Do I need a business bank account?

Managing payments is an essential part of running a business. While you need an account for this, it doesn't have to be from a traditional bank, as non-bank providers also offer business accounts with valuable features and benefits.

Traditional business bank accounts often come with high fees, slow processing times for international transfers, and limited software integration capabilities.

In contrast, non-bank providers like Airwallex can provide lower fees, fast international transfers, and additional capabilities that can streamline and enhance your financial management. When considering a business account, it’s worth exploring alternatives that may better suit your business needs.

Five benefits of using a business bank account in the UK

As a sole trader starting out or growing your business, you might not need a separate business bank account - although, it can make a lot of sense. Having a dedicated account for your business that’s used to manage all business-related transactions can help:

1. Boost credibility: First impressions matter. A dedicated business account shows suppliers and customers that you're serious about your business. It helps present a professional image and build trust with your suppliers and customers.

2. Organise financial records: Combining personal and business transactions can make bookkeeping unnecessarily time-consuming and complicated. Using one account for all business-related transactions helps simplify this process and reduce errors.

3. Simplify tax time: Organised bookkeeping makes a big difference at tax time by making it easier for you and your accountant to collect financial information. Linking your business bank account to your accounting software can further automate this process. Consult your accountant for more details on potential tax implications.

4. Track performance: Keeping an eye on cash flow is vital for any business. A business bank account makes it easier to track, monitor, and manage your income and expenses. With regular reviews, you can make quick adjustments to your business that help keep you on track with your targets.

5. Support loan applications: If you think you’ll want credit or a loan for your business, you’ll need to provide evidence of your business financials and cash. A dedicated business bank account can help build that evidence and a credit rating separate from your personal profile.

How to choose the right business bank account in the UK

With so many business banking options from the big four and challenger providers, finding the right one for your business can feel overwhelming. To help choose the best fit for your business, there are some key questions you need to consider.

What are your specific needs?

Start your search by thinking about what your business needs from a bank account now and in the future. Ideally, your bank account will accommodate your business as it grows and evolves. Here are some key things to consider:

• Transaction type and volume - If your business deals with cash, you may need a bank with nearby branches to make deposits. If you operate mostly online, mobile apps and a reliable online banking system might be more important.

• Global payments - Trading across borders requires additional services to help you manage international transfers, foreign exchange rates, and payment workflows.

• Customer support - Customer support from your bank can impact the service you provide to your customers. Having access to 24.7, responsive service can help you quickly address any issues and minimise the customer impact.

Identify the types of transactions and services you need and use this as your key criteria when reviewing features across different bank accounts and alternatives.

What fees are involved?

Different business bank accounts and alternatives offer various fee structures, including monthly charges, transaction-based fees, and foreign transaction fees for global business activities. It's important to consider these fees carefully and choose an account that aligns with your business needs to avoid unnecessary costs.

Learn more about foreign transaction fees and how they can impact your business.

How easy is it to use?

While fees and features are important, service and convenience are also important, as they can impact both your bottom line and the customer experience. Things to look out for include:

• Customer service via a channel and times that suit you

• Mobile app navigation and features

• Software integration capability

• Speed of international transfers

• Access to reporting

• Ability to support multiple users

• Capacity to hold multiple currencies

Bonus Tip: Talk to other business owners and compare business bank accounts online. Seeing what others like you think and learning about their experiences can help you make an informed decision.

What are the alternatives to a traditional business bank account?

The growth of non-bank financial services providers such as fintechs has opened up new possibilities for businesses beyond traditional bank accounts. As smaller, agile companies, they’re been able to produce innovative products and services that suit the needs of business operating in an increasingly online and global environment.

Online-only

Online-only banks or fintechs operate entirely online, making them a good option if you prefer managing your money online. They usually have lower fees and are easy to use, with access from anywhere. However, they lack physical branches and may not offer some traditional services.

Payment services

Payment services like PayPal, Stripe, and Square allow you to accept payments without a traditional bank account. These services are great for businesses that mainly take online payments because they’re easy to set up and provide quick access to funds. The downside is that they charge fees per transaction, which can add up fast if your business has a lot of transactions.

All-in-one business accounts

Non-bank providers such as Airwallex offer all-in-one business accounts that help businesses grow and operate globally. For example, our global accounts for international business payments offers multi-currency accounts, high speed international transfers, borderless cards, expense management, and online payments—all in one platform.

Benefits of using Airwallex Business Accounts

Our Airwallex Business Account is designed as an all-in-one account to help your business operate and grow globally. Within the one platform, you get access to multi-currency accounts, high speed international transfers, borderless cards, expense management, and online payments. The benefits for business operating across borders include:

• Centralised systems for all operations - With Airwallex, you can manage all your financial operations in one place. This centralisation simplifies managing payments, expenses, and other financial activities, reducing the complexity and time spent on administrative tasks.

• Flexibility to support growth - Our business accounts include flexible, scalable features designed to adapt to your business’s changing needs and support growth.

• Tech-first systems - Airwallex leverages advanced technology to create a user-friendly and efficient platform. This technology-driven approach supports seamless integration with other tools and creates a smooth, intuitive experience for managing your finances.

• Constantly evolving features - At Airwallex, we continually update features to align with the business needs of our customers. This means you’ll have access to the latest tools and services, helping you stay competitive and efficient.

The software company that ditched global banks to streamline processes with Airwallex

Bird, a leader in powering communication between businesses and their customers, has significantly enhanced its financial operations by partnering with Airwallex. Founder and CEO Robert Vis had seen the company experienced significant growth and as a result, needed a financial operations platform that could fit their changing needs.

"Airwallex is a fantastic partner for us and we’re excited to see how this partnership develops. They understand the needs of a global SaaS platform and have gone out of their way to work with us to improve how we use their services" said Robert.

With Airwallex, Robert introduced several strategic wins for the business, including:

Financial efficiency and automation: The finance team at Bird now has real-time visibility and streamlined multi-currency account management, reducing manual effort.

Improved global supplier payments: Bird can now easily make batch payouts and enhance their supplier payment procedures thanks to Airwallex's global infrastructure.

Enhanced ERP integration: Airwallex’s API integration with NetSuite enabled Bird to automate reconciliations, enhancing operational efficiency and transparency.

Partnering with Airwallex has allowed Bird to replace over 20 global banks it previously relied on, streamlining its financial infrastructure to better support its rapid global expansion and high volume of transactions.

"They’re not just a great alternative to traditional banking infrastructure, but a level up" said Robert. "Empowered by Airwallex, our Finance team can focus on what they do best, which is optimising operations and growing the business efficiently."

Making the right choice

Choosing the right business account is an important decision for your business. It can help you save money, improve customer experience, and simplify financial operations. Take your time to consider your needs, compare options, and make an informed decision. The right choice will support your business growth and make managing your finances easier.

FAQs about Business Accounts

1. I’m a sole trader. Do I need a business account?

You’re not legally required to have a business account if you’re operating as a sole trader. However, separating your business and personal finances can help with better financial management and simplified tax reporting, while providing a solid foundation to support future business growth.

2. How much money should I put in my business account?

How much you need depends on the nature of your business. Ideally, you would have enough cash to cover your short-term expenses with a buffer to cover any unexpected costs.

3. Will I get taxed more if I use a business account?

The type of account you use has no direct influence on how much tax you pay. However, clear financial records can help you and/your accountant better manage your tax obligations.