UK
  • Singapore
  • Hong Kong
  1. Osome Blog UK
  2. A Guide to Opening Your First Business Bank Account in the UK

A Guide to Opening Your First Business Bank Account in the UK

If you are a small business owner, you are not required legally to have a corporate bank account. However, opening your corporate bank account has its advantages and can help you keep your accounts clean. Thankfully, it is rather effortless to open a corporate bank account, with many options for you to choose from.

We love that you’re taking steps to grow your business. If you’re looking to unload the boring routine of bookkeeping and accounting for your UK e-commerce business, let us help you with that. Meanwhile, read on.

Here’s what you need to know.

What Are The Types Of Company Structures In The UK?

How do you decide which suits you best?

Find out more detail on how to decide which company structure to choose.

In the UK, the company structures that are legally accepted include:

  • Sole trader
  • Partnership
  • Limited Liability Partnership (LLP)
  • Limited Liability Company (Ltd)

The specific details regarding company structures vary across the UK, so be sure that you are clear of your region’s rules and regulations.

When Do I Need a Business Bank Account?

If you have yet to start a corporate bank account, you should consider doing so especially if:

  • Your company is processing a high volume of transactions
  • You want to obtain a business credit card
  • You are looking to get a business loan
  • You want to accept card payments from your target audience
  • You have the intention to incorporate your company as a limited company
  • Your business expenses and income are getting more complex and you want to simplify things when completing your self-assessment for tax season

The Advantages Of Having a Corporate Bank Account

Separating your business finances from your personal finances can benefit your company in the long run.

Here are the 4 main advantages of having a corporate bank account:

  1. Maintain Professionalism

With a dedicated corporate bank account, your company will appear to have more credibility as your customers make payments to your business account rather than your personal account.

  1. Simplify Administrative Work

As your business grows throughout the years and oversees important milestones including office space rental and staff employment, these bank statements will be reflected more clearly in a corporate bank account that is not combined with your personal one.  

Additionally, with a corporate bank account, you don't have to waste extra time sorting out your personal expenses from your business ones, and the time saved can allow you to manage your business budget and finances in a more efficient manner.

  1. Build Credit Rating

When the need to apply for a business loan arises, having a corporate bank account can help you build a credit history for your company. When considering your eligibility for a business loan, many banks will look at your credit rating.

  1. Keep Things Simple For HM Revenue & Customs

When tax season comes, having a corporate bank account makes it much easier for you to maintain records and submit your tax returns. When filling up your tax return, you are required to inform HM Revenue & Customs (HMRC) of the amount of money your company has earned. You are allowed to deduct certain allowable expenses (e.g. office costs and travel costs) to work out your taxable profit.Ift you use only one bank account for both your personal and business costs, it can be challenging to accurately work out these calculations.

Corporate Bank Account Vs. Personal Bank Account

Similar to your personal bank account, your corporate bank account can also offer the basics from cash and cheque handling, issuing a debit card, to an overdraft. You can also set up standing orders and direct debits, with your corporate bank account paving the way for your business to build credit rating for potential loans, obtain a business credit card, and receive payment from clients.

However, a corporate bank account typically requires a monthly fee of around £5 to £8 to maintain, with additional fees needed for transactions such as cheque deposits. Nonetheless, most business banks provide an initial fee-free duration of one to two years following your corporate bank account opening.

What Are The Required Details And Documents To Open a Business Corporate Bank Account?

For companies opening a corporate bank account in the UK, the procedure is fairly simple so long as you adhere to the eligibility criteria. You will need to have these documents ready:

  • Proof of address in the form of a recent bank statement, utility bill or council tax statement
  • Proof of ID. All named company directors will require this. This can be in the form of a photo driving license, national ID card or passport.

You will also have to furnish your company details, including:

  • Full company address (including postal code)
  • Approximate annual turnover
  • Registration number with Companies House (for limited companies and partnerships)
  • On a case-to-case basis, you may even be required to show your personal financial situation with documents to prove that your credit and banking history is clean

Can I Open a UK Corporate Bank Account With a Foreign Entity?

It can be challenging to open a corporate account in the UK for a foreign entity. If you are banking with a global institution from your region, it may be worth checking if they could assist in creating an account for you with their business in the UK.

Otherwise, HSBC is known for extending help to smaller international businesses, but this would depend on your case.

Which Are The Best Corporate Bank Accounts In The UK?

Which services can you open corporate accounts with?

There are many services to choose from, from well-known banks to money transfer companies.

With a variety of banking options available, consider your business needs before you decide on the best corporate account that will serve your requirements. While the UK has its own 'big four' including HSBC, NatWest, Lloyds Banking Group and Barclays, these may not be the best option for your business. Instead, keep an open mind and also consider the newer banks including Starling Bank or Metro Bank, or even international money transfer companies such as Wise.

The Big Four

Bank Features
HSBC
  • A global bank with 4,400 offices in more than 7 countries
  • 1,100 branches around England, as well as Wales
  • Corporate accounts offered to sole traders, partnerships, limited companies and charities
  • Variety of corporate bank accounts available
  • If you already bank with HSBC in your home country, they are able to help you create an account in the UK prior to your arrival
  • Companies with a turnover of up to £2 million will get an annual review to make sure their business receives the best standard tariff
  • Account fees are £5.50 per month but waived for a period of up to 18 months for new customers
NatWest
  • 1,400 branches across the UK
  • 4 business accounts are available depending on your company’s size
  • NatWest’s Select current account comes with a standard contactless Visa debit card and is free to use
Lloyds Banking Group
  • Approximately 1,300 branches across the UK
  • Corporate accounts offered to sole traders, partnerships, limited companies and charities, with an annual turnover of up to £1 million
  • Three business accounts available, with a variety of tools, such as accounting software and reduced-price legal assistance
  • Account fees are £6.50 per month but waived for a period of up to 18 months for new customers
Barclays
  • 1,500 branches across the UK
  • Corporate accounts offered to sole traders, partnerships, and limited companies
  • Free to use, with a standard contactless Visa debit card
  • Corporate account is free for first year, with financing options available
  • Account fees are £6 per month but start-ups can get fee-free banking on a case-by-case basis

Newer-Established Banks & Alternatives

Bank Features
Starling Bank
  • Corporate accounts offered to partnerships and limited companies
  • £0 monthly fee, free to send money within the UK by Faster Payments, Direct Debits and Standing Orders, £20 fee for each CHAPS payment
  • Fees are applicable to send money outside the UK
  • Free to receive Sterling pounds from both within and outside the UK
Metro Bank
  • Free monthly account fee if you maintain your Business Bank Account above £5000 monthly
  • Need to be aged 18 or over and have a turnover and/or annual balance sheet total that does not exceed £2 million
  • If you are a sole trader you need to reside in the UK to open an account
Wise
  • Opening a corporate account is free
  • You could hold up to €70k before incurring a 0.40% charge annually
  • Allows you to hold money in 55+ currencies

Things To Consider When Choosing a Bank

The features of corporate bank accounts vary depending on the chosen product offered. Before you choose your provider, here are some considerations:

Initial Fee-Free Period

Many providers provide a duration at the start of your corporate account opening when you are not required to pay any standing fees on your corporate bank account. Make sure you are also aware of the fees you will incur after the initial fee-free period, as it can be time-consuming to change your corporate bank account at a later stage.  

Personal Adviser

Having a personal adviser you can contact directly is especially useful since this specialist understands your business needs and can provide you with a personal experience. They are also able to explain your corporate account’s features and the loaning options available to you.

However, some online-only corporate accounts do not offer a personal adviser. Thus, if you are starting a new business or emphasise the need for readily available advice, it may be worth applying for a corporate bank account from the Big Four.

Bank Charges

Most corporate bank accounts charge a monthly fee, as well as extra fees for other transactions including cheque deposits. Basic accounts typically cost between £5-10 per month, while the more expensive and feature-rich corporate accounts can set you back upwards of £40 per month.

Overseas Transactions

If you transact with foreign customers, you will have to set up a corporate bank account that can carry out foreign currency transactions. Remember to check on this before you sign the document if this is a non-negotiable service for your business.

Insurance

Starting your own business always involves some risks, including incoming and outgoing missed payments. Luckily, some banks provide insurance at an additional fee, which can be a load off your mind if your borrower defaults on payments. Before you sign the documents for any corporate banking products, be sure to understand the coverage level offered by your provider.

How Long Does It Take To Open a Corporate Bank Account In The UK?

This can range from three weeks to three months for your corporate bank account application to be approved, followed by the subsequent meetings.

However, some providers such as Metro Bank allow you to walk in and make an appointment on the same day. Alternatively, opening a corporate bank account with Wise can be even faster. You can simply create an account in a matter of a few minutes, and your corporate account will generally take between two to five working days for verification.

Focus on Your Business and Leave the Rest to Us

We know how challenging it can be to run a business, but we are here to help. It is not always easy to stay on top of things with so much going on. Fret not and leave the pesky paperwork to us.

Free yourself from the admin work and let us handle your company's accounting, taxes and reports. We take over paperwork, cross-check data, and submit your annual reports neatly. You will also have advice from experienced Chartered Accountants to help pay tax efficiently. Got any questions? Chat with us today!

Share this post:

Tips to run your business smarter.
Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

You might like it

Running My Business

Should I Close My Company or Make It Dormant?

Choosing between closing your company for good and making it dormant is a huge decision to make. Before taking that step, get to know what the consequences are for each decision. We’re here to help.

E-commerce

Shopify Plans And Prices Analysis: Which Is The Best?

When you start an online business, you will definitely require a platform like Shopify for you to perform basic business operations. This article helps you to see which Shopify plan is best for the stage of the business you’re at.

Entrepreneur's Bootcamp

Tips To Maintain a Compliance Calendar

The repercussions of missing crucial deadlines extend beyond non-compliance and can even include hefty fines, lost revenues and opportunities, as well as decreased productivity.

E-commerce

How Amazon Sellers Can Better Manage Inventory To Improve Sales & Cashflow

Brand owners and sellers of all scales struggle to seek a well-balanced supply chain. Additionally, Amazon has its own inventory management rules, which makes everything even tougher.

E-commerce

10 Best Hosting Providers for E-commerce in 2021

If you are looking to sell online, the right e-commerce hosting provider can make all the difference. However, with a variety of options out there, choosing the best provider can be confusing.

E-commerce

What an Invoice for E-commerce Businesses Needs To Have

For business owners who own and run an online store, you probably already know that invoices must be sent to your customers for the services you provide or the goods you sell, as a form of purchase proof.

Incorporation

How New Company Owners Should Prepare Financial Statements

After you register your company, you may want to start thinking about your company’s finances such as monthly income, expenses and taxes because UK company owners need to submit their company’s annual accounts to Companies House.

Incorporation

What Are the KYC or Know Your Customer Checks In the UK When Opening a Company?

KYC checks are needed for the authorities to combat money laundering and terrorism financing. You might unwittingly partner up with clients who are using their business relationship with your company to launder money or facilitate other nefarious projects.

Brexit

OSS or IOSS? VAT One-Stop-Shop Rules for E-commerce in the EU

Since July 2021, the European Union’s (EU) existing VAT rules have been replaced by two new alternatives: the One-Stop-Shop (OSS) scheme, and the Import One-Stop-Shop (IOSS) scheme.

E-commerce

Top 8 Features You Need On Your Online Shop To Increase Conversion Rate & Average Order Value

Every e-commerce merchant wants to increase their sales conversion rate and boost their average order value. But not everyone goes about it the right way. However, if getting more conversions was easy, everyone would be running a super-profitable store, right?

E-commerce

A New Seller's Guide to E-commerce Fulfillment & Shipping

Ecommerce fulfilment and shipping for your UK-based business matters. This guide unpacks how the right strategy can influence your bottom line and help you find what’ll work best for you - whether it’s in-house fulfilment, dropshipping or a solid partnership with a 3PL.

Amazon

4 Steps How To Succeed In Private Label Sales On Amazon

One of the most common mistakes Amazon private label sellers make is that they just assume they can sell and make money easily when they start private labelling. Learn from Amazon sellers who have tried.

Tips to run your business smarter. Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

We’re using cookies! What does it mean?