Kinetic. In our opinion, if you’re already comfortable with an Android or iPhone, it makes sense to embrace mobile banking.

Lloyds

Lloyds’ Start-Up and Small Business Accounts are designed for firms with annual revenue of up to £3 million. Customers that are a start-up or small company get 12 months of free everyday banking, regardless of whether they are switching or creating a new account. It accepts free electronic payments and has a straightforward price structure. Once the free banking time expires, the monthly price is £7.

Additionally, Lloyds provides a three-month free trial of its Business Finance Assistant online accounting solution to new clients.

Bank Metro

Along with bank accounts for bigger firms, Metro Bank offers a dedicated account for start-ups and small to medium-sized enterprises (SMEs) with less than £2 million in revenue.

Metro Bank will eliminate your monthly account maintenance charge if your balance remains over £6,000 for the whole month. Otherwise, the monthly fee is £6. If you maintain a balance of £6,000, you will get 30 fee-free UK transactions each month, with any further transactions costing 30p. Accounts with a balance of less than £6,000 will be charged 30p for each UK transaction.

Metro Bank also offers a free year of Enterprise Nation business help.

NatWest

Business Start-up Account

The Start-up Business Account is offered to firms that have been in operation for less than one year and generate less than £1 million in revenue.

The account includes the standard smartphone app and online banking, but what sets it apart is the complimentary mentoring offered by NatWest to fledgling businesses, whether through its Business Builder digital tool or its NatWest Accelerator programmes for start-ups in today’s high-growth (digital) climate, fintech, and purpose-driven sectors.

The NatWest Start-up Business Account includes a complimentary subscription to the FreeAgent accounting software for all business clients.

There are no transaction costs for the first year and a half, followed by ordinary transaction fees. However, there is no monthly fee associated with a Start-up Business Account.

NatWest, like HSBC, offers a mobile-first banking app called Mettle (more details below). It does not charge a monthly fee or a minimum transaction cost. It is appropriate if you are an alone trader or a limited corporation with two shareholders.

Business Bank Account

The NatWest Business Bank Account has all of the benefits of the Start-up Account and a dedicated relationship manager.

Again, no monthly fee is charged, but typical transaction fees apply.

Along with access to the Entrepreneur Accelerator programmes and complimentary FreeAgent accounting software, you can apply to join Bankline via the Business Bank Account, a one-stop-shop dashboard that provides an overview of activity with sign-on for multiple users, providing a real-time view of your bookkeeping – ideal for businesses with a high volume of transactions.

RBS

Start-up Bank Account

RBS’s Start-up Bank Account is similar to that of its sister bank NatWest, except it gives two years of free banking without transaction fees, rather than 18 months.

Along with standard online and mobile banking, the RBS Start-up Bank Account includes Tyl, NatWest’s in-house small company payments system.

Business Account

Aimed for firms that have been in operation for at least a year, RBS Business Account is similar to sister bank NatWest’s Business Bank Account. It offers 24/7 online, telephone, and mobile app banking, no minimum monthly fee, and a dedicated relationship manager.

Once again, FreeAgent provides free accounting software, access to the Enterprise Accelerator Program, and multi-account administration through Bankline.

Santander

Santander offers a variety of current account choices.

Business Current Account

This one is available to businesses that have been operational for less than 12 months and are establishing their first business current account with Santander.

It includes a negotiated overdraft of up to £25,000 on an unsecured basis. To be qualified, you must have a clean credit history and have not been declared bankrupt or entered into an IVA within the last six years. Additionally, you cannot have been an ineligible director of a failing firm within the same period.

After the first 18 months, the account costs £7.50 a month, with a monthly cash deposit limit of £1,000 and a fee of 70p for each £100 put more than this limit.

Additionally, you may provide access to your account to coworkers to assist you in managing your business’s finances.

There is no minimum or maximum opening deposit or balance requirement to begin.

1|2|3 Business Current Account

The 1|2|3 Business Current Account’s primary selling point is the cashback. Cashback is determined on the basis of the money you put into your account each year and will range between 1-3 per cent. This cashback will be credited to your account on the first £10,000 placed into it each year.

That’s 1% on sales of less than £200,000 – you’ll get up to £100 in cash back per year; 2% on sales of £200,000+ (£200 cashback per year); and 3% on sales of £300,000- (£300 cashback per year).

Apart from that, it is quite similar to the Business Current Account.

Whether you choose the start-up or switcher deal, you’ll pay a monthly cost of £5. After the first 18 months (12 months for switchers), you’ll be transferred to the £12.50 account, which likewise has a £1,000 monthly deposit limit and a fee of 70p for £1000 beyond that maximum.

TSB

Business Plus Account

TSB’s Business Plus account includes six months of complimentary business banking for sole traders, partners, and directors. Whether you’re moving banks or creating a brand-new account makes no difference.

Following that, you’ll pay £5 per month, which will be waived if your average monthly balance is £10,000 or greater.

If you prefer to bank in-branch, over 300 TSB locations around the UK.

The account includes a free Square reader, and there are no costs associated with the first £1,000 in transactions.

Additionally, TSB Company Plus includes business advice and assistance through Enterprise Nation and Funding Options.

Virgin Money

M Account for Business

The M Account for Business is a no-fee account for firms with less than £1 million annual revenue. It also includes free day-to-day internet banking.

M Account for Business clients gets cash back when they use their debit card for business purposes. They will earn 0.25 per cent cashback with no limit. Currently, an introductory offer of 0.35 per cent cashback is available until 31 January 2022 (up to a maximum of £500).

The M Account for Business has an optional 12-month overdraft called Planned Borrowing, which has a borrowing maximum of £1,000 per transaction. The Annual Interest Rate (EAR) on Planned Borrowing is anticipated to be 9%. (8.5 per cent per annum over the Bank of England base rate).

Business Current Account

Virgin Money Business Current Accounts are intended for enterprises with £6.5 million in annual revenue. It provides 25 months of free daily banking, after which a monthly fee of £6.50 is charged.

Along with the typical online banking facilities for managing your account, you may receive 0.35 per cent cashback on direct debit transactions, discounts on business purchases, and additional savings when using your debit card at participating merchants.

A monetary limit of £250,000 per year is applicable (whether paid in, paid out, or exchanged.

Platforms digitales

Naturally, a few new digital banking systems have emerged in recent years. Here’s a brief rundown of their most noteworthy qualities.

2022’s best digital banking systems

ANNA

ANNA is available to any resident of the United Kingdom who is a director of a limited company or a non-limited firm organised as a partnership or sole trader.

It takes three minutes to get started, and you’ll get a personalised homepage with a link that you can include in your online profiles or give straight to someone. Additionally, you may provide your staff with their debit card with a spending limit, which will automatically manage their costs.

You may create unlimited direct debits, as well as scheduled and recurring payments, for free.

ANNA offers two options geared at single traders and small businesses: a pay-as-you-go tariff that charges per transaction, such as 20p for sending money in or out, or a Business plan that costs £14.90 per month + VAT and bundles £35 of free activity before adding transaction fees. Prices in their entirety may be seen here.

CardOneMoney

CardOneMoney (previously CardOneBanking) is a more traditional financial institution. It utilises SMS notifications to confirm when money is deposited in your account and when bills are paid. Additionally, you may check your balance through SMS messages.

The account is designed for single traders, limited corporations, and partnerships with combined annual revenue of £2 million.

Add an extra four prepaid corporate MasterCards linked to your company account. Additionally, you may export statements to a cloud-based accounting network.

Simply bear in mind that this is also not covered by the Financial Services Compensation Scheme.

The monthly rent is £12.50, with a £55 application fee.

Cashplus

Cashplus claims that applying takes as little as four minutes and that opening an account takes just seconds.

This is an excellent account if you currently have a small crew — you may add up to twenty extra business expenditure cards for your workers to use.

To assist with cash flow, get a company cash advance and connect it with online accounting software.

Cashplus offers a specialised draft service. The draft is a low-cost credit limit automatically tied to your account if you run out of cash. While your yearly cost covers consumption, there is also a fixed daily usage charge.

The account’s yearly cost is £69.

Countingup

Countingup is a newcomer to the mobile banking space.

Its company service includes automated accounting, professional invoicing, and receipt scanning, as well as tax calculation and filing. Notes and attachments may be added immediately to transactions, or you can remind yourself to seek tax reduction on the purchase.

This is a suitable option if your firm is situated in the United Kingdom since this account does not allow you to send or receive overseas payments. Countingup intends to include this functionality in the future.

All accounting elements, such as receipt capture and tax estimation, are included in all accounts.

After a three-month free trial, the price structure is as follows:

• £3 each month if you deposit at least £750
• If you deposit between £750 and £7,500, you will pay £9 each month.
• £18 per month, no deposit required

But, self-employed individuals are restricted to £50,000 in their accounts, while limited business accounts are limited to £120,000.

Mettle

Mettle is a subsidiary of NatWest but operates independently. This means you cannot contact NatWest and request assistance with your Mettle account.

If you’re a lone trader or a limited business with up to two owners, you’re able to apply, but you must have a balance of less than £100,000 (or £50,000 for sole traders).

Among the key features is the ability to produce and send invoices immediately from your smartphone, complete with your business branding. Notifications will inform you when your account has been credited. However, you will be responsible for matching the payment to the outstanding invoice.

Again, it falls short in terms of pursuing past-due bills. It will notify you when an invoice is a past due, but you must follow up with the customer yourself.

In terms of transactions, you may manage recurring payments, attach receipts to transactions, and export your spending data directly from the app.

Apart from that, you may sync your account with FreeAgent, Xero, or QuickBooks or export data to CSV for use with other accounting software.

A critical points to bear in mind is that the application is not protected by the Financial Services Compensation Scheme (FSCS). The account, however, is subject to the FCA’s protection standards and associated rules. The goal of safeguarding is to preserve and restore consumer funds in a business failure.

Mettle is completely free to use and join.

Monzo

Monzo is the newest digital banking platform to include corporate banking capabilities. If you are a sole trader or a director of a registered limited company by shares, open an account (Ltd). For limited businesses, multi-user access is offered. Simply keep in mind that you must first have a personal Monzo account before applying for a business account.

Certain sorts of companies are not eligible for accounts. However, this may change in the future.

To help combat financial crime, you can deposit between £5 and £300 in cash in a single transaction and up to £1,000 every six months.

Monzo connects with Xero, FreeAgent, and QuickBooks in terms of functionalities. Monzo Business Pro offers new Xero customers six months of cloud accounting software for free when they sign up for the Business Pro account. Additionally, it has a Tax Pots function, which allows you to set away a portion of your earnings for tax purposes each time you are paid. Additionally, you may want to be alerted once you are paid.

The price structure is two-tiered: Lite includes the essentials, but for advanced features like integrated accounting and Tax Pots, you’ll need to upgrade to Pro for £5 per month.

Revolut

Revolut is an excellent option for company owners that travel and do business internationally. Customers can store, trade, and transfer more than 28 currencies at a real-time exchange rate.

You may issue actual and virtual cards and monitor the spending of your workers in real-time.

Revolut includes bonuses and advantages from Apple, Google Ads, Deliveroo, and Samsung.

In terms of the accounts you have:

• Free (£0 per month)
• Develop (£25 per month)
• Sliding scale (£100 per month)
• Enterprise (tailored – contact Revolut)
• Freelancers may sign up for a free account (£0 per month), a Professional account (£7 per month), or an Ultimate account (£25 per month).

Starling Bank

Suppose you are a sole trader, the owner of a limited company, a limited liability partnership, or a member of a limited company with several owners. In that case, you may create a Starling Bank business account.

There are no monthly fees associated with this account, and it includes an overdraft. You may apply for an overdraft of up to £150,000 if you own a limited business. For £7 per month, you can add a Company Toolkit to enhance your business’ capabilities. Additional options include invoices and auto-matching, email connectors, and transaction-level VAT recording. Additionally, a euro business account (£2 per month) and a US dollar business account (£5 per month) are available as add-ons.

Cash deposits of up to £20,000 are accepted at Post Office locations around the nation. It will cost you £3 per deposit.

Your Starling Bank business account may be integrated with Xero, FreeAgent, or Quickbooks.

Tide

Tide offers a variety of account types.

The free Tide account includes payment scheduling and access to Quickbooks, Xero, and Sage. The Plus account (£9.99 per month plus VAT) offers one complimentary expenditure card for each member of your team, as well as up to twenty complimentary transfers every month. The Cashback account (£49.99 per month) includes all of the benefits of the Free and accounts, plus 0.5 per cent cashback on your Tide card and a personal account manager.