Compare the best business bank accounts

If you operate a limited company, LLP, or partnership, your business is a separate legal entity and must have its own bank account. Sole traders aren’t legally required to keep business and personal accounts separate, but HMRC recommends doing so.

Sole traders technically can, but many personal account terms and conditions prohibit business use. Even when it’s permitted, mixing business and personal transactions can complicate record-keeping and reporting, so it’s usually best to keep the two separate. 

Free accounts suit new businesses, sole traders and those with straightforward banking needs. Several digital providers offer permanently free accounts with no transaction limits on UK bank transfers. 

Paid accounts offer different advantages depending on the provider. High-street banks typically bundle branch access, lending and dedicated account managers into their monthly fee. Paid tiers from digital providers tend to focus on higher transaction allowances, cashback or reduced per-transaction charges.

Most digital providers can approve a straightforward application in minutes. Limited companies with multiple directors or businesses in higher-risk sectors may take a few days longer. High-street banks are generally slower, often taking several days to a few weeks, especially where a branch appointment or additional paperwork is involved.

Some challenger banks like Zempler Bank and providers like Tide don’t currently perform hard credit checks. Most other providers do, but a poor credit history does not automatically disqualify you from opening an account; it may affect access to lending products such as overdrafts.

CASS is a free service that lets businesses switch their bank account to another provider within 7 working days. It transfers direct debits, standing orders, salaries, and bills, while redirecting incoming payments from the old account for 36 months. Not all providers support it, so check before applying. 

FSCS protection is a government-backed guarantee that compensates eligible account holders up to £120,000 if their bank fails. Safeguarding is used by e-money institutions such as Revolut, and means funds are ring-fenced in a segregated account at a regulated bank. However, if the provider fails, there is no automatic right to compensation. This means businesses may have to recover funds through an insolvency process, which may take longer and does not guarantee a complete recovery.

There is no limit on the number of business current accounts a company or sole trader can hold. Some businesses use multiple accounts for different purposes. For example, businesses often use a high-street bank account for cash deposits and lending alongside a digital account for day-to-day payments. Each account at a separate FSCS-protected bank is covered up to £120,000 independently.

High-street banks generally offer arranged overdrafts alongside the current account, with representative APRs varying by provider. Most digital-only banks do not offer overdraft facilities. If borrowing is important to you, check whether the provider offers overdrafts before opening an account, as transferring lending products between banks isn’t always straightforward.

Most providers accept sole traders, and a few business current accounts are specifically designed for them. Eligibility requirements are typically lighter than for limited companies, with most providers needing only personal identification and basic business details to get started.

Digital banks generally have the fastest and simplest application processes. Most require only a smartphone, proof of identity (passport or driving licence) and basic business details. Digital providers can open accounts in minutes for straightforward applications. High-street banks typically take longer and may require branch visits or additional documentation.