Compare business Bank Accounts

Whether you’re a startup, small business, or large corporation, we provide comprehensive comparisons of the best business bank accounts for your business, highlighting key features like fees, limits and online tools.

Business Bank Accounts

View Deals

How to Choose the Best UK Business Bank Accounts in 2025

The UK’s digital banking scene has exploded with a mind-boggling 659% jump in users since 2018. This surge makes finding the best business bank account more significant than ever before.

Business owners generally care about costs first. Nearly half of them want accounts without monthly fees. The right account needs more than just a good price tag though. Your perfect banking match depends on what your business needs, whether you’re flying solo or running a limited company.

This piece covers everything from instant account setup to how these accounts work with “Xero” and “QuickBooks”. You’ll sleep better knowing the Financial Services Compensation Scheme (FSCS) protects deposits up to £85,000.

The perfect business bank account that lines up with your company’s needs is out there. Let’s find it together.

Understanding Business Bank Accounts

Business bank accounts work differently than personal accounts and come with features specifically designed for running a company. These accounts give you tools to track invoices, manage expenses, and make tax returns easier

What makes them different from personal accounts

Business accounts come with unique features that set them apart. You can get integration with accounting software, the ability to hold multiple currencies for international deals, and employee cards with custom spending limits. On top of that, these accounts can handle higher transaction volumes and often come with perks like free business advice and payment solutions.

Your business’s credibility gets a boost when you have a dedicated account. Clients feel more confident paying into an account with your company’s name instead of a personal one. A business account also helps build your company’s own credit history – something you’ll need when looking for loans or credit.

When you legally need one

Your company’s structure determines if you need a business bank account. Companies registered as limited, limited partnerships, or limited liability partnerships must have a separate business account. This rule exists because the law sees these business types as separate entities.

Sole traders don’t legally need one, but using a personal account for business might break bank rules. Banks often don’t allow business transactions in personal accounts and could shut down accounts that do this. Mixing personal and business money can also cause headaches during tax season and HMRC audits.

Three-quarters of self-employed people in the UK use their personal accounts for business. In spite of that, keeping separate accounts has clear benefits:

• Easier tax returns and accounting
• Better tracking of cash flow
• More opportunities to grow with specialized financial tools
• Better preparation if you get audited

Key Features to Look For

The features you choose for your business bank account can affect your daily operations by a lot. Let’s get into everything you need to think over.

Online banking capabilities

Today’s business accounts give you complete digital access through web and mobile platforms. You can check live balances and look up statements going back seven years . Some online banking platforms let you make daily payments up to £100,000. This works great especially when you have large transactions to handle.

Transaction fees and limits

Accounts usually come with charges somewhere between £5 and £10 monthly. Some banks drop these fees if you keep certain monthly deposits. The costs come in two types:

• Fixed monthly fee that includes transactions
• Pay-per-transaction model that covers cash deposits, withdrawals, and electronic payments

Businesses with many monthly transactions might find fixed-fee accounts cheaper.

Integration with accounting software

Modern bank accounts work smoothly with popular accounting platforms such as Xero, FreeAgent, and QuickBooks. These connections make bookkeeping easier because transactions and receipts sync automatically.

International payment options

International payment features need careful thought if your business works globally. You can make electronic transfers to almost any country. EU payments made before 3pm arrive the next working day. Some providers give you local account details in multiple countries. This helps you receive international payments faster.

Different providers charge different amounts for international transactions. Traditional banks might ask for up to £20+ per SWIFT transfer. Digital banks often have better rates. Many banks skip fees for EU/EEA payments when you provide correct IBAN and SWIFT/BIC details.

Choosing Based on Business Type

Your business structure determines which banking solutions work best for you. Different businesses need different types of accounts that match their specific requirements.

Sole trader requirements

Sole traders have plenty of flexibility with their banking arrangements. Though not legally required to have a separate business account, using personal accounts for business might lead banks to close your account.

A dedicated business account makes sense for sole traders, and here’s why:

• It makes tax reporting and accounting easier
• You can track business performance better
• Your business looks more professional to clients
• You’ll be ready for business growth

To open a sole trader account, you need to meet some criteria. You must be a UK resident over 18 years old. Some banks will ask for proof that you’re trading and might check your credit history.

Limited company needs

Limited companies must follow stricter banking rules. The law requires them to have a separate business bank account. This rule exists because limited companies are legally separate from their owners.

Banks need these documents from limited companies:

• Companies House certificate of incorporation
• Articles of association
• Recent director appointments
• ID proof if you have significant control
• Documents that verify company address

Limited companies can open multiple business accounts but must keep them separate from personal finances. Banks look at various factors before approval, such as your business sector risk and international trading activities.

Your account approval might take longer if you work in high-risk sectors or have complex business structures. Keeping accurate records is vital since companies must keep financial documents for six years. Poor record keeping could result in fines up to £3,000 or director disqualification.

Comparing Account Costs

Choosing the right business bank account depends on understanding the costs involved. British businesses spend about £3,700 each year on banking charges. This makes analysing costs vital to make informed decisions.

Monthly fees explained

Basic monthly fees can range from £5 to £8, based on your provider. Many accounts come with a fee-free period that last between 12-24 months. These charges become regular expenses after this period unless you meet certain conditions.

Banks might waive your monthly fees if you:

• Keep a minimum balance (like £6,000 daily balance)Hit specific transaction volumes
• Qualify for special business packages

Transaction charges

Banking services come with different transaction fees. You can typically expect to pay approximately between 70p to 90p per £100 for cash deposits and 20p to 30p for electronic transfers for each transaction.

International transaction fees usually include:

• SWIFT transfer charges.
• Foreign currency conversion fees
• Cross-border payment processing costs

Hidden fees to watch for

You need to look out for costs that aren’t obvious. Banks might charge dormancy fees if your account stays inactive too long. Paper statement fees still exist with some providers, though they’re becoming rare.

Using ATMs outside your bank’s network can lead to extra charges. This makes it important to think over your cash needs before picking an account. You might face penalties if you close your account within 180 days of opening it.

Overdraft setup fees typically range from 1.5% to 2.5% of the facility amount. These fees often come back yearly and affect your long-term costs. Digital banks are different – they usually have clearer fee structures, and some don’t charge traditional banking fees at all .

Small businesses in the UK spend £2.8 billion yearly on hidden international transaction fees alone. Get into the complete fee schedule before opening an account. The most affordable account depends on how you handle transactions and run your business operations.

Digital vs Traditional Banking

It’s estimated that 45% of UK business owners started using app-based bank accounts last year. This represents a fundamental change in business banking priorities. Business owners need to review the unique advantages of both digital and traditional banks to make informed decisions.

Benefits of app-based accounts

App-based business accounts stand out with their efficient operations and affordable solutions. Business accounts without monthly fees are a big incentive. These digital banks excel by offering:

• Real-time transaction tracking
• Automated expense categorization
• Instant payment notifications
• Digital receipt capture
• Smooth accounting software integration
• Multi-currency capabilities
• Same-day account setup

Advantages of high street banks

Traditional banks stay relevant through their resilient infrastructure and complete service offerings. Business owners often value easy access to customer service and direct adviser support. These institutions provide several unique benefits that app-based providers can’t match.

High street banks deliver specialized services that meet complex business needs. Their advantages include:

• Full-service lending options
• Dedicated business support teams
• Face-to-face consultations
• Large international banking networks
• Complete merchant services

Traditional banks provide improved security measures that strike a chord with certain business segments. Trust in high street banks tends to run higher with their long-standing presence and proven track record in handling complex financial matters builds this confidence.

Specific business requirements often determine the choice between digital and traditional banking. To cite an instance, businesses that handle cash regularly might benefit from traditional banks’ branch networks. Companies that need digital integration and real-time financial management find app-based accounts more suitable.

Both online only and traditional banks serve business needs well. The final choice depends on transaction volumes, cash handling needs, and specialised financial services requirements.

Conclusion

Choosing a business bank account needs a good look at your specific situation and company setup. Traditional banks give you face-to-face support with their 100-year old infrastructure. Digital banks bring new features to the table and usually cost less.

Your business’s unique factors will point you to the right choice:

• How many daily transactions and cash handling you need
• Whether you need international payments
• How it works with your accounting software
• What you can spend on banking fees
• How you want to access banking services

Sole traders can pick from many banking options. A separate business account makes tax reporting easier and looks more professional. Limited companies need their own business accounts. They must follow strict rules about documentation and money management.

The best approach is to compare current business bank account offers that match what you need. Note that the Financial Services Compensation Scheme protects deposits up to £85,000, however not all business accounts have FSCS protection. This depends on if the account provider is classified as a bank, so always make sure you check to see if you are covered or not. This might not be necessary for some types of banking,, if you can offset it against product cost savings or innovative solutions, but would be important if your banking requires a balance of funds to be held.

Setting up or managing a business is an exciting trip. The right banking partner can make a big difference to your success. This knowledge helps you pick an account that can propel development and meet all the rules you need to follow.

About This Information

Our articles, guides & reviews are provided as generic information only. Any expressed view, product or service mentioned within these does not constitute as financial advice or recommendation by us.

Be mindful that information may have changed since publication.