How to open a business bank account in the UK

Growing your business is an exciting time, as you’re seeing the tangible outcome of all your hard work. And as a thriving business, you need a bank account to match.

Opening a business bank account marks a step-change in your business financials. It provides a central place for your finances, keeping them separate from your personal account. You’re able to streamline how you track and manage your expenses and cash flow, making it much easier to keep tabs on your tax liabilities. Follow our easy guide to opening a business bank account in the United Kingdom.

What is a business bank account?

A business bank account usually works in the same way as a personal bank account, but is opened in the name of the business and is used solely for business transactions. Business bank accounts are a legal requirement in the UK if you wish to set up a limited company, but can also be used by sole traders, clubs, societies or partnerships.

What’s the difference between a Business Account and a Business Bank Account?

The difference between a business account and a business bank account is that the latter is provided by a financial institution that holds a banking licence, commonly known as banks (and building societies in the UK).

A business account generally refers to an account and financial solution provided by a financial institution that does not hold a banking licence but does hold other regulated licences.

Many modern fintechs, like Airwallex or Wise, have opted not to become a bank. Airwallex is able to build a business account service that covers payment collection, treasury, transfers and payouts, invoicing, expense management and cards.

Can I open a business account (from a FinTech) alongside my business bank account?

Yes. Business bank accounts are great for getting started, borrowing and moving money domestically. Many businesses quickly realise the limitations and fees associated with their business bank account as they grow - especially internationally - and soon opt for fintech providers who offer purpose-built business solutions such as international payments, invoicing, company cards and expense management. Check out SaaS business iTrinity’s experience of leaving their traditional bank.

How to open a business bank account in the UK

When opening a business bank account in the UK, in some cases major banks (HSBC, Barclays, Lloyds, and the Royal Bank of Scotland among others) may let you open an account online. But this is only to begin the process. Most banks require proof of residency upon application.

Following online registration, in most cases, you’ll still need a face-to-face meeting with your bank to allow you to open an account with them. They’ll ask you to provide all the necessary business information listed above, and the photo ID of all named directors of your business. 

The bank will also need to have a face-to-face meeting with your company’s UK representative in order to sign a bank mandate that enables your company to open an account.

You should expect it to take anywhere from three weeks to twelve weeks for your account application to be approved. So make sure you build this time into your planning.

Documents required to open a business bank account

When opening a business bank account in the UK, the process itself is reasonably straightforward, and there are a number of key documents and pieces of information you need to provide.

These include:

• Proof of ID for all named company directors. This can be a passport, national ID card, or a driver’s licence (must have a photo)

• Proof of address. You can use a recent bank statement, utility bill, or a council tax statement

• Full business name and contact details

• Your Companies House registration number

• Estimated annual turnover

• In some cases, your personal financial history, to confirm you have a clean credit and banking record

Once you’ve had all the necessary meetings, filled out all the necessary paperwork, and provided all the relevant documentation, it’s time to play the waiting game. 

Am I eligible to open a UK business account?

In order to open a business bank account, you must be a registered business as either a sole trader, limited liability partnership, or a limited company. Depending on which provider you register with, there may be some restrictions on which industry you operate in, or how you plan to use the account. It's always worth checking with your local UK banking provider before applying for an account.

Can I open a business bank account for a foreign business?

While there are no specific rules expressly forbidding international businesses from opening a business bank account in the UK, there is due diligence required that can make it difficult for some foreign businesses.

The good news, however, is that opening a business bank account in the UK is as easy as it’s ever been, as recent years have seen banks afford greater flexibility to non-UK residents. But it isn’t as straightforward as opening a personal account—there are still hoops to jump through to know how to open a business bank account.

Some banks, while in theory having the option for foreign businesses to open an account, in practice don’t offer any financial products for companies that aren’t registered in the UK. 

Many UK banks have the option to open an ‘international account’. These are specifically designed for non-UK residents and don’t require the same strict documentation requirements as a standard UK bank account.

The key thing you need to open a bank account in the UK is proof of residency. So if you’re a UK resident for tax purposes, and have a residential address, then it’s smooth sailing. 

If you’re an overseas business, and you have an account with a global bank, you may be able to have your local bank branch liaise with your selected UK bank and open an account online for you. This typically only works if there’s an existing relationship between the two banks.

It pays to be mindful when opening a business bank account

While opening a business bank account can seem like a step in the right direction, it’s important to know what you’re getting yourself in to. Be sure to read all the small print and product details before you sign off on your new bank account.

With some UK banks, opening a business bank account comes with the requirement to make a substantial initial deposit. There may also be the requirement to deposit a minimum amount each month to keep your account active. This may not be feasible if your business is just starting out.

On top of this, there may be expensive monthly fees attached to your account. This might take the form of fees just to hold the account or fees for opening an account in another currency. 

Be careful to check the fine print, too. In some circumstances, there may be lock-in periods in which you’re unable to close the account or switch to a better deal.

From a purely practical point of view, opening a business bank account is becoming harder, as we’re seeing more and more bank branches close for good. In fact, the period from 2015 to 2019 saw more than a third of the UK’s bank branches shut down. This is making life particularly hard for rural business owners, who are now finding it more time-consuming to reach their nearest branch.

Skip the paperwork and wait times with an Airwallex Business Account

Setting up an Airwallex Business Account is a smarter, quicker alternative to manage your business’ finances—and you don’t need to know how to open a business bank account at all.

With easy sign-up, you open an account online and can get your account up and running within the day, without needing to leave your home or office. You don’t have to jump through hoops just to speak to someone as we have a UK-based support team who will help you through the approval process should you get stuck.

You can start sending and receiving money the moment your account is active. You receive a market-leading foreign exchange rate when making payments in foreign currency that’s much more competitive than traditional providers.

Airwallex multi-currency business accounts are designed for businesses that are looking further afield. You can open separate Global Accounts to send, receive, and hold money in multiple currencies, providing your business with the financial tools to go global.

With intelligent digital products like our web app API integrations and virtual cards coming soon, Airwallex is your one-stop shop for business banking.

Related articles about business banking:

• What is SWIFT: Banking System and Payment Network

• What is a Sort Code & Account Number?

• Foreign Transaction Fees: How to Avoid Them