Business Bank Accounts for Care Homes

Keeping your care home’s money running smoothly

Rising wage costs, agency cover and fees that lag behind inflation are putting real pressure on UK care homes. Even with strong occupancy, delayed local authority payments can leave uncomfortable gaps in cash flow. In this environment, the right business bank account is more than admin - it is a daily tool for stability. From flexible overdrafts to clean data exports and FSCS protection, your account setup can help you meet payroll on time, pay suppliers without drama and plan with confidence.

This guide sets out what a business bank account means for care homes, how to choose one, and why certain features matter in practice. We will keep things simple, avoid jargon and highlight where not-for-profits and incorporated providers face different rules. The aim is to help you make a confident, well-informed choice that fits your service, your residents and your regulatory commitments.

No jargon, just clear guidance you can act on today.

Who this guide will help

This guide is for UK care-home owners, managers and finance leads who handle day-to-day payments, payroll and budgeting. It is equally useful whether you are opening your first account, switching to improve features and fees, or tightening controls as your service grows. Charity-run homes, sole traders and limited companies will each find practical steps tailored to their structure.

What a business bank account does for care homes

A business bank account keeps your care home’s money separate, organised and audit-ready. For limited companies and LLPs, it is not optional - a separate account is required because the business is a distinct legal entity. Even sole traders benefit from a dedicated account that simplifies tax, payroll, CQC inspections and lender assessments.

Modern providers offer clear, itemised statements, downloadable exports and real-time app views that make it easier to track fee income, payroll cycles and supplier payments. Many digital-first accounts integrate with accounting software, so your forecasts are based on up-to-date data rather than last month’s spreadsheet. Most UK business accounts are covered by the Financial Services Compensation Scheme, with many business deposits protected up to £120,000 per authorised banking group, subject to eligibility and business type. That reassurance matters when you are holding payroll funds, refurbishment reserves and contingencies.

Strong banking hygiene supports better CQC readiness and faster access to finance.

How to set up and choose well

Start by mapping how your care home actually handles money - resident fee inflows, payroll frequency, agency usage, supplier runs, cash handling and any international payments. Compare tariffs against that pattern. Some accounts have no monthly fee but charge for cash deposits or branch withdrawals. Others bundle digital transactions at low cost but price cash handling separately.

When opening an account, expect to provide proof of trading address and business identity, such as HMRC letters, leases or invoices. Incorporated providers should align Companies House records, key personnel and CQC registration details to avoid onboarding delays. If you need working capital or an overdraft, clean six-month statements and up-to-date accounts will help underwriting. Switching providers can be straightforward through the Current Account Switch Service, which moves payments and direct debits within seven working days for eligible accounts.

Look for tools that cut admin: instant notifications, spending categories, statement exports and compatibility with your accounting software. If you are part of a group, dual authorisation and user permissions can strengthen controls without slowing down care.

Why this choice matters now

Care homes are trading through tight margins and unpredictable inflows. A well-matched business account supports resilience by smoothing the cash-flow bumps caused by wage rises, agency cover and late local authority payments. Flexible overdrafts and transparent fees can prevent avoidable costs at the worst possible time.

FSCS protection helps you manage risk when holding significant balances. Understanding how limits apply to your entity type means you can decide whether to spread reserves across providers. Clear, searchable statements speed up audits, lender reviews and inspection preparation. For charity-run homes, purpose-built accounts may lower costs and add controls such as dual authorisation, giving trustees greater assurance.

Ultimately, the right account is a practical lever for profitability - not just a place to store funds. It gives you the visibility to forecast, the tools to act quickly and the confidence to invest in quality improvements.

The upsides and trade-offs

Watchpoints before you apply

Tariffs vary widely. If your home handles resident cash or relies on branch services, look carefully at charges for deposits and withdrawals. Digital-only accounts can be cost-effective but may send cash handling through partners at extra cost. Review international payment fees if you pay overseas suppliers or recruit staff from abroad.

FSCS protection matters, especially for payroll and reserve funds. Limited companies usually have their own limit per authorised banking group, while sole traders share a combined limit with personal balances at the same institution. If your balances exceed typical limits, consider spreading reserves across providers. Plan for overdraft needs early and evidence how the facility supports staffing, refurbishments or compliance upgrades.

Documentation should be consistent: trading address, Companies House details, key personnel and CQC status. Keep six months of clean statements and management accounts to support both onboarding and any future lending applications. Finally, ensure user permissions and dual authorisation align with your governance and duty-of-care responsibilities.

Practical alternatives if one account is not enough

1. Charity or community accounts for not-for-profit homes - often lower fees and dual authorisation.
2. Secondary business current account at a different banking group to diversify FSCS coverage.
3. Business savings or notice accounts for reserves to earn interest while keeping funds accessible.
4. Group structure accounts for each legal entity to separate liabilities and optimise protection.
5. Credit union or building society business accounts where local presence and support are priorities.

Next step: map your payment flows, then shortlist accounts that fit your actual transactions.

FAQs

Q: Do I legally need a business bank account? A: If your care home is a limited company or LLP, yes - you must keep finances separate because the business is a distinct legal entity. Sole traders are not legally required but strongly benefit from separation.

Q: How does FSCS protection apply to care-home funds? A: Eligible business deposits are typically protected up to £120,000 per authorised banking group for many business customers. Sole traders share a combined limit with their personal balances at the same provider.

Q: Can I switch without disrupting payroll and supplier payments? A: If both banks use the Current Account Switch Service, payments and direct debits are moved within seven working days for eligible accounts. Plan the timing around payroll and notify key suppliers.

Q: What documents will banks ask for? A: Expect proof of trading address and identity, Companies House records, details of key personnel, and where relevant your CQC registration. Keep recent accounts and six months of statements handy.

Q: How should I manage larger balances safely? A: Consider spreading reserves across different authorised banking groups or separate legal entities where appropriate. Keep operational cash accessible and ring-fence payroll to reduce risk.

How Switcha can help

Switcha compares business banking options against the way your care home actually transacts. We will connect you with the best options for what you are looking for, from digital-first accounts to charity-specific solutions. Our guidance is clear, friendly and focused on helping you switch or open an account with confidence.

Important note

This guide offers general information for UK care homes and is not financial, legal or tax advice. Check eligibility, FSCS rules and tariffs with each provider, and consider independent advice before opening, switching or applying for credit.