A Guide to Business Bank Accounts in the UK

Getting your business banking right

Choosing and opening a business bank account in the UK should feel straightforward, not stressful. If you run a limited company or LLP, having a separate business account is not optional - it is a legal requirement because your business is a distinct legal entity. Sole traders are not legally obliged, but separating personal and business money still makes tax time cleaner and protects your records.

Think of your account as the hub of your financial life. It is where payments land, bills go out, and your cash flow is managed. Many accounts also connect to bookkeeping tools so you can automate admin and spot issues early. The right choice will balance day-to-day ease with strong protection for your deposits and clear, transparent fees you can plan around.

Clarity beats complexity - especially when your cash flow depends on it.

Who will benefit

This guide is for UK-based founders, directors, partners and sole traders who want to open or switch a business bank account with confidence. If you are starting up, scaling, or simply want better fees and features, you will find practical steps, realistic timelines and ways to avoid common pitfalls.

What a UK business account covers

A business bank account lets you receive customer payments, pay suppliers, manage payroll and keep HMRC-ready records. For limited companies and LLPs, it is legally required to keep company money separate from personal funds. Even sole traders gain clearer books, easier expense tracking and fewer errors when filing returns.

Most UK business accounts come with essentials like a debit card, mobile and online banking, and transfers. Many add invoicing, multi-currency wallets, and accounting integrations with tools like Xero and QuickBooks. Deposit protection is a key factor: the Financial Services Compensation Scheme protects eligible deposits up to £85,000 per banking group. For sole traders, that limit is shared across personal and business accounts with the same group. For limited companies, the £85,000 limit applies separately from the owners’ personal protections.

Fintech players can offer fast setup and modern features, sometimes at lower monthly costs. Traditional banks bring branch access, cash and cheque services, and a broader range of borrowing options. Some app-only providers safeguard funds rather than using full FSCS coverage. UK banks like Starling are FSCS-protected, while providers like Revolut safeguard UK customer funds and focus on speed and multi-currency.

How to open an account, step by step

Most banks will ask for proof of UK company registration, your business address, and identification for directors and anyone owning or controlling more than 10%. You may be asked for a simple business plan and recent statements or audited accounts if you are already trading. Expect screening checks to verify your identity and understand your business activities.

Opening a full account at a UK high street bank can take four weeks to three months, especially if an in-person meeting is needed. That can feel slow when you are eager to launch, but it reflects regulatory checks designed to protect both you and the banking system. Digital-first providers can get you started much faster and may serve as a useful interim solution while a traditional account is being finalised.

Set yourself up for a smooth application by gathering documents early and being ready to explain your business model, expected turnover and main payment routes. If you trade internationally, note your key countries, currencies and any industry licences. The more precise you are, the fewer back-and-forth delays you will face.

A complete, consistent application is the fastest route to approval.

Why the right account matters

Choosing the right account influences your costs, your protections and your ability to operate smoothly. FSCS protection up to £85,000 per eligible entity per banking group can provide real peace of mind, particularly for limited companies that hold larger balances. If you rely on cash or cheques, branch access and deposit facilities can save time and fees.

Costs vary widely. Some providers charge no monthly fee for basic tiers but apply transaction or cash deposit fees. Others bundle tools like invoicing and foreign currency accounts into paid plans. Startups can access strong introductory offers - HSBC and Barclays typically provide 12 months free day-to-day banking for qualifying new businesses, moving to tariffs afterward, and TSB has offered 30 months free day-to-day banking for eligible firms. For early-stage ventures, these promotions can keep overheads lean while you focus on growth.

Flexibility also matters over time. As your business evolves, you can switch accounts in the UK without penalty in most cases, though you may lose any remaining introductory perks. Planning for integrations with your bookkeeping and payment systems helps ensure a smooth transition.

The upsides and trade-offs

Pitfalls and red flags

Watch for fee structures that look low at first glance but add up through transaction, cash deposit or international charges. A common example is cash handling fees, which might be a percentage with a minimum per deposit. If you regularly handle cash, these costs can outweigh a higher monthly fee elsewhere. Service quality also varies, so Trustpilot scores and impartial reviews can highlight issues like slow support or outages.

Know the difference between FSCS protection and safeguarding. FSCS is a statutory compensation scheme that covers eligible deposits if a bank fails, up to the £85,000 limit per banking group and entity type. Safeguarding is a regulatory requirement for e-money institutions to keep customer money separate, but it is not the same as FSCS. Match the protection to your risk tolerance and cash levels.

Finally, set realistic expectations on timelines. Allow four weeks to three months for traditional accounts and plan your launch accordingly. If you need to start trading sooner, a digital account can bridge the gap while you complete full onboarding elsewhere. The UK Finance online checklist is a helpful way to confirm required documents before you apply.

Other routes you can take

1. Open a digital-first account now, then add a traditional bank for cash deposits and borrowing later.
2. Use a provider with strong accounting integrations to minimise manual admin from day one.
3. Split funds across banking groups to optimise FSCS coverage where appropriate.
4. Start with a startup offer at a high street bank, then review after the free period.
5. Switch accounts as your needs change using UK switching support and tools.

Common questions, clear answers

Q: Do I legally need a business account? A: If you run a limited company or LLP in the UK, yes. Sole traders are not legally required, but a separate account helps keep records clean and simplifies tax.

Q: How long will approval take? A: Traditional banks often take four weeks to three months due to checks and meetings. Digital providers can be much quicker, which can help you start trading sooner.

Q: Is my money protected? A: Eligible deposits with UK banks are protected by the FSCS up to £85,000 per banking group. Some e-money providers safeguard funds instead of FSCS coverage. Check your provider’s status.

Q: What documents will I need? A: Expect proof of company registration, business address, ID for directors and owners above 10%, and a simple business plan. If trading, banks may ask for statements or audited accounts.

Q: Which accounts are best for sole traders? A: Look for low or no monthly fees, strong app features, and FSCS protection if that matters to you. Many providers integrate with Xero or QuickBooks to save time on bookkeeping.

How Switcha can help

Switcha will connect you with the best options for what you are looking for, whether that is fast setup, FSCS protection, international features or cost control. We compare fees, features and service quality for UK providers so you can make a confident, informed decision without the legwork.

Important information

This guide provides general information, not personal financial advice. Always check current fees, eligibility and protections before applying. If you are unsure what suits your circumstances, consider regulated financial advice or speak directly with your chosen provider.