Compare Small Business Bank Accounts

If you’re a limited company, you must legally have a separate business bank account. But as a sole trader or partnership, you do not need to have a business bank account — you can use your personal bank account to accept customer or client payments.

It’s still advisable for sole traders and partnerships to open a business bank account to keep their business and personal transactions separate. This makes it much easier for you when it comes to calculating your income tax, as your transactions are streamlined for bookkeeping purposes.

Having a business bank account as a sole trader can also give your business credibility, which means customers will feel more confident when paying you for your services.

Should I open a small business bank account?

It depends. If you’re a limited company, yes, you need a business bank account. If you’re a sole trader or a partnership, the choice is yours.

But as with any major business decision, you should consider the pros and cons of opening a business bank account.

The advantages of opening a business bank account

• It separates personal and business transactions
• It makes calculating business expenses easier
• You can receive credit and debit card payments
• Your business looks more professional

The disadvantages of opening a business bank account

• You might have to pay monthly fees after an initial free period
• There might be transactions or cash deposit fees
• Another bank account means you now have two accounts to oversee (personal and business)

What do I need to open a small business account?

You’ll need to provide proof of your identity and some information about your business.

Here are some things you might need when opening a new account:

Proof of ID
The provider will want proof of identification for you and anyone else involved in opening the account, i.e. partners or other director-level people.

Proof of UK address
They’ll need proof that you and your directors live at a UK address. For this, you can provide your photocard driving licence, council tax bill or bank statement. You’ll find an exhaustive list of acceptable documents on the provider’s website.

Business verification
Providers will want to learn more about your business. This includes your company name and your registered business address (if different from your home address). They might also want a business bank statement if you have one or correspondence with HMRC.

Am I eligible to open a small business bank account?

If you have a UK business, you might be eligible to open a business bank account. Most banking providers will assess your credit data and will want to understand more about the nature of your business before letting you open an account.

Eligibility criteria may vary between providers, so it’s important to check you meet these before you apply. Many providers will expect you to be over the age of 18 and have a UK-registered business address.

Can I open a small business account with bad credit?

Yes, you can open a small business account with bad credit. Bank providers will still perform a credit check when you open a bank account.

Instead, they run a ChexSystems report, which is similar to the process of a credit check. This report will bring back things like if you’ve had cheques bounce, if you have unpaid fees or if your account was overdrawn.

Even if you’ve opened a bank account, you should always look to improve your credit score. Improving your credit score as a business will play an important role if you ever need to apply for investment or business finance products.

How to open a small business bank account

Opening a business bank account is straightforward:

Step 1: Decide on your requirements
What do you want out of your business bank account? For example, is it important the provider has branches you can visit? Do you want one with an effortless banking app experience?

Step 2: Compare the different accounts
Next, it’s time to compare the different providers on offer to ensure you get a good deal. (You can compare bank account providers with us for free.)

Step 3: Choose your provider
Click through to the provider’s website to complete your online application and have your bank account set up in a matter of days.

If you’ve already got a business bank account, but you want to switch your provider, the Current Account Switch Service makes switching simple. All you need to do is select your new provider, and they’ll take care of everything else. You can expect your new account up and running in just four days.

Why should you compare small business bank accounts

If you go straight to one provider, there’s a good chance you miss out on better deals from providers you hadn’t even considered.

Comparing is quick and simple — you might find a bank provider with more competitive interest rates, zero account fees or better features. Features might include being able to invoice directly through their banking app or being able to set up your bank account in a matter of minutes.

Compare small business bank accounts with Capalona

Our comparison tool is completely free for you to use. Simply visit our bank account comparison page and view all current deals from banking providers, including Tide, Starling Bank and Revolut. Use our filtering system to find accounts specifically for startup, bad credit or prepaid cards.

You don’t have to part with any details, either. Simply visit the page and peruse it at your leisure.